Capital Development Guidelines

Tendering is a critical activity in a capital works project and is normally the accepted means of obtaining a fair price and best value for undertaking construction works.

The Ministerial Directions pursuant to the Project Development and Construction Management Act (1994) and The Code of Practice for the Building and Construction Industry (the Code) set out specific requirements covering all aspects of tendering. All members of the Project Control Group considering tenders should be familiar with the requirements of the Code.

The Ministerial Directions set out the methods to be used for tendering that are acceptable for public bodies in Victoria and the methods are set in accordance with financial levels. Reference should be made to the Building Commission website (http://www.buildingcommission.com.au) to ensure current levels are applied.

The Code applies to all building and construction work that is managed or funded by the Victorian Government and must be observed by all parties involved in such work including hospitals, aged care, psychiatric and community facilities.

The Code is to be observed by consultants, principals, their agents, contractors, subcontractors and suppliers, and their professional organisations and associations. The Code stipulates that compliance requirements must be included in advertisements and must be implemented.

The Tender process involves a Health Service/Agency seeking competitive bids for works and/or services that are set out in a documented brief. There are offers made by a variety of bidders who set out their submission in accordance with the tendering requirements. The completion of the process occurs when one offer is accepted following the evaluation of all offers.

The following general principles are involved in calling tenders, clients must:

• Conduct tendering honestly and fairly to all parties by treating all parties in the same manner
• Comply with all statutory obligations, including trade practices and consumer affairs legislation
• Refrain from seeking or submitting tenders without an intention to proceed
• Have regard to the cost of bidding and seek to constrain such cost
• Apply the same conditions of tendering for each tenderer and avoid any practice which gives one party an improper advantage over another
• Refrain from practices such as collusion on tenders
• Be prepared to attest to the probity of the process, including that related to issues concerning collusive practices and conflict of interest, by statutory declaration
• Produce tender documents that specify the principal’s requirements clearly to allow tenderers to accurately price the works.

Selective Tendering is the most commonly used for the Department’s capital works projects.

The standard form of contract accepted by the Department is Australian Standard Lump Sum AS 2124-1992 General Condition of Contract with special conditions. These guidelines are based on tendering for projects using AS 2124-1992. Approval by the Capital Management Branch (CMB) is required if another form of Contract is to be used.

As set out in the Code of Practice for the Building and Construction Industry, State Government policy requires any pecuniary interest in a project to be declared immediately.

Projects are not tendered until tender documents are complete, signed off by the Project Manager for purpose. In addition the Quantity Surveyor is to warrant that the pre-tender estimate is within the approved budget together with Cost Plan D and endorsed by the Project Control Group. However this may vary dependent upon the procurement method adopted. Approval must be given by the Department (CMB) to tender.