1. Tendering Methods
1.1. Open Tendering allows anyone to submit a tender to supply the goods or services that are required.
1.1.1. Advantages
1.1.1.1. Lower tender price
1.1.1.2. No favourism & equal opportunities
1.1.1.3. Introduction to new firms
1.1.1.4. Accountability
1.1.1.5. Maximum competition
1.1.1.6. New comers to the industry
1.1.2. Disadvanages
1.1.2.1. Incompetent contractor
1.1.2.2. Incapable firms may submit tenders
1.1.2.3. Time
1.1.2.4. Overall cost to construction industry
1.1.2.5. Cost of tendering is high due to number of tenderers increases (higher cost of administration due to duplicating documents)
1.1.2.6. Financial security
1.1.2.7. Accountability
1.1.2.8. No assurance about quality
1.2. Selective Tendering
1.2.1. Advantages
1.2.1.1. Time
1.2.1.2. Overall cost to construction industry
1.2.1.3. Can obtain competitive bids
1.2.1.4. Technically qualified contractors
1.2.1.5. Reduced tendering cost (less administration and evaluation is easier)
1.2.1.6. Reliability of the tender returns is higher
1.2.2. Disadvantages
1.2.2.1. New comers to the industry
1.2.2.2. Possibility to obtain the lowest tender price is lesser
1.2.2.3. Less accountability
1.2.2.4. Exclude smaller contractors or those trying to establish themselves in a new market
1.2.2.5. Collusions during tenders may possible
1.2.2.6. Price
1.2.3. Stages
1.2.3.1. First Stage - Commercial
1.2.3.1.1. Ad-hoc schedule of rates
1.2.3.1.2. A detailed preliminary bill
1.2.3.1.3. Programme and construction method
1.2.3.1.4. Labour rates, main materials prices, plant rates
1.2.3.1.5. % of OH&P
1.2.3.1.6. Proposed subcontracting with Profit and attendance
1.2.3.2. Second Stage - Technical
1.2.3.2.1. First stage aims to select a suitable contractor by means of limited competition.
1.2.3.2.2. Second stage is a process of negotiation with the selected contractor on the basis of the first-stage tender
1.3. Negotiated Tendering - occurs when the client approaches asingle supplier based on their track-record or a previous relationship and the terms of the contract are then negotiated
1.3.1. Advantages
1.3.1.1. Achieve better quality with minimal cost
1.3.1.2. Fewer set of documents
1.3.1.3. Contractor’s performance is known
1.3.1.4. Smooth administration
1.3.1.5. Performance Bond may not be required
1.3.1.6. Tender evaluation is speedier
1.3.2. Disadvantages
1.3.2.1. Accountability may be lesser
1.3.2.2. Less formality may lead to administrative issues
1.3.2.3. No opportunities for new comers
1.4. Serial Tendering - hybrid method tendering whichcombines a normal competitive tender (whether single or two-stage) with negotiation
