Tendering the Environment
Hanlan Feedermain Contract 3 included significant changes to the tender document, removing the ability for bidders to overlook environmental requirements
Environmental concerns and mishaps have been the cause of many delays, cost overruns, shutdowns and legal implications over the years. Many people in the industry will read this and think that delays caused by environmental factors are a result of multiple, complicated or changing regulations. While these are sometimes contributing factors, the root of the problem starts with contract tenders, more specifically the way they are written or not written.
When it comes to contract tenders, the wording and often elusive nature of environmental factors results in a disconnect between the infrastructure construction industry and the associated project`s environmental considerations and requirements. Wording that surrounds environmental considerations on the job tender is vague at best, with no line items; line items are virtually non-existent on the bid form.
To take a step back, the purpose of a tender process is to be transparent in order to provide an equal opportunity for contractors to bid on a project. To create a fair process, some standard criteria must be met: everyone is provided with access to the same tender information; everyone has the same amount of time to plan and submit a proposal; everyone is evaluated using the same system, based on meeting the same criteria.
At the outset, all tenders meet the above standard requirements with the intent to create a level playing field for bidders.
The problem: Typical tender scenario
We all know, low bid gets the job. So if low bid gets the job, why would any person who wants to be awarded the job include “unnecessary” costs (i.e. environmental considerations) if the tender does not require it? Now fast forward to the lucky low bidder who got the job, who is now working to carry out the project and reality sets in. Since there were no line items required in the tender for environmental considerations, the contractor is now faced with dealing with who is in fact responsible – well the contractor of course. So what does this often mean? Extra costs, project delays and potential shutdowns.
So the contractor is now left with two options: Do it properly, which means they cover the cost of environmental components (ie environmental monitoring, erosion and sediment controls, fish removal and relocation, etc.) – not a very profitable option (which defeats the purpose of low bid wins); or continue with the project status quo and implement risk management, keeping fingers and toes crossed that the project does not come under public or regulatory scrutiny – “fly under the radar.”
Perhaps the best way to explain it is with the saying “Contractors are some of the most environmentally responsible people, so long as they are getting paid for their efforts.”
Due to the vague wording, direction and expectations as related to environmental considerations in tender documents, the illusion of the level playing field is replaced with the reality of extra costs, project delays, potential shutdowns and potential negative environmental effects and tarnished reputations. Until now.
Challenging the tender status quo
In 2013 the Municipality of Peel Region’s Water Capital Group opted to reflect on past experiences and make significant changes to a tender document on a very substantial feedermain project – Hanlan Feedermain Contract 3.
Significant onus was placed on the contractor within the tender with clear direction and expectations.
Allowances were placed in the specifications for the contractor to retain an environmental specialist, which completely removed the ability for bidders to overlook, and not cost for, environmental requirements.
What the Water Capital Group in Peel Region did differently
Examples of key requirements included in their tender:
1. Peel Region’s Water Capital Group made the qualifications of the required environmental consultant very clear:
“The Vendor shall retain the services of an environmental consultant, however, the environmental consultant will report to and will receive instructions from the Agency and the Engineer. Invoices from the environmental consultant will be processed by the Vendor and included in each payment certificate. The Agency will pay the Vendor for these charges and the Vendor shall immediately pass the payment on to the environmental consultant with no deduction, but subject to normal Contract holdback. The Vendor may apply a markup or management charge to the invoices from the environmental consultant, with such charge being no greater than 10 percent of the invoice amount…The environmental consultant shall have the proper designation(s) and/or certification(s) and experience in dewatering monitoring and control, employed by an organization operating under a Certificate of Authorization (COA) issued by the Association of Professional Geoscientists of Ontario (APGO), and they shall have, as a minimum qualified staff with recognized professional designations or certification in aquatic/fisheries, ecological and hydrogeological sciences.”
2. Requirements for submissions in the form of written plans/reports were explicitly detailed:
“Temporary control submittals – Environmental Management Plan, Dewatering and Monitoring Plan, ESC and surface water management plan, disposal of waste materials and haul routes plan.”
Timing and contents of these submissions were detailed in the tender and included as line items on the bid form.
Small change, big impact: Benefits of detailing environmental considerations in the tender
Peel Region’s Water Capital Group took the time to make the expectations clear and ensure that costs were accounted for. This removed the ambiguity from the tender process, resulting in a true level playing field for bidders – essentially creating a win-win scenario. In other words, low bidder wins, low bidder can complete the project carrying real costs, and the environment is no longer the afterthought.
The Water Capital Group’s decision to include detailed environmental requirements in their tenders is a huge leap forward. The hope is that other proponents will recognize the benefits and follow suit to include these considerations in their tenders. The industry has been moving in the direction of shifting liability to the contractor, but the fact remains that as the “owner,” liability can never be completely removed. The owner will be always be “the responsible party” and should therefore make its expectations clear, ensure that costs are accounted for, and remove the ambiguity.
Peel Hanlan Contract 3 may not be the only attempt at this unique model of clarity of direction and expectation, but it is certainly a leap forward.