• Qualifying for work with BMW

    Builders Prequalification Scheme

    Builders bidding for a tender likely to be $500,000 or more may need to be prequalified under the Builders Prequalification Scheme (the Scheme).

    The Scheme minimises the risk of Department of Finance, Building Management and Works (BMW) entering into contracts with building contractors with insufficient financial and technical capability and capacity.

    BMW’s objectives for the Scheme are to:

    • remain an informed and responsible client of the building and construction industry
    • achieve consistency, fairness and transparency of its tendering and selection processes
    • reduce the cost of tendering and tender assessment for both industry and Government
    • encourage high standards and continuous improvement that will contribute to a sustainable building and construction industry in Western Australia.

    The Scheme is typically used for BMW contracts valued at greater than $500,000 that in BMW’s judgement require a registered builder and primarily relate to the construction, alteration or addition of a building.

    While the Scheme is intended primarily for construct-only contracts, BMW will decide how to use the Scheme for other forms of procurement and other types of construction work.

    As part of a new initiative, the period of prequalification under the Scheme has been increased to three years, subject to a satisfactory business risk assessment each year.

    Forms and publications

    Builders Prequalification Scheme (Version 4.3 July 2018 - PDF)

    Builders Prequalification Scheme application form (Word doc)

    Project Complexity Classification Guide (PDF)

    Aboriginal and Regional Building Contractors Project Specific Upgrade Program application form (Word doc)

    For further information on the Builders Prequalification Scheme, please contact:
    email: builders.prequalification@finance.wa.gov.au
    phone: (08) 6551 2201

    Business Risk Assessments

    If a contractor wishes to apply to be prequalified, to maintain its prequalification, or bid for a tender to work with BMW, they may be subject to a Business Risk Assessment. This Assessment is a tool used by BMW to assess the financial viability and capacity of contractors to fulfil the requirements of contracts.

    BMW will consider the outcomes of the Business Risk Assessment when making a contract award or prequalification decision.

    Business Risk Assessment Calculator

    The below online calculator will assist contracting entities with their preliminary business risk assessment (in their own right) against the pre-determined financial criteria of BMW.

    It is only a guide and does not represent the results of a formal assessment by BMW.

    The use of the online calculator is subject to the acceptance of the disclaimer statement in the calculator.

    Forms and publications

    Business Risk Assessment Calculator (MS Excel)

    Business Risk Assessment document Version 1.1 June 2017 (PDF doc)

    For further information on business risk assessments, please contact:
    email: BMWBusinessRisk@finance.wa.gov.au

    Supplier Performance Management Framework

    BMW wants to work with contractors and consultants who have a demonstrated track record in delivering superior project outcomes. BMW is committed to establishing and maintaining performance management schemes for its procurement panels and frameworks that enable both exemplary and unsatisfactory performance to be recorded, communicated and acted upon.

    BMW uses a range of mechanisms as part of its Supplier Performance Management Framework.  

    Supplier Demerit Scheme

    We know that most suppliers do the right thing, however where a supplier has performed so poorly that the standard contractual remedies are insufficient, BMW will manage this through the Supplier Demerit Scheme.

    Forms and publications

    Supplier Demerit Scheme guideline

    Bulletin - Supplier Demerit Scheme

    Further information

    Contact us at BMWindustryliaison@finance.wa.gov.au or on (08) 6551 1888.


    The Supplier Demerit Scheme replaces the Contractor Sanctions Scheme (CSS) which was in effect from 1 October 2015 to 29 September 2017.

    Further information on the CSS is available here: Contractor Sanctions Scheme Bulletin.

    Suppliers and Insolvency

    If a supplier has previously experienced financial difficulty or insolvency, and is applying to be considered for a commercial opportunity through BMW, BMW will seek to manage any associated risks.

    Unless otherwise approved by BMW, suppliers which have experienced (or where a supplier’s director or key personnel have experienced) an insolvency or bankruptcy event as described below, are not eligible to tender for work with BMW for three years after the event. This applies to:

    • contractors applying for prequalification
    • consultants applying for panel membership
    • suppliers submitting a tender or an expression of interest.

    Bankruptcy event includes where the supplier, director or key person:

    • is the subject of a bankruptcy petition
    • is made bankrupt
    • has had a deed of assignment or deed of arrangement made, accepted a composition, been required to present a debtor’s petition or had a sequestration order made under Part X of the Bankruptcy Act 1996 (Cth).

    Insolvency event includes where:

    • a supplier has stated that it is unable to pay its debts when they fall due
    • a supplier has had an execution levied against it by a creditor
    • notice is given of a meeting of creditors with a view to the supplier entering a deed of company arrangement
    • the supplier enters a deed of company arrangement with creditors
    • an external controller or an external administrator is appointed
    • an application is made to a court for the supplier’s winding up
    • a winding up order is made for the supplier
    • the supplier resolves by special resolution that it be wound up voluntarily (other than a member’s voluntary winding up)
    • a mortgagee of any of the supplier’s property takes possession of that property.

    Liquidated Damages

    When a contractor enters into an Australian Standard (AS) 2124-1992 or minor works contract with BMW, it is likely that liquidated damages will be included in the contract. This is good contract management, particularly for an agency responsible for managing public money and delivering assets to the community.

    What are liquidated damages?

    • If a construction project is delivered late (beyond the agreed date for practical completion), the contractor is seen to have breached the construction contract and the owner (or Principal) may seek compensation for any consequential financial losses.
    • To manage this risk, a predetermined figure is set out in the contract to be applied should the building be delivered late. These amounts are known as liquidated damages.
    • BMW, along with the consultant team including the cost planner, calculates the liquidated damages amounts that are included in the contract.
    • BMW may recover liquidated damages from contractors following a delay.

    How BMW calculates liquidated damages.

    • The liquidated damages amount is a genuine pre-estimate of the loss if the project is delivered late. The amount is proportionate to this actual loss; it is not applied as a penalty.
    • Liquidated damages are typically calculated by time (such as per day or week) rather than as a lump sum.
    • Normally liquidated damages include, but are not necessarily limited to:
    • - cost to the client of temporary accommodation and other services
      - cost of additional consultant and BMW administration fees required during the delay
      - an opportunity cost of the Government not yet being able to benefit from the project
    • If a contract includes separable portions, each of these will have its own liquidated damages amount specified.