1.4.1. Advantages
1.4.1.1. Achieve better quality with minimal cost
1.4.1.2. Fewer set of documents
1.4.1.3. Contractor’s performance is known
1.4.1.4. Smooth administration
1.4.1.5. Performance Bond may not be required
1.4.1.6. Tender evaluation is speedier
1.4.2. Disadvantages
1.4.2.1. Accountability may be lesser
1.4.2.2. Less formality may lead to administrative issues
1.4.2.3. No opportunities for new comers
2. Stages of Tender Process
2.1. Pre qualification of bidders
2.1.1. Project wise/annually
2.1.2. Pre qualification questionnaire
2.1.3. Pre qualification rating and short listing
2.1.4. Criteria
2.1.4.1. Financial capacity
2.1.4.2. similar experience
2.1.4.3. resources
2.1.4.4. previous projects
2.1.4.5. business relationships
2.1.4.6. culture
2.2. Short listing of bidders
2.3. Invitation to Tender
2.3.1. Invitation Tender– content
2.3.2. Instructions to Tenderers content
2.3.2.1. General
2.3.2.2. Bidding Documents
2.3.2.3. Preparation of bids
2.3.2.4. Submission of Bids
2.3.2.5. Bid Opening & evaluation
2.3.3. Tender document content
2.4. Site visits
2.4.1. All bidders are invited
2.4.2. Facilities , utilities
2.4.3. Access roads
2.4.4. Local labor
2.4.5. Obstructions
2.4.6. Storing facilities
2.4.7. Services and infrastructure
2.4.8. Site visit confirmations
2.4.9. Other risks
2.5. Issuance of Tenders
2.6. Tender queries
2.7. Tender addendums
2.7.1. Will be logged
2.7.2. Method of query to be defined
2.7.3. Answers will be distributed to all
2.7.4. Timely answers are important
2.7.5. Tender notices are to be distributed to all
2.7.6. Tender addendums to be distributed to all
2.7.7. Tender addendums will be part of tender submissions
2.8. Tender notices
2.9. Tender submissions
2.9.1. Tender Box
2.9.2. Sealed envelops
2.9.3. Formal acceptance
2.9.4. Regret letters
2.9.5. Safe custody
2.9.6. Two envelop submissions
2.9.6.1. technical
2.9.6.2. commercial
2.9.6.3. ensure prices do not influence technical evaluation
2.10. Tender opening
2.10.1. Tender policy, quorum, votes
2.10.2. Signing off
2.10.3. Communication restricted
2.10.4. Tender opening form
2.10.5. Decision to award or tender analysis
2.11. Tender analysis & reports
2.11.1. Technical analysis
2.11.2. Criteria for technical analysis
2.11.3. Commercial (Financial) analysis (like to like)
2.11.4. Tender Checklist
2.11.4.1. Trade License
2.11.4.2. Form of Tender
2.11.4.3. Power of attorney
2.11.4.4. Tender bond – value and validity
2.11.4.5. Return all tender documents
2.11.4.6. Acknowledge tender addendums
2.11.4.7. Covering letter
2.11.4.8. Alternative offers
2.11.5. Tender analysis report – test responsiveness , tender requirements – bonds
2.11.5.1. Price comparison
2.11.5.2. Amount in words shall govern in a miss matching
2.11.5.3. Corrections for arithmetical errors
2.11.5.4. Corrected price comparison
2.11.5.5. Un priced items – Nothing / Nil / Included
2.11.5.6. Tender qualifications
2.11.5.7. Rates analysis
2.11.6. Tender report
2.11.6.1. Executive summary
2.11.6.2. Overview of tender evaluation process
2.11.6.2.1. evaluation criteria
2.11.6.2.2. methodology used
2.11.6.3. Tender evaluation forms – tender analysis
2.11.6.4. Reasons for eliminations
2.11.6.5. Recommendations for award of tender
2.11.6.6. Best practice
2.12. Post Tender Clarrifications
2.13. Tender documentation
2.13.1. Volume 01
2.13.1.1. Instruction to Tenderers
2.13.1.2. Form of Tender
2.13.1.3. Appendix to Form of Tender
2.13.1.4. Form of Agreement
2.13.1.5. COC part 01 & 02
2.13.1.6. Specimen forms
2.13.2. Volume 02 – General & Particular Specifications
2.13.3. Volume 03 – Pricing Preambles & BOQ
2.13.4. Volume 04 – Drawings
2.13.5. Volume 05 – Any other
2.14. Contract award
3. Tender Documentation - prepared to seek tenders (offers)
3.1. prepared for a range of contracts
3.1.1. equipment supply
3.1.2. the main construction contract
3.1.3. demolition
3.1.4. enabling works
3.2. content
3.2.1. A letter of invitation to tender.
3.2.1.1. issued for a range of contracts
3.2.1.1.1. Equipment supply.
3.2.1.1.2. Design by contractors.
3.2.1.1.3. Trade contractors.
3.2.1.1.4. Works contractors.
3.2.1.1.5. Main construction contractors.
3.2.1.1.6. Demolition
3.2.1.2. includes
3.2.1.2.1. Letter of invitation to tender.
3.2.1.2.2. Form of tender.
3.2.1.2.3. Preliminaries (including pre-construction information).
3.2.1.2.4. Form of contract, contract conditions and amendments.
3.2.1.2.5. Tender pricing document
3.2.1.2.6. Drawing schedule.
3.2.1.2.7. Design drawings.
3.2.1.2.8. Prescriptive or performance specifications
3.2.1.2.9. Instructions to tenderers explaining the tender process.
3.2.1.2.10. The timescale for the tender process (including the address & time for return of tenders).
3.2.1.2.11. An explanation of how queries will be dealt with.
3.2.1.2.12. The evaluation process and any evaluation criteria.
3.2.1.2.13. The submission required in response to the invitation to tender.
3.2.1.2.14. Policy in relation to alternative or non-compliant bids.
3.2.1.2.15. Policy for providing feedback to unsuccessful tenderers.
3.2.2. The form of tender.
3.2.2.1. prepared by the client or their consultantsandcompleted and signed by the tenderer
3.2.2.2. formal acknowledgment that the tenderer understands and accepts the terms of conditions of the tender documents and any other requirements that are stipulated
3.2.2.3. includes
3.2.2.3.1. Latest return time and date.
3.2.2.3.2. Date, name and address.
3.2.2.3.3. Tender reference number
3.2.2.3.4. The price for which they are to do the works and any adjustments prices that have been agreed should the scope of the work or period of time change
