DEPARTMENT OF TREASURY
AND FINANCE
MARCH 1998
AMENDED NOVEMBER 2006
Version 3.0
© State of Tasmania 1998
Enquiries
Procurement and Property Branch
Department of Treasury and Finance
21 Murray Street
HOBART TAS 7000
Telephone (03) 6233 3674
Facsimile (03) 6233 3681
Background
Physical assets comprise a significant segment of public sector resources. Those assets under the control
and stewardship of public sector agencies are held and used to meet Government policy objectives through
the provision of goods and services.
Effective asset management is essential in an environment where there are competing demands for
Government resources.
The publication Project Initiation Process issued by Treasury in April 1997 requires agencies to relate the
acquisition of assets to their outputs. It is therefore appropriate that the responsibility for asset
procurement should pass from the Procurement and Property Branch of Treasury to individual agencies.
The publication Best Practice for the Engagement of Consultants is one of a suite of building construction
procurement practices publications which will together comprise a Procurement Practices Manual. They
will set out mandatory requirements and best practices for Government major building construction works,
applying to each project once it has received funding and is approved to proceed. A list of the
publications is at Appendix 4.
The aim of these publications is to provide information that will assist agencies to manage the
Government’s “building construction risk” and to present a consistent view to industry for all Government
building construction projects with a value of $100 000 and above.
The Best Practice for the Engagement of Consultants publication provides guidelines to engage the right
consultant and apply the appropriate brief to achieve the required outcome. Following these guidelines
will be essential to the successful outcome of a project.
This publication also provides a framework to be followed when engaging consultants, and it assists with
the management of consultants after they have been engaged.
Table of Contents
List of Abbreviations
vi
Background 1
1. INTRODUCTION 1
1.1 Value Management Overview 1
1.2 Consultants Required 2
2. ISSUES 4
3. CLIENT—CONSULTANT RELATIONSHIP 6
3.1 Partnering 6
3.2 Fee Level 6
4. QUALITY OF SERVICE 7
4.1 Objective 7
4.2 Issues 7
4.3 Involvement of Specialist Sub-Consultants in Project Brief and Schematic Design Phases 8
4.4 Design and Documentation Stage 9
5. CONSULTANT PRE-QUALIFICATION SCHEME 10
5.1 Clauses for inclusion in Letter of Invitation and the General Conditions of Engagement of
Consultants in relation to performance reporting 10
6. CONSULTANT PROCUREMENT 11
6.1 Selection Process Issues 11
6.2 Quality Based Selection (QBS) 12
6.3 Developing the Commission Brief 12
6.4 Professional Standards Act and Personal Information Protection Act requirements 13
6.5 Invitation to Consultant(s) 13
6.6 Fee Negotiations 16
6.7 Appointing Selected Consultant 17
6.8 Performance Evaluation 17
7. COMMISSION CONTRACT 17
7.1 Standards 17
7.2 Commission Brief 17
7.3 Confirmation of Engagement 17
7.4 Annexure 18
8. YEAR 2000 COMPLIANCE 19
9. CROWN CONTRACTS CONFIDENTIALITY POLICY 19
2
List of Abbreviations
The design brief for a building construction project must reflect the services delivery needs of the
functions to be accommodated in the building.
Detailed planning and evaluation of project solutions will assist agencies in establishing the most
appropriate means of meeting their service delivery requirements.
The greatest potential for identifying and achieving capital and recurrent savings is in the early
planning phases of a project. Significant savings can be realised through careful consideration of
the need for new services and the most appropriate means of service delivery. This may require
the involvement of specialist consultants. However, the investment of fees at the inception of a
project should identify potential cost savings when they are still realisable.
The decision to engage a consultant, to assist in the process of acquiring a new building or
redeveloping existing accommodation, should derive from the agency’s strategic asset
management plan (SAMP). A SAMP is an overview document, and before a build solution is
contemplated it is necessary to ensure that the output needs will be met by the proposal and that
another, less costly, solution is not available. The Project Initiation Process (PIP), published by
Treasury, defines the process to be followed to determine the most appropriate means of service
delivery involving asset procurement.
