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Practice in Shanghai - Sequential Tendering

Zenning

Hi all,

I'd like to know if anyone has the experience in doing design projects in Shanghai. I myself haven't and I'm curious: Is sequential tendering allowed in the construction industry in Shanghai? I have heard the Chinese law prohibits a project to be subdivided into separate bid-build 'packages'. But after the Olympics and the Expo and so many foreign architects built in Shanghai and Beijing, and Gensler is building a big tower along Pudong as we speak, could someone educate me on this? How'd a project be carried through there?

Much appreciated.

Zenning

 
 
 
Mar 3, 14 3:12 pm
Zenning

Come on … no one knows? really? It's urgent...

Mar 3, 14 11:22 pm  · 
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midlander

I've worked in China for about 4 years - in my experience tendering has always been handled by the Local Design Institute with little involvement from foreign design consultants. By law foreign-owned design firms are limited to work up through DD stage, after which the LDI takes over.

That said, we have often expedited work and handed over schematic plans / structural drawings in order to proceed with excavation before the design is complete. I assume this is bid separate from the main construction work.

What is your situation - why do you need to know this urgently? If you are working in China the owner should have an LDI who can advise on this.

Mar 4, 14 2:17 am  · 
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Zenning

We're a small start-up about to head that direction, but still hesitating. So want more info. Midlander - what you said sounds like it is what I expected. I really would like to hear more people's opinions and experience...

Mar 4, 14 11:47 am  · 
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In China, the Authority primarily deals with the owner instead of the architect, be it local design institute or foreign architect. For permitting purposes, like all other countries, you need the local design institute stamp as the architect of record. Other permit drawings, bid set is also reviewed by a statutory body called 招标办 prior to bid. The bid process in China context as far as I know is undertaken by the owner's project company.

Foreign architect can be the design consultant for the project for the entire project cycle but the scope of service is very much between the owner and their foreign architect. Cost is the issue not regulation. A typical arrangement is to for the foreign firm to take the lead from concept to design development (DD)  stage and for the local design institute to take the lead from construction documentation to close-out. Some even stop their involvement at DD stage. The danger of doing so is- compromises tend to take place after DD that prevent if not completely destroy the original design intent from being carried through to completion. So if possible, it is advisable to have continued involvement through to completion. It could be in the form of construction document review at 30%, 60%, 90%, review of selected shop drawings and bi-weekly or monthly site visit just to ensure the design intent is maintained. I have done projects where we did even construction documentation and monthly site visit and full shop drawing review but it takes a very enlightened client to understand the value of such service and is prepared to pay for it.

I am not sure what exactly do you mean by sequential tendering. What I do know is sub-sub-contracting is banned. ie A sub-contractor who had won a nominated sub-contract cannot further sub-contract the work out to someone else thereby making them a mere middle men. I would imagine a consultancy firm who had won a design project probably is also banned from sub-contract the work to other consultancy. is that what you are referring to?

The above is the typical situation in the traditional design-bid-build process. Design & build is another matter altogether and I am not sure it is that prevalent in China. As I have not done one in China, I will leave it to others who have done it to comment.

Mar 5, 14 12:35 pm  · 
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Zenning

Hi Geok, thanks.

By sequential tender, I meant:
 
Say, the foreign design architect has won an invited competition to build in Shanghai. The joint-venture local office (LDI) redraws the DD drawings, added Chinese translations and compliance of local building codes, and invites several potential contractors who might later on interested in bidding the job to suggest on budgeting and construction timeline. When the construction drawings are sufficient enough, to save time on an otherwise five or six years of extended work, here in North America we subdivide our drawings into separate bid-build 'packages': contractor A would bid on a portion of the project and then be responsible for, say, the foundation and the structure, another different contractor B, for the facade, yet another, C, for the interior and so on. And the A/E will develop further their design drawings along with this sequence and deadlines, while the site has begun work. (Which means the A/E will be chased by the progress of the site, and the site might entails intense overlapping of different trades and risk overcrowding and safety.)
 
A joint-venture practice in Shanghai as I understood, the Bidding Law of PRC is very different from what is practiced in North America. My question simply: Is this kind of sequential tendering allowed in the construction industry in Shanghai?
 
Mar 6, 14 10:58 am  · 
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Zenning

Thanks for your pm, Geok.

My head is growing like a sloshing bowl ...

Could you / someone walk me through their experience, perhaps say, a project like Gensler's Pudong tower, or any of those Olympic or Expo buildings.

So let me get this straight. The LDI is the Record Architect. They apply the permit. Prepare the bids. And choose the winning contractor's bid. Yes?

If no, then who prepare the bids, the owner's office or the LDI office? And when do the owner / LDI choose a contractor?

(I am not getting into Sequential tender yet - which is not traditional design-bid-build)

Mar 6, 14 2:37 pm  · 
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geokser

My projects are primarily in the commercial world and I will leave Olympic projects to those who had done public projects there to cover that portion of works in China.

As I have mentioned earlier, owner is the party whom the Authorities dealt with, not the LDI. It is the owner who applies for the various permits with document prepared by their consultants and endorsed with LDI's stamp. The owner may pull in the LDI and foreign consultants to attend their meetings with the various local Authorities but ultimately the Authorities only recognize the owner, which is often a project office that the owner had set up to deliver the project. The bid document, drawings and specification could be prepared by LDI or foreign consultant or a joint effort but had to be vetted by a statutory board called the Tender Board before bids are called.

It is perfectly normal to go out to call tender for an excavation & sub-structure construction contract while design is on going once the general arrangement is firm. ie column grid and foundation's design & construction document are completed. Similarly it is also normal to call for bid for the main contract while the details of identified (scope clearly defined) sub-contracts works are still being developed. Having sub-contract bid by trade is not an issue but to have multiple levels of sub-contracting is a no-go. Be cautious when the number of sub-contracts starts to snowball into hundreds of sub-contracts. It is a sign that hanky-panky like kick-backs and bribes may be at work behind the scene. Work with the Authorities to understand their concerns, they by and large have genuine concerns because the number of black sheep and incidences of sloppy workmanship among the contractors are quite prevalent. I do understand some Authorities can also be very difficult to deal with, so tread carefully.

Generally it is the owner's project manager from the project office who called for bid, negotiate and award the contract. They are generally assisted by a quantity surveyor (QS) on cost and contractual issues) and architect and the core consultants- LDI among them (on design and technical issues). It is a waste of time to call tender to get pricing indication since it only drag out the bid process. The cost issue is better dealt with throughout the design and documentation stage with periodic cost update from the QS as the design developed. To do so only at bid stage will only lead to major value engineering exercises that are taxing on all parties- owner, consultants and bidders. There are no lack of court cases of contractual disputes, complaint of poor quality and protracted delay arising from such exercises. In fact, your LDI's entire procurement strategy should be re-examined based on your description of their actions.

The above are just general comments without the benefit of knowing the actual contractual relationship between you, your LDI and the owner of the project and the roles and responsibilities delineated in contracts among these parties. How a project is delivered or how the delivery actually pan out ultimately are governed by the contracts signed between the parties, irrespective of how others have done it.

If you wish, let me have your e-mail contact and I could send you a flow chart illustrating the entire process as is generally understood in China context. My contact is geokser@gmail.com.

Hope the above is of some help to you for successful delivery of your project.

Mar 6, 14 4:53 pm  · 
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