3.2.2.3.5. The date until which the price remains valid.
3.2.2.3.6. The period of time that is allocated for the works, or an actual completion date
3.2.2.3.7. Confirmation of the country’s law that will govern the contract.
3.2.2.3.8. Acceptance of terms and conditions.
3.2.2.3.9. References to other documents containing information.
3.2.2.3.10. Any qualifications that apply.
3.2.2.3.11. Who will bear the costs of preparing the tender.
3.2.2.3.12. Any alternative proposals (or a reference to documents providing this information).
3.2.2.3.13. Confirmation of the tender being genuine and bona fide.
3.2.2.3.14. Signature and tenderer details.
3.2.3. Conditions of contract
3.2.3.1. different contract routes
3.2.3.1.1. Construction management
3.2.3.1.2. Design and build
3.2.3.1.3. Design build finance and operate (PPP / PFI / DBO / BOOT)
3.2.3.1.4. Engineering Procurement and Construction Contract (EPC) / Turnkey contract
3.2.3.1.5. Engineering Procurement and Construction Management contract (EPCM)
3.2.3.1.6. Management contract
3.2.3.1.7. Measured term contracts
3.2.3.2. Typical conditions
3.2.3.2.1. Access to the construction site
3.2.3.2.2. Assignment, rights of third parties
3.2.3.2.3. Commissioning
3.2.3.2.4. Contractor's design
3.2.3.2.5. Insolvency.
3.2.3.2.6. Contract sum and adjustment
3.2.3.2.7. Injury, damage and insurance.
3.2.3.2.8. Liquidated damages.
3.2.3.2.9. Net contribution clause.
3.2.3.2.10. Partial possession.
3.2.3.2.11. Sectional completion.
3.2.3.2.12. Quality of works
3.2.3.2.13. Statutory obligations.
3.2.3.2.14. Sub-contractors.
3.2.3.2.15. Testing and defects
3.2.4. The form of contract
3.2.4.1. Common standard forms of contracts
3.2.4.1.1. 1. FIDIC (Fédération Internationale des Ingénieurs-Conseils)
3.2.4.1.2. 2. JCT (The Joint Contracts Tribunal)
3.2.4.1.3. 3. NEC (The New Engineering Contract)
3.2.4.1.4. 4. SBD (Standard Bidding Document) published by ICTAD (Institute ofconstruction Training And Development now called CIDA ( Construction IndustryDevelopment Authority)
3.2.5. Bills of Quantities
3.2.6. Bidding data
3.2.6.1. • Employers details
3.2.6.2. • Scope of Work
3.2.6.3. • Intended completion date
3.2.6.4. • Qualification information
3.2.6.5. • Refundable and non-refundable deposit
3.2.6.6. • Entitlement for price fluctuations
3.2.6.7. • Bid validity
3.2.6.8. • Amount and validity of bid security
3.2.6.9. Availability of resources
3.2.6.10. • Pre bid meeting
3.2.7. Contract data
3.2.7.1. Employer’s/Contractors/Engineer details
3.2.7.2. • Time for completion of work
3.2.7.3. • Defects notification period
3.2.7.4. • Advance Payment
3.2.7.5. • Amount of performance security
3.2.7.6. • Liquidated damages and maximum limit
3.2.7.7. • Deduction of retention and limit of retention
3.2.7.8. Minimum amount of interim certificate
3.2.7.9. • Insurances
3.2.8. Contract
3.2.8.1. • Letter of acceptance
3.2.8.2. • Agreement
3.2.8.3. • Performance security
3.2.8.4. • Advance payment security
3.2.8.5. • Retention money guarantee
3.2.9. Tender pricing
3.2.9.1. Objectives
3.2.9.1.1. Enable like for like comparison between tenders and the cost plan (pre-tender estimate).
3.2.9.1.2. Enable the cost consultant to assess where value lies within the different tender
3.2.9.1.3. Identify areas of savings that might be negotiated with tenderers while still in competition.
3.2.9.1.4. Identify any significant differences in pricing between tenderers to ensure the design has been correctly interpreted.
3.2.9.1.5. Form the financial basis of the tender report
3.2.10. Design drawings, and perhaps an existing building information model.
3.2.10.1. Develop and communicating the brief.
3.2.10.2. Investigate potential sites and assess options.
3.2.10.3. Develop the approved idea into a coherent and co-ordinated design.
3.2.10.4. Communicate the developed design to other parties, such as the local planning authority, the building control body, contractors and suppliers.
3.2.10.5. Record ongoing changes to the completed construction.
3.2.10.6. Record the completed construction.
3.2.11. Specifications.
4. Procurement
4.1. Definition
4.1.1. The process of obtaining supplies of something, especially for a government or an organization
4.2. Involved key activities
4.2.1. purchase planning
4.2.2. standards determination
4.2.3. Financing
4.2.4. supplier research and selection
4.2.5. specifications development
4.2.6. price negotiation
5. can give greater risk to the contractor than some other contract forms, as there are fewer mechanisms available for them to vary their price
6. Importance in construction
6.1. Risk management tool
6.1.1. Process
6.1.1.1. Identification of potential risks
6.1.1.2. Assessment of their effects
6.1.1.3. Develop method of risk response
6.1.1.4. Provide for residual risk
6.2. Methods
6.2.1. Traditional Path (Client engages design team and contractor direct)
6.2.2. Design & Build Path (Client engages contractor who then employs designers)
6.2.2.1. Advantages
6.2.2.1.1. Price is more certain
6.2.2.1.2. Less time consuming
6.2.2.1.3. Single point responsibility
6.2.2.1.4. Buildability
6.2.2.2. Disadvantages
6.2.2.2.1. Cost of the project? Risk Premiums
6.2.2.2.2. Quality may be compromised
6.2.2.2.3. Variations are costly
6.2.3. Management Oriented Management Contracting (Client appoints contractor who controls work package contractors)
6.2.3.1. Advantages
6.2.3.1.1. Improved Buildability
6.2.3.1.2. Fast track construction
6.2.3.1.3. High design flexibility
6.2.3.1.4. Competitive prices for work packages
6.2.3.2. Disadvantages
6.2.3.2.1. Reduced cost certainty
6.2.3.2.2. Can be expensive
6.2.3.2.3. Can be difficult to manage
6.2.4. Management Oriented Contract Management (Client appoints contractors (CM & TC), CM manage construction work while TC construct)
6.2.4.1. Advantages
6.2.4.1.1. Improved Buildability
6.2.4.1.2. Fast track construction
6.2.4.1.3. High design flexibility
6.2.4.1.4. Value for money as TCs can be tendered or negotiated
6.2.4.2. Disadvantages
6.2.4.2.1. Reduced cost certainty
6.2.4.2.2. Can be expensive
6.2.4.2.3. Can be difficult to manage
6.2.4.2.4. To be used by experienced Clients
7. Risks in Construction
7.1. Cost fluctuations
7.2. Geography
7.3. Quality concerns
7.3.1. Iron Triangle
7.3.1.1. Emphasis through project stages
7.4. Time
8. Contracts
8.1. What is a contract?
8.1.1. An agreement enforceable at law
8.1.2. A legally binding agreement between two or more parties
8.2. Major Components
8.2.1. An offer
8.2.1.1. A promise made by the offer or which matures into a contract when accepted by the other party
8.2.1.2. does not turn into a contract - it is merely a stage in negotiations, inviting the other party to make an offer
8.2.2. The acceptance of the offer
8.2.2.1. Must be certain and unambiguous (definite): can be by word (written or oral) or by conduct, which must be made known to the offeror.
8.2.2.2. counter-offer itself will have to be accepted by the initial offeror
8.2.2.3. party/person who make the invitation to offer and the acceptance or rejection is called “offeree”.
8.2.3. A consideration
8.2.3.1. Something of value was promised in exchange for the specified action
8.2.3.2. the value that induces the parties to enter into the contract
8.3. Constriction contracts
8.3.1. Client – invites to offer (tender notice) : Offeree
8.3.2. Bidders (Contractors) – offer (completed tender) : Offeror
8.3.2.1. Acceptance must be unconditional & in accord with the offer. Conditional offer is a Counter offer, which needs to be accepted by the offeror to be legally bound
8.3.2.2. An offer remains open during the time stipulated (Tender ValidityPeriod) in the offer
8.3.2.3. Bidders are entitled to withdraw their bids at any time prior to the acceptance
8.3.3. Client – accept the offer
8.4. Contract defines
8.4.1. Rights (what you should get)
8.4.2. Obligations ( what you should do) of parties under the agreement
8.4.2.1. Contract defines
8.4.2.1.1. What is to be designed
8.4.2.1.2. What is to be built and
8.4.2.1.3. How much to be paid
8.4.2.1.4. A contract defines rights and obligations of parties
8.5. Contract Classification
8.5.1. classification by responsibility
8.5.1.1. A design contract
8.5.1.2. A building/construction contract
8.5.1.3. A design and build contract
8.5.2. classification by reward
8.5.2.1. Price Based
8.5.2.2. cost based
8.5.3. how to determine payment
8.5.3.1. Price-based contracts (price given in advance)
8.5.3.1.1. Lump sum (Fixed priced) contracts
8.5.3.1.2. Unit price contracts (Measurement/Measure & Pay contract)
8.5.3.2. Cost-based contracts (Cost reimbursement)
8.5.3.2.1. Cost + Percentage Fee
8.5.3.2.2. Cost + Fixed Fee
8.5.3.2.3. Cost + Fluctuating Fee
8.5.3.2.4. Cost + Fee + Profit Sharing
8.5.3.2.5. Target Cost Contract
8.5.3.2.6. a fixed-sum contract is undesirable or inappropriate
8.5.3.2.7. open-ended in the sense that the total cost to the owner is not known until completion of the work
8.5.3.2.8. When negotiating contracts of the cost-plus type, the contractor and the owner must pay particular attention to few important considerations
8.5.3.2.9. Advantages
8.5.3.2.10. Disadvantages
8.5.3.2.11. Applicability
8.5.3.2.12. risk associated
8.5.3.2.13. how to determine payment
8.5.3.3. Time and Material Contracts
8.5.4. Alternate classification
8.5.4.1. Specification Based Contracts
8.5.4.1.1. Drawings & Specification Contract
8.5.4.1.2. Performance Specification Contract
8.5.4.2. Schedule of Rates
8.5.4.3. BOQ Based Contracts
8.5.4.3.1. Bills of Firm Quantities
8.5.4.3.2. Bills of Approximate Quantities
8.6. factors influencing type of contract
8.6.1. The start and the completion date of the project
8.6.2. Price certainty
8.6.3. The appropriateness for providing an adequate incentive for efficient performance by the contractor
8.6.4. The ability to introduce changes
8.6.5. The allocation of risks