Selecting consultants

Consultants and client advisers provide the foundation on which a successful project is constructed. Depending on the client’s in-house resource, selected consultants could provide the following functions:

• design services (a single organization could be responsible for all design duties, with other designers appointed as subcontractors; alternatively different organizations could be appointed for each of the key disciplines, with the project manager responsible for managing and controlling them);

• project management (including cost management);

• value management, risk management, partnering facilitator, facilities management (may be included in project management).

The consultant’s brief should describe the services that the consultant is required to carry out precisely. These are dictated by the strategy adopted and whether the services are to be provided individually or in combination.

The project sponsor must also ensure that any authority delegated to the project manager is carefully defined particularly in connection with:

• ordering variations and making changes; • certifying interim payments;

• settling claims; and • agreeing final accounts.

Developing the model for selecting consultants

Establishing VFM has as much to do with the quality of goods and services as with their price. But there must be a sound basis for evaluation and judgment.

Sir Michael Latham in his 1994 report Constructing the Team stated that, ‘professional consultants should be selected on a basis which properly recognizes quality as well as price.’ Working Group 4 of the Construction Industry Board was established to choose and endorse a quality price assessment mechanism for appointing professionals – including architects, engineers, surveyors and project managers.

The principal features of the quality/price mechanism recommended in this report are summarized as follows:

1 The quality/price mechanism should be established by a formally constituted and fully accountable tender board before tenders are invited, and all tender documentation should be designed to ensure that appropriate responses are received to which the mechanism can be applied.

2 A quality/price ratio must be agreed at the outset, representing the percentage weightings to be given to quality and price. The more complex the project, and the greater the degree of innovation and flexibility likely to be required from the consultants, the higher the ratio should be. Indicative ratios suggested for various types of projects are:

Type of project Indicative quality/price ratio

Feasibility studies and investigations 85/15

Innovative projects 80/20

Complex projects 70/30

Straightforward projects 50/50

Repeat projects 20/80

3 Quality criteria should be grouped under four main headings and weighted. Recommended headings and suggested weightings are:

Quality criteria Suggested weighting range

Practice or company 20–30%

Project organization 15–25%

Key project personnel 30–40%

Project execution 20–30%

4 A quality threshold needs to be established (e.g. 65 out of 100). Tenders must achieve this minimum quality score before final interviews are held and prices considered.

5 Submitted tenders are assessed for quality by marking each of the four quality criteria out of 100, multiplying each mark by the respective weighting percentage and then adding them together to give a total score out of 100.

6 Consultants passing the quality threshold (ideally only two to three) are then interviewed, their quality scores are reviewed and their prices examined and marked. The lowest compliant bid scores 100 and others score 100 minus the percentage figure by which their bids exceed the lowest price (e.g. a bid 25 per cent above the lowest bid scores 75).

Suggested weighting ranges for project-specific quality criteria are illustrated in Table 3.1. 36 Selecting the consultants and contractors

The final quality/price assessment is achieved by multiplying the quality and price scores by the respective weightings set by the quality/price ratio and adding them together to give a total score out of 100 (e.g. if the quality/price ratio is set at 70/30, the quality score is 80 and the price score is 75, the total score is 80 x 70 per cent + 75 x 30 per cent = 78.5). The highest scoring consultant should be awarded the contract. An example of a tender assessment sheet is shown in Table 3.2.

The Construction Industry Council (a body representing all the professions) has developed a tool called Selecting the Team to help clients create a team able to work together successfully. It offers practical advice on how to put together a selection panel, develop a questionnaire, set the criteria for a shortlist and then evaluate the shortlisted candidates. This publication complements two other CIC partnering publications – A Guide to Partnering Workshops and A Guide to Project Team Partnering.

Basis of payment to consultants

There are three principal ways of paying for professional services (sometimes used in combination): 1 time charge

2 lump sum and

3 ad valorem – according to value Table 3.1 Project-specific criteria

Generic quality criterion Key aspects Suggested weighting

(marked out of 100) range

Practice or company Organization 20–30%

Financial status

Professional indemnity insurance Quality assurance or equivalent system Commitment and enthusiasm Workload and resources Management systems Relevant experience Ability to innovate References

Project organization Organization of project team 15–25% Authority levels of team members

Logistics related to site, client and other consultants Planning and programming expertise

Key project personnel Qualifications and experience relevant to project 30–40% Understanding of project brief

Flair, commitment and enthusiasm

Compatibility with client and other team members Communication skills

References

Project execution Programme, method and approach 20–30% Management and control procedures

Resources to be applied to the project Environmental, health and safety matters

The fee structure to be adopted will depend on the degree of certainty in the scope and content of the services required. When the scope and content of the services are uncertain, for example during the appraisal of options, then reimbursement on a time basis is appropriate. However time charges provide no surety of the eventual fee cost. They tend to be an expensive way of paying for longer-term services and are more appropriate for shorter-term commissions.

Lump sum charges should only be used where the scope of all the services is defined precisely and there is little risk of significant variations in the scope of the works. A combination of lump sum charges for the more certain elements of the work and time charges for those less certain, may offer best VFM.

Ad valorem fee structures reimburse consultants in proportion (generally as a percentage) to the cost of the project.

From the client’s viewpoint these may appear at times to provide an incentive for consultants to design expensive projects rather than those offering value for money. It may therefore be appropriate to introduce some form of abatement or capping mechanism to the fee structure, in order to underline the necessity of striving to contain certain costs while maintaining quality. However, great care should be taken when developing such a model in order not to penalize those who are not responsible for changes or who have carried out abortive work or had to provide additional services as a result of the changes caused by other parties.

If the consultants’ fees are calculated based on the final construction cost during times of high inflation there may be an overpayment, known as an uncovenanted gain, as the majority of consultants’ work is usually carried out during the early stages of the project.

38 Selecting the consultants and contractors Table 3.2 Example of completed tender assessment sheet Tender assessment sheet

Project: Halls of residence, University of Metropolis Tenderer: bmg (Architectural services)

Assessor: Keith Potts

Project quality weighting: 65% Project price weighting: 35%

Quality threshold: 65 (to be compared with total quality mark)

Quality threshold Project weighting Marks awarded Weighted marks

(A) (B, out of 100) (AxB)

Practice or company 25% 64 16

Project organization 15% 80 12

Key project personnel 40% 65 26

Project execution 20% 75 15

100% Total quality score 69

Price criteria

Tender price 260

Price score 100 100 100

Overall assessment

Quality weighting x quality score = 65% x 69 = 44.9 Price weighting x price score = 35% x 100 = 35.0

Overall score = 79.9

Signed: Date: