Wired up

One of the ways construction can become leaner is to use technology in the procurement process. Electronic tendering is now quite widely used and covers a range of applications. It can be as simple as putting the tender documents onto CD and distributing them. Or it can mean insisting that those putting in tenders receive documents by email or via a dedicated website. This is where legal issues start to arise.

For many clients, particularly public authorities, it is essential to treat all tenderers equally. The RICS last month published a guidance note on e-tendering to help those who conduct the tender process to avoid legal pitfalls. The note suggests, for instance, that prospective tenderers be asked whether they can receive material in a particular format and provides a sample inquiry letter. Finding software that all tenderers can read is particularly important in relation to drawings and spreadsheets. Not all companies have the same technology available, but if their services make them appropriate for a tender list it cannot be right to exclude them on these grounds.

So, careful preparation is required before sending out tender documents. The guide includes a sample prequalification document, giving data about the project and asking for details of experience in different methods of electronic data transfer.

The guide also covers the use of email in the procurement process. The most important issue is probably security: avoiding unauthorised changing of the text in the tender documents being sent out or the documents that are returned. PDF documents can be amended and simple emails are even more susceptible.

How many users lock their computers every time they move away from their workstation? If someone wished to help a particular tenderer by giving incorrect information to the others, how easy would it be for them to do that using a QS’s computer? Where answers to tender queries are sent by email, it is all too easy for mistakes to arise, so that the information is not sent to all tenderers or different information is sent to some tenderers. For these reasons the guide advises that formal tendering should not be conducted using email, suggesting that discs and web-based systems are more approriate.

If someone wished to help one tenderer by giving incorrect information to the others, how easy would it be for them to do that using your PC?

Having completed the tender process, the next step is to execute the contract. At this point, most people still resort to paper copies. In the case of regular purchases, such as those from builders merchants, secure websites have been set up to permit orders to be placed and a binding contract created. Most people are now familiar with this kind of arrangement, which is similar to buying goods over the internet for personal use. Construction contracts or the appointment of a designer, however, are usually one-off arrangements so this is not appropriate.

It is possible to enter into a contract electronically, even with a one-off contract, but it is important to be sure the person contracting electronically is authorised to do so. The best way of doing this is by using electronic signatures. These will uniquely identify who has authorised or “signed” the contract. There are organisations – certification service providers – that can arrange this. If the document is to be executed as a deed, it will need two authorised signatories.

The note also covers the European Union rules on electronic distribution of tender documents. This results in a slightly shorter tender period. More controversially, the EU rules provide for reverse auctioning. In practice this is a way of reducing the price by the tenderers bidding each other down in an auction conducted electronically. This has of course received considerable negative publicity, as it runs counter to partnering and co-operation in the industry. The guide indicates that reverse auctions work best for manufactured goods with a clearly defined specification.

E-tendering offers advantages over paper-based methods. It can be quicker but there is still the opportunity for human error. If the technology fails at a crucial moment, that can also mean unfairness to one or more of the tenderers. The guide provides a useful steer through the pitfalls and should help anyone using this technology for all or part of the procurement process.