Module 4 lecture 1

Tendering and its Process
MODULE 4 CONTRACT MANAGEMENT -TENDER AND ITS PROCESS

Table of contents
- Tender ?
- Tender vs Contract
- Purpose of tender
- Invitation of tender/tender notice
- Types of tender
- Tendering Process
- Prequalification
- Administrative approval
- Technical sanctions
- Feature or element of Tender documents
-Award of Contract
-Letter of intent
-Letter of acceptance
-Notice to proceed

Tender
• an offer to contractor to do the work for a certain amount
of money.
• incorporate time and other conditions.
• to carry out the contract requirements.
• main reason is to complete a project.
• based on bill of quantities (BOQ) & specifications.
• Incorporates the sum of money, time and other conditions
required to carry out the contract obligations in order to
complete a project or a part of it consisting of specified
works.

Tender vs Contract
TENDER
The term tender formally
means an invitation to
trade/build/supply under
the terms of offer.
CONTRACT
A contract is the term
used when two parties
have reached
agreement.

Purpose of tender
• To select a suitable contractor at a time
appropriate to the situation of the project.
• To obtain an acceptable tender or offer upon
which a contract can be let.
• To ensure the completion of project at scheduled
time.
• To protect the interest of all stakeholders.

Invitation of tender/tender notice
It is a brief description of the job being tendered
Published in Newspapers and on the Internet.
Internet is a very cost effective way of publishing the
tenders.
Tender wizard, e-Procurement of different states,
Central Public Procurement Portal (CPPP) of
Government of India, E-Tender Portal (AAI), ISRO e-
procurement, BSNL Tenders, e-Procurement System for
Organisations under MoD.

Invitation of tender/tender notice Contd...
1. Name of the Project.
2. Name & Address of the
organization offering the
tender.
3. Name of work, materials or
services.
4. Place of work location.
5. Approximate estimated cost of
work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender
Document sale commences.
9. Date and time up to which
tender documents can be
obtained.
10. The cost of tender documents.
11. Due date of submission
12. Eligibility Criteria

Invitation of tender/tender notice Contd...

Types of tender
• Open tender
 open to all qualified bidders
 published in the newspaper and internet
 chosen on the basis of price and quality.
 most effective way of obtaining many competitive rates.
• Close tender / Selective tender
 open to bidders in the category stated in the notice only
 contractor of known reputations.
 contractor who submit the lowest tender.
 chosen for their expertise and experiences.
• Negotiated tender
 only one contractor is approached.
 architect and other members of the design team.
 As per the wish of client the contractor or firm will be selected.

Tendering Process
Stage 2:
APPROVAL TO
TENDER
Stage 1:
PREPARATION
Stage 3:
DOCUMENTATION
Stage 4:
INVITATION
Stage 5:
PROCESSING
Stage 6:
AWARD
CONTRACT

Tendering Process Contd...
Preparation:
• Final completion of drawings, specification, measurement /
take-off process.
• Choose conditions of contract.
• Parties involved: architect, engineers, QS, client, project
manager.
Approval of tender:
• Discussion and decision on type of tender to be used.
• Selection of tender type: open, selective & negotiate
• Parties involved: Client, Consultant, Project Manager

Documentation:
Compilation of:
 Letter of invitation to tenderers
 Articles of agreement / conditions of contract
 Form of tender
 Form of tenderer’s details. i.e: contractor’s registration, organization background,
track record (past and present projects)
 Letter of acceptance
 Bank and insurance guarantee forms (performance bond)
 Bank and insurance guarantee forms (advance payments)
 Specifications
 Summary of tender
 Schedule of rates
 Relevant drawings

Invitation:
Based on selection of tendering methods
• Open / competitive / bid tender – produce tender notice.
• Selective – shot listed contractors will be invited to
tender if they wish.
• Negotiated – only one contractor is approached- direct
entry to project.

Prequalification
• Screening of potential contractors, suppliers, or vendors to
develop a list of qualified bidders who will receive the
invitation-to-bid (ITB)/ tender documents.
• Parameters: Financial position, Previous experience,
Technical expertise, Management ability, Equipments,
Management ability, Workmanship and ability, Litigation
history etc,.
• Document proof need to submit along with bid document.
• Two phase bidding system: Technical and Financial bidding.

Administrative approval
• Budgetary approval from Government.
• Formal acceptance by the department.
• An approximate estimate and preliminary plans are necessary to
explain the proposals.
• After receiving the administrative approval, detailed drawings,
design and the estimated cost etc. are prepared by the engineering
department and submitted to the administrative department for
sanction.
• Department secretary provides the administrative approval after
the consent of minister incharge.

Technical Sanction
• After receipt of administrative approval and expenditure
sanction, a detailed estimate is further sanctioned by a
competent technical authority of the engineering department.
• Ensures that the proposals are structurally sound and the
estimate is accurately calculated.
• Technical Sanction should be taken before inviting tenders to
execute the work.
• Chief Engineer to Assistant Executive Engineer provide the
Technical Sanction based on the amount of work.

Features or element of Tender documents
1. Tender Drawings
2. The specification
General requirements
Specification of workmanship and materials
3. Bill of Quantities
4. Conditions of Contract
5. Form of Tender
6. Form of Agreement
7. Form of bond

Tender Drawings:
• Tender drawings describe the project detail.
• Help the contractor to arrive realistic price.
• Ensure no significant changes in the project cost.
The specification
• General Specification
 Includes relevant details of the site and information on items which do not form
part of the permanent works: Accommodation (offices, toilets), stores, workshops,
fencing, watchman, protection, temporary roads and lighting, insurance,
scaffolding, administration and office equipment, cost of staffs
Contd...

Specification of workmanship and materials
• It deals with the detailed requirements of project. The type, the quality
and method of fixing (or fabrication) and testing of every item for
incorporation in permanent works is described.
• Typical contents of ‘specification of workmanship and materials’ are:
Demolitions excavations and earthwork, drainage and sewerage, piling
and ground anchors, mass reinforced concrete, brickwork, masonry,
waterproofing, metalwork, structural steelwork, type of cement to be
used, type of aggregate, type of water, type of mixer required, trial
mixes required, test results required, method of mixing, tests on mixing,
methods of transporting and placing, tests on concrete produced,
methods of curing, stripping times for formwork, etc,.
Contd...

Bill of quantities (BOQ)
• It lists every work activity or component part necessary for the
execution of the (permanent) works.
• These quantities are generally prepared by the Engineer’s staff
/quantity surveyors.
• Essential to cost control.
• Arranged to same sections as specifications and prepared from
tender drawings.
Contd...

Bill of quantities (BOQ)
Contd...
Item No. Particulars Quantity Unit Rate Amount
1 Earthwork in excavation 10,55,273 cft 7 73,86,911
2 PCC 1:4:8 for Footings 38,768 cft 85 32,95,280
3 Shuttering for Footing 23,423 sft 26 6,08,998
4 Footing concrete 1:2:3 85,168 cft 100 85,16,800
5 Pedestal 5,094 cft 100 5,09,400
6 Plinth beam shuttering 18,184 sft 26 4,72,784
7 Plinth beam concrete 5,338 cft 100 5,33,800
8 Refilling of Earth 18,76,700 cft 2 37,53,400
9 PCC 1:4:8 for Basement 38,768 cft 35 13,56,880

Conditions of Contract
Contd...
• Defines the responsibilities and liabilities of the parties to
the contract.
• Describe the method of administration (by Engineer)
• Define the terms under which the work is to be carried out,
the relationship between the Employer and the Contractor,
the powers of the Engineer and the terms of payment.

Form of Tender
Contd...
• Standard letter of offer by the Contractor to execute the
works.
• Prepared by the Engineer and signed by the contractor.
• Contains the main points of the offer: Starting date,
Duration, Project cost.

Form of Agreement
Contd...
• Standard form of agreement is the legal contract between
the promoter and the contractor.
• Evidences the agreement of the Employer to pay the price
indicated in the contractor’s tender and the contractor’s
agreement to undertake the works in accordance with the
tender documents.
• Names of parties, list of contract documents, and signatures
of parties.

Form of Bond
Contd...
• It is signed by both the contractor and client evidencing their agreement
to pay a sum of money to the Employer in the event of the contractor’s
default.
• Terms and conditions if the either party fail to perform the duties
• Guarantee in two ways.
• The amount of bond is 10% of the contract sum.

Award of Contract
• Notice to a bidder of the acceptance of the submitted bid.
• Written confirmation of an award of a contract by client to a
successful bidder.
• Stating the amount of the award, the award date, and when
the contract will be signed.

Letter of intent (LOI)
• Interim agreement that summarizes the main points of a
proposed deal.
• Does not constitute a definitive contract but signifies a
genuine interest in reaching the final agreement subject to
due diligence, additional information, or fulfilment of
certain conditions.
• The language used in writing a letter of intent is of vital
importance.
• Memorandum of understanding' or pre-contract.

Letter of acceptance
• Written communication by a successful bidder to client.
• Formal acceptance of the bided project.
• Confirms the details of the client's offer including the
project cost, perquisites, conditions and project duration.

Notice to proceed (NTP)
• Letter from the client/ owner) to a contractor stating the
date that the contractor can begin work subject to the
conditions of the contract.
• The performance time of the contract starts from the NTP
date.

Reference
• https://www.procurement.act.gov.au/prequalification/preq
ualification_q_and_as.
• https://www.academia.edu/5114663/LECT_2_-
_TENDER_and_CONTRACT?auto=download.
• http://www.ques10.com/p/5658/explain-detailed-
specifications-administrative-a-1/.
• http://staff.fit.ac.cy/eng.ls/Skevi/ACEC438/ACEC438%2
0Tender%20documents%20presentation.pdf.

Module 4 lecture 1

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