The PIP incorporates Value Management (VM) and may require a VM consultant to assist in
developing options. A project will proceed to design and construction only after the PIP
determines that a build option should be pursued, a Budget Committee recommendation has been
received, and Cabinet approval provided for Capital Investment Program (CIP) funding.
The continuation of the VM study, throughout the design and documentation phases, is a major
contribution to maximising value for money over the life of the building.
Underlying the VM process is the principle that there is always more than one way to satisfy a
need and that a rigorous and structured examination of the alternatives will produce the most
acceptable solution.
1.2.1 PIP
Depending on the size and complexity of the proposal, the PIP may require a VM consultant, a
financial consultant and building consultants (that is, in the disciplines of architecture,
engineering and quantity surveying).
1.2.2 VM Study
Once the requirement for a build option has been established and funding is approved, a VM
consultant may be required to continue the VM process. This will further identify such issues as
site options and functional organisation. Value for money is optimised by extending the VM
study, to include critical points in the project procurement process.
The development of a functional brief requires a consultant to convert the agency’s output needs
into specific user requirements and details of relationships between spaces.
To determine and assemble the information required in the project brief involves a consultant
with a team of specialist sub-consultants.
A full consultant team, complete with specialist sub-consultants, is required for these phases.
The post occupancy evaluation is usually performed by the project architect, but can be carried
out by an independent architect or a consultant specialising in post occupancy evaluation.
Consultant commission briefs should include a requirement to include operating plans and
maintenance plans. Unless there is capacity available within an agency, a consultant should be
2. ISSUES
The following are the issues that need to be taken into consideration when commissioning
consultants for building construction projects:
• Government must be seen to achieve maximum benefit in its spending of public funds.
• Government must be seen to be fair and equitable in its dealings with the private sector.
• Government must exercise probity in dealing with consultants at all times.
To achieve probity, agencies will need to have procedures and processes that ensure:
• that all services purchased from the consultant industry are value for money;
• that dealings with the consultant industry are fair and equitable;
• that the processes and procedures will bear public scrutiny; and
• that consultants who make submissions for projects but are unsuccessful, are debriefed on
request.
• Government must receive best value from its investments.
This requires a PIP to determine that a build option is the appropriate solution to satisfy the
agency’s needs. This also requires that the agency ensures that the consultant engaged will
provide the most cost efficient solution to satisfy the agency’s needs and ensure that value for
money is achieved during the planned life of the facility.
• An audit trail of the commissioning and consultant briefing processes must be provided.
• The design solution must provide efficient and effective service delivery for agencies.
• Innovative service delivery options must be encouraged.
Innovative service deliveries include:
• solutions developed in conjunction with the private sector;
• using up-to-date technology to achieve desired outcomes;
• “no build” solutions to satisfy service delivery needs; and
• “end use” planning to provide alternative uses for built assets.
• The criteria that are required to satisfy the agency’s service delivery needs must be clearly
defined and documented.
• Depending on the size, nature, complexity and planned longevity of the proposed facility,
project budgets include fees for the following:
• life-cycle costing;
• estimates of maintenance and operation costs;
3. CLIENT—CONSULTANT RELATIONSHIP
The selection of the appropriate consultant is an important issue. Through this appointment, an
agency retains a team of professionals on which will ultimately depend the financial, functional,
design quality and cost/time success of the building project.
Throughout the design and construction phases, the consultant will also provide a service as an
adviser. This relationship continues until completion of the building, and generally beyond, into
fit-out and future extensions.
3.1 Partnering
The relationship between clients and consultants needs to be an open and co-operative approach
to achieve a successful partnership. This process aligns the consultant with the client and, in
addition to the traditional procurement services, requires the consultant to provide advice and
assistance to achieve the client’s ongoing objectives. As agencies are highly reliant on
consultants being able to accept and manage risks on behalf of the agency, the consultant will
need to monitor and manage the agency’s risks throughout the relationship.
The agency’s part in the partnering relationship will include an attitude that the consultant’s
advice and assistance is required for the life of the building and not just for its design and
construction phases.
The process for the selection of a consultant must review the wide range of criteria by which
competing firms need to be evaluated.
Increasing the fee beyond value for money will not increase the quality of the service provided.
The fee level determines the time spent on research, considering opportunity, refining the design
and detailing of documentation. Inadequate effort spent on these factors can reduce real savings,
may cost contract variations during the construction phase and may lead to higher life-cycle cost
in the form of increased maintenance and energy costs.
It is important to ensure not only that the consultant receives an adequate fee to perform the task,
but that all sub-consultants in the commission will also receive fees that are adequate for
effective performance of the tasks in the commission.
The most appropriate means of ensuring value for money is to negotiate fees with a consultant for
a specific service. This requires an understanding of the cost structure of consultants, the
resources involved in a service, and the needs of the project (as set out in the functional brief)
which the agency determines.
4. QUALITY OF SERVICE
4.1 Objective
When engaging a consultant, it is essential to ensure that:
• the technical content of a project is adequately briefed in accordance with the stated client
need;
• the intended design solution produced by the consultant satisfies the brief; and
• the scope of work for a project is adequately defined by the client and has a realistic
budget.
4.2 Issues
Generally, commissions are with an architect (usually the lead consultant), who engages
specialist consultants as sub-consultants.
Project procurement process do not necessarily ensure that adequate thought has been given to
the needs which the project is required to fulfil, or that the quality of the solution offered
encompasses all the opportunities that are available. These issues should be considered in
addition to the procurement process.
Consultants are in competition for a limited pool of work. This leads to a market that is sensitive
to fees. Agencies should concentrate on the level and quality of service which they need and
If sub-consultants have an inadequate brief for the commission, they have little information on
which to base a fee submission. The functional brief, developed through the VM study, therefore
needs to include briefing information on the internal environmental conditions and services
systems to be incorporated into the project. If this information has not been developed at
commissioning, then the inclusion into the commission of sub-consultants should be delayed
until such information is available.
Fees which require consultants to economise on the service lead to the tendency for consultants
to take a preliminary brief at face value and not explore alternative design solutions or assess
long-term consequences. Inadequate consideration of a project at the briefing stage can result in
buildings and building services that may meet the project budget but leave the State and the
procuring agency with an asset that is a long-term liability, due to energy inefficiency, occupant
discomfort, or lack of planning and infrastructure to accommodate predictable change.
Inadequate fees can also tend to reduce input in the design development and documentation
stages, preventing consideration of alternative solutions, systems and equipment.
The life-cycle cost of the project is generally reduced when the fees are excluded from the
selection criteria in the commission brief and fees are negotiated at the end of the selection
process. This approach allows the preferred consultant to have input into the scope of work of
the commission to ensure that the sub-consultants’ scope of works are adequately identified and
the fee negotiated enables the consultants to achieve the client’s outcome.
The project brief should not be commenced until the functional brief is resolved and approved.
The functional brief may require the input of specialist sub-consultants.
If multiple schematic design options are required for an agency to assess, it may be appropriate
for the fees for the project brief and schematic design phases to be time based or a negotiated fee
for each stage of the additional work, in order to ensure that these phases are thoroughly
researched.
In all cases where multiple schematic design options are required, the procuring agency must
ensure that:
Should the procuring agency consider that there is insufficient in-house expertise to assess
schematic design proposals, a second consultant with this expertise should be engaged to provide
that assistance (refer clause 1.2.2, - VM Study).
Fees will be charged for the involvement of specialist sub-consultants in the briefing and early
design phases. However, increased fees resulting from thorough briefing and design phases are
justified by:
• the improvements to the overall project design;
• increased long-term satisfaction in the building performance;
• increased building efficiency;
• significant and ongoing savings in energy and operation costs; and
• achievement of optimum long-term asset value for Government.
Building space and operational efficiency can be increased by detailed consideration of space
requirements and functional considerations. Critical appraisal of these aspects can reduce initial
capital costs as well as reduce the staffing required to operate a facility such as a hospital.
• Changes made to the functional brief, during the design process, are thoroughly assessed for
their impact on the whole project and are documented in detail for future reference. This is
essential in case of future litigation and the need to allocate legal liability. Changes to the
required consulting services will also change the value of the fees.
• Tender documentation is thoroughly assessed prior to calling tenders, to avoid the need for
issuing addenda, to avoid qualifications being submitted with tenders and to avoid delays at
the tender assessment stage. An agency cannot promptly award a contract when a significant
doubt or confusion exists. This can cause considerable delays.
Should the procuring agency consider that there is insufficient in-house expertise to carry out the
independent review of any of the above tasks, then a consultant with this expertise should be
engaged to provide the overview.
The Procurement and Property Branch (PPB) of Treasury maintains the Consultant
Pre-qualification Scheme which provides a record of the consultants qualified to perform
Government work. This Scheme serves to maintain a comprehensive record of all consultants
available, their expertise, experience, capacity to perform and a history of their performance on
Government projects.
It is crucial to the viability of the Consultant Pre-qualification Scheme to maintain the currency
of the information in the system and one of the best ways to do this is by using the Consultant
Performance Report (CPR). If the reports are to be useful as evidence in the future, and not just a
project officer’s opinion, they must be discussed with the consultant, especially when the report
is to be negative.
For further information on the CPR, refer to the Purchasing Web site.
5.1 Clauses for inclusion in Letter of Invitation and the General Conditions of Engagement
of Consultants in relation to performance reporting
Tenders should be advised that during the course of a contract, the consultant’s performance will
be monitored. Notification may be provided in the original Notice to Tenders in the following
form:
“It should be clearly understood that during the course of the consultancy the consultant’s performance will be
monitored and evaluated and that all information gathered as part of that process may be used by all areas of the
Tasmanian Government for the purpose of evaluating future submissions or offers by the consultant to perform
works.”
It is also advisable to ensure that the following clause is contained in all contracts:
“The consultant agrees:
• that the performance of the work will be monitored and evaluated by the Principal (or his authorised officer);
• to provide such assistance as is required by the Principal (or his authorised officer) in relation to the above-
mentioned monitoring and evaluation;
• that all information provided to the Principal (or his authorised officer) for the purposes of the above-mentioned
monitoring or evaluation will not be regarded as confidential; and
• that all information gathered by the Principal (or his authorised officer) for the purposes of the above-mentioned
monitoring and evaluation may be used by all areas of the Tasmanian Government for the purposes of
evaluating future tenders or offers by the consultant to perform other works.”
6. CONSULTANT PROCUREMENT
6.1 Selection Process Issues
Successful consulting services depend on sufficient time being spent by professionally qualified
staff. This makes it essential that the method of selecting consultants will not drive fees down to
a point where consultants cannot afford to assign properly qualified staff for sufficient periods of
time to carry out the assigned task. This would lead to a reduction in the scope and quality of the
service provided and the assigning of lower paid (and usually less qualified) personnel to the
project.
The consultant is entrusted with the design and implementation of an asset costing a large sum of
money, with even greater recurring costs over the life of the asset. In comparison, the
consultant’s fee for providing the service is relatively minor.
Even though the fee is minor compared to the total project life-cycle cost, it is still part of the
process of obtaining value for money and the fee needs to relate to the effort expended by the
consultant in providing the service required.
The following are five essential factors to ensure probity of the selection process:
• value for money;
• transparency of the process;
• dealing with conflicts of interest;
• accountability; and
• monitoring and evaluating performance.
QBS redefines the relationship between client and consultant by creating a partnering
arrangement that places the consultant alongside the client. In that role the consultant functions
as an extension of the client, managing the procurement process and the risks on behalf of the
client.
The commission brief will include a detailed scope of work, explaining to the consultant the
outcome that is expected from the service. Included in the scope of works will be reference to
such issues as:
• preparation for and attendance at the Parliamentary Standing Commission on Public Works
Hearing;
• preparation of estimates;
For multiple submissions, it is critical that the selection criteria and their weighting are included
in the commission brief. This indicates to the consultants what emphasis the agency places on
the consultant’s capabilities, allowing submissions to be more focused. It provides the basis for
selecting a consultant and ensures that an auditable process is set in place. Refer also Section 7.2
- Commission Brief.
6.4 Professional Standards Act and Personal Information Protection Act requirements
In certain circumstances it may be necessary, in addition to clauses relating to pre-qualification
performance reporting (refer to 5.1 above) to include clauses relating to the Professional
Standards Act 2005 and the Personal Information Protection Act 2004. Reference should be had
to the web site at www.purchasing.tas.gov.au/Buying for Government/Purchasing Policies for
further information.
The terms of reference for selecting consultants should be based on the project consultant
commission brief, which will include type, size and complexity of the service required and the
timetable that must be achieved.
There are two options available for requesting proposals from consultants.
• Single Submission; and
• Multiple Submissions.
This approach has been accepted by the consulting industry for projects up to $1 million. This
approach should not be used for projects with a capital value over $1 million.
Before selecting a consultant, agencies should prepare a list of selection criteria framed to ensure
a successful project. This list will be the same as the list of weighted criteria described in clause
6.4.2 Multiple Submissions. In addition, agencies should identify an estimated fee for the
proposed consultancy. If in-house expertise is not available, an independent expert should be
engaged. PPB is also available to provide advice.
In order to satisfy probity issues, the selection should follow a formal process. The decision to
request a single submission and the procedures applied should be scrutinised by a senior officer
within the agency who is not directly associated with the project.
The cost to Government for multiple submissions is also high. Three senior officers are required
to form the assessment panel, requiring each to gain an understanding of the project criteria,
spend time in preparing for and attending the consultant interviews, preparing reports on the
interviews and making a report recommending a consultant.
However, where the commission is of significant value, that is, a fee value in excess of $100 000,
the advantages of multiple submissions outweigh the increased cost of the process to both
Government and the consulting industry.
To contain costs to the consulting industry, multiple submissions should normally be sought from
three consultants only. Occasionally, where circumstances demand it, up to five consultants may
be invited to submit proposals.
The following are typical criteria applied in selecting the short list of three consultants, from the
PPB Consultant Pre-qualification Scheme:
In establishing the basis for assessing proposals and selecting the preferred consultant, it is
important that selection criteria be included in the commission brief. This requires both client
and consultant to focus on the qualities required of the consultant to enable the consultant to
provide the required service. This process converts a subjective assessment into a quantitative
comparison, which is more easily formalised. It ensures that the selection process is auditable
and probity aspects are met. The basis of evaluation must be clearly defined and consistently
applied.
The basis of evaluating submissions from consultants should be determined before consultants
are selected to submit a proposal.
The following guidelines should be applied to determine the selection criteria and their
weighting:
• criteria are derived from the project terms of reference;
• criteria must be relevant;
• criteria must be defined clearly to allow them to be applied consistently;
• criteria must be identified before applying the weighting;
• weighting scales to be applied must be defined; and
• the method of scoring must be defined.
The selection criteria and the method of scoring should be stated in the commission brief.
Weighting is not normally included in the commission brief when expressions of interest are
being sought against general criteria and/or the consultants are of unknown capability. In this
case the weighting is applied by the selection panel.
When the general capabilities of the consultants making the submissions are known and the client
wishes the consultants to address specific criteria, then the weighting should be included in the
commission brief.
The consultant then establishes the steps involved to provide the service and the options
available. This is usually done in consultation with the procuring agency.
The outcome of this part of the process is to fine tune the scope of work and to reach agreement
on the implementation methodology that will ensure that the agency’s needs are met.
The aim of the fee discussions is to ensure that value for money is achieved, not to reduce fees
below what is necessary for the consultant to provide the required service.
Once fees are agreed, the commission brief may need to be amended to reflect the agreed scope
of works.
The situation may arise that the procuring agency cannot reach agreement with the first-ranked
consultant on the level of fee. If this occurs, discussions with the first-ranked consultant are
closed and the consultant is notified formally. Discussions are then opened with the second
ranked consultant and the process described in Clause 6.5 is repeated.
Agencies should identify relevant performance indicators for use during the performance
evaluation phase and ensure that they are applied.
7. COMMISSION CONTRACT
7.1 Standards
The contract applied to a consultant commission is the General Conditions for Engagement of
Consultants Australian Standard AS 4122—2000. This contract, which includes the Annexure,
details all contractual requirements between the Crown and the consultant.
The Australian Standard AS 4121—1994 ‘Code of ethics and procedures for the selection of
consultants’ must be adhered to when selecting and commissioning consultants.
Product: includes, but is not restricted to, any software, hardware, micro code or system under or
in connection with this contract.
Valid Date: means the date of an actual day which is represented with four digit year, two digit
month within year, and two digit day within month or any other equivalent representation.
Calculations: includes without limitation, the calculation, comparison, sequencing and any
combination required, which accommodates same century and multi-century formulas and date
values and date data interface values including leap year calculations and date data century
recognition.
Related Product: means an item of hardware, software or firmware with which the Product
shares information relating to Calculations or with which the Product needs to complete a
function involving the recording of an interval of time.
Compatibility: means all related products’ ability to interface and continue to operate, to accept
and produce a two digit year with an implied prefix of 19.
The (Licensor, Supplier, Contractor, Vendor) commits (or warrants/guarantees) that the date (and
century) and clock fields within the Product:
i. generate and otherwise perform Calculations using Valid Dates, for all intervals of time
including those that refer to the calendar year 2000 and beyond; and
ii. is compatible with Related Products that will reference years until the end of 1999 by two
digits or four digits; OR
will by (date being a date before the end of calendar year 1998)
i. generate and otherwise perform Calculations using Valid Dates, for all intervals of time
including those that refer to the calendar year 2000 and beyond; and
ii. be compatible with Related Products that will reference years until the end of 1999 by two
digits or four digits.
This functionality will be provided by the date referred to at no additional cost to the Licensee.
When consultants’ fees are a percentage of the estimated capital cost, consultants will tend to
promote inflated project budgets and provide designs accordingly. What is required is a fee
structure that promotes overall cost reduction and value optimisation in meeting an agency’s
asset needs.
A QBS process (refer Section 6.2, Quality Based Selection) is a substantial improvement to the
traditional adversarial approach of limiting the consultant fees by a fixed or percentage fee
approach. However, it is only a step towards securing the consultant’s effort to develop the best
value for money solution to cover the client’s output needs. An incentive arrangement in the fee
structure is required to encourage the consultant to provide this higher level of service.
Agencies may offer a financial incentive to consultants in the form of, for example, a bonus
based on innovative design or for achieving cost savings over the life of the building, including
capital, maintenance and operating costs, while still satisfying the client’s output needs.
10.4 Conclusion
Commission fees need to relate to the quality of intellectual effort and time required by the
consultant to fulfil the required task. However, the key to assessing the acceptability of a fee is
the value for money it represents to Government. Rather than reducing their fees, consultants
should be encouraged to reduce the capital and recurrent costs of a project while still retaining
the agency’s output needs.
11. CONCLUSION
The process of commissioning consultants is an integral part of asset procurement and therefore
integral to Strategic Asset Management. As such it is an element in Tasmania’s Financial
Management Reform Strategy.
The Best Practice for the Engagement of Consultants document is a guide to agencies when
engaging consultants to assist in the procurement of their facilities.
For further information, please contact the Procurement and Property Branch, Department of
Treasury and Finance.
The following publications will constitute the complete Procurement Practices Manual.
Published Booklets
Tasmanian Annexure to the National Code of Practice for the Construction Industry