In a newly competitive Middle East the clarity and ambiguity of tenders for FM contracts and the affect on the bottom line is increasingly under the spotlight. fmME looks at the issues from a developer's side and from the service provider's, plus the impact owners associations are having on the sector. Top tips included...
Senior property contract specialist Linda Engstrom on bid preparation, the impact of substandard tender documentation and the recipe for success
Does the tendering process in the Middle East differ from other countries?
Be innovative. No matter what the current economic climate, customers and clients are interested in savings. The documents probably ask for services of a certain scope and level - can you think efficiencies?
The policies in the UAE are similar to rest of the world. With significant development in the real estate sector, the process of submitting and preparing bids has matured over the past few years, but there is scope for further improvements in commercial FM in respect of the process and the quality of bidding.
What are the issues you face on receiving tenders?
The main issue is definitely quality along with compliance. Typically, the basic requirements of a bid aren't considered, such as responding to specific tender requirements. Not many bidders consider the hot topics in the region such as sustainability, health & safety and energy management.
What impact does a poor bid have on your business?
Non conformation of tender documentation impacts the review and assessment process. This results in not having a clear understanding of the capabilities and deliverables from the FM provider. In addition, opportunities of cost savings through value engineering or cost leveraging through the supply chain may also not be appropriately identified.
How can the tendering process improve?
The tendering process can improve significantly through the consideration of the following:
Thorough understanding of the client's requirement through a proper review of the tender documentation and discussions with the client concerning their specific objectives and requirements
Proper compliance to the tender documentation in the bidding process through the provision of appropriate level of details and understanding in the bid documents.
Identification of the value added benefits or scope of cost reductions/resource rationalisation for the clients.
What is the recipe for success?
As with most other industries in Dubai, the FM market has seen rapid expansion and quality has improved. This market has seen the introduction of large, corporate FM companies with international expertise which has changed the level of the playing field. Companies these days are having to work harder to win work. Producing great bids, or at least bids that are easy to understand, complying with instructions and clearly outlining your company's competitive edge, is the recipe for tendering-success in today's market. Developer perspective:
Mick Dalton, general manager, Marafeq Facilities Management, on why the tender process is hit and miss in the Middle East, the key to successful tendering and how the current economic climate has impacted the tendering process from a client and provider perspective
Why is the tender process so hit and miss in the Middle East?
The tender process in Middle East is very hit and miss because some companies only go for a one year contract which is not good procurement practice. There is also the issue of individual sub-element contracts - such as landscaping and cleaning - being awarded with FM as a bolt-on service - it should be the other way around. And there are instances of clients tendering large volumes of property to a service provider that cannot cope with the demands, and fails to deliver on the service level agreement (SLA).
Service level agreement driven contracts including risk and reward and key performance indicators (KPI) are onerous and the FM market can't deliver on these because in many cases they don't understand them. There's so much prequalification and requests for proposal (RFP) and then the client, in some cases, doesn't read the tender information.
Clients often don't understand the nuances and specialisms of different FM companies, and subsequently award contracts to ill suited providers. And many don't follow the best practice guide to FM procurement that the British Institute of Facilities Management (BIFM) published.
A tender is a legal document, what are the key elements of putting one together?
I would say your first port of call is identifying an intelligent FM client which has a tender board mechanism in place geared toward tender requirement transparency. That, in turn, will lead to a clear brief and strategy and set of objectives that will define document output.
Contract requirements should be output driven with detailed site information to include asset register and a full set of operation and maintenance (O+M) manuals for the site. A fair set of SLAs and KPIs should be included in a professionally written FM contract.
A clear and realistic time frame to tender, the right number and type of companies to tender, a three to five year contract, processes to outline timescales for setup, transition, and mobilisation, monthly reporting and performance appraisal, a clear payment mechanism that actually pays the supplier on time and a client that adheres to the above and works with the provider, would all make for a level playing field.
How has the current economic climate impacted the tendering process from a client and provider perspective?
The economic climate has meant clients have started to come back and try and renegotiate fixed price contracts with FMs, while it has also forced companies to move away from cost plus to lump sum contracts.
Performance is being managed more effectively and pressure on service fees has led to keener pricing. Strata law has caused major issues as owners associations (OA) have started to negotiate directly with FM companies, of which they know little or nothing about.
For example: year one defect liability type contracts moving to year two ongoing contracts have made it tougher as residents associations and the Real Estate Regulatory Authority (RERA) don't understand there is a difference, and therefore more costly.
There is a major issue with the building defects in new builds. This often means the FM ends up snagging, which is not what they are contracted to do.
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