ENGINEERING CONSTRUCTION ( BAA 1322 )
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Transcript ENGINEERING CONSTRUCTION ( BAA 1322 )
LECTURE 2:
TENDER PROCESS
AND
DOCUMENTATION
Lecture by:
Ms. Noorhidayah Sunarti (012-6254776)
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WHAT IS TENDER?
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Tender is an offer which 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.
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WHAT IS
TENDERING ?
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Stages of a project
Stage 1: inception & feasibility – identifying
project objectives / set up project brief
Stage 2: design – develop further project brief /
develop concept & schematic design / Undertake
detailed design & detailing / prepare cost plan &
budget
Stage 3: tendering – issue tender documents /
prepare & submit tender / evaluation of tender /
award tenders / prepare contract documents
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Stages of a project
Stage 4: construction – site possession &
mobilization / undertake procurement fabrication,
installation, construction / carry out contract
admin
Stage 5: handover & maintenance –
undertake all testing, commissioning & training /
obtain CF / handover project to owner /carry out
necessary maintenance / Defect rectification / etc
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Tendering
Will be started after the design complete and
project budget must be approved
The process that is used to obtain offers
leading to a contract between:
client
contractor
client
main contractor
consultant
sub-contractor
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Purpose of tendering process
To select a suitable contractor at a
time appropriate to the situation of
the project.
To obtain from the contractor
selected at the proper time, an
acceptable tender or offer upon which
a contract can be let.
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Difference between a contract and
a tender
A tender formally means an invitation
to trade under the terms of offer.
A contract is the term used for when
the parties have reached agreement.
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General
TENDERING
PROCESS
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Tendering process –
PRINCIPAL ACTIVITIES
1.
2.
3.
4.
5.
Selection of the most preferable or
appropriate contract procurement
method.
Development of tender list
Preparation of tender documentation
Invitation / calling off tender
Preparation and submission of
tenders
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Tendering process –
PRINCIPAL ACTIVITIES (cont’d)
6. Receipt and opening of tenders
7. Evaluation of tenders
8. Acceptance of tender award or award
of contract
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Stage 1: Selection of the most preferable or
appropriate contract procurement
method.
Traditional contract procurement
route
Longer time – lead to critical work
scheduling
Less errors – more precise
Fast-track contract procurement
route
Shorter time
Consequences – may be lead to critical
error, variation.
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Stage 2: Development of tender list
Potential tenderers can directly apply to
the employer for future works.
Employer generate list based on previous
dealings
The professional team generate their own
list and recommend to the employer.
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Stage 3: Preparation of tender
documentation – typical contents
Letter of invitation
Checklist for submission of tender
Articles of agreement
Conditions of contract
Form of tender
Tender specifications
Bills of quantities
Tender drawings
Sample copy of letter of acceptance
Sample copy of bang guarantee for performance
bond
Schedule of day work rates
Sample copy bank guarantee for advance payment
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Tendering process
Stage 1:
Stage 2:
Stage 3:
PREPARATION
APPROVAL TO
TENDER
DOCUMENTATION
Stage 6:
Stage 5:
Stage 4:
AWARD
CONTRACT
PROCESSING
INVITATION
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Stage 1: Preparation
Final completion of drawings,
specification, measurement / take-off
process.
Choose conditions of contract.
Parties involved: architect, engineers,
QS, client, project manager
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Stage 2: Approval to tender
Discussion and decision on type of
tender to be used.
Selection of tender:
Open
Selective
Negotiate
Shortlist the selected contractor
Parties involved: CLIENT,
CONSULTANT, PROJECT MANAGER
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Stage 3: Documentation
Contract based on tender & specs
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
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Contract based on quantities
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
Bills of quantities
Relevant drawings
Stage 4: 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
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TENDER NOTICE
OR NOTICE
INVITING TENDER
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The Tender Notice is a brief
description of the job being tendered
which is to be published in Newspapers
and on the Internet.
The Internet is a very cost effective
way of publishing the tenders.
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Format of an ideal Tender
Notice
a. Name of the Project.
b. Name & Address of the
c.
d.
e.
f.
g.
h.
Company floating the
tender.
Name of work, materials
or services.
Place of work location.
Approximate estimated
cost of work.
Earnest Money.
Period of completion.
Date on which the Tender
Document sale commences.
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i.
j.
k.
l.
m.
n.
Date on which the Tender
Document sale commences.
Date and time up to which
tender documents can be
obtained.
The cost of tender
documents.
The date and time up to
which the tenders to be
submitted and are to be
opened.
Specification.
Eligibility Criterion.
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Stage 5: Processing
Received tender submitted by contractor
Tender assessment / evaluation
Completed tenders are received
Arithmetical check
Reasonable tender sum
Reasonable completion time
Capabilities of tenderers under considerations
Tender recommendation / report – tender
board
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Guidelines to fulfill in the
Tender System
The capacity, past credentials and financial
status of the tendered is thoroughly
investigated before awarding the contract.
These aspects should be commented in detail
along with the tender documents.
The rates should be quoted in the numbers
and words without any corrections. To take
advantage of any possible increase in
statutory taxes & duties, the tax component
such as excise duty, Sales Tax, Works
Contract Tax, etc. should be clearly
indicated.
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Tenderers should not quote many
special conditions as some of them may
have financial implications, did this can
be added to your quoted cost. Also it
creates confusion and creates room
for manipulative forces.
The rates quoted for individual items
should be realistic and should not be
abnormal and unworkable.
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Stage 6: Award contract
Pre-award meeting with contractors –
validation of lowest complying bid
Validate lowest bid - Pre-contract meeting
with contractor for contract signing
Approval by tender board / treasury (tender
exceeds RM10 mill.) – an acceptance of
tender form is issued to tenderer , signed by
the authorised officer
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TENDER PROCESS
FOR CONTRACTOR
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Tendering process
Stage 1:
Stage 2:
Stage 3:
Decision to
tender
Determine
basis of
tender
Preparation of
cost estimates
Stage 6:
Stage 5:
Submissio
n of
tender
Conversion
of estimate
to tender
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Stage 4:
Commercial
appreciation
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Stage 1: Decision to tender
Receipt of tender documents
Pre-tender data sheet
Decision to tender
Consider implications of:
Bonds
Warranties
Parent company
Guarantees
Funding
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Stage 2: Determine basis of
tender
Abstract materials and subcons
Sent out enquiries
Consider construction methods / prepare method
statement
Design temporary works / consider alternatives
Prepare outline programme
Check major quantities
Identify restrictions
Visit site and compile site report
Campaigning meeting (designating areas
responsibilities)
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Stage 3: Preparation of cost
estimate
Calculate recurrent rates using:
Operational
Unit rates
Man-hours estimating
Analyse and check subcontractors’ quotations
Price prelims / general items (in association
with members of the team
Prepare summary sheets
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Stage 4: Commercial
appreciation
Tender committee meeting part 1 Review:
Method
Programme
Technical and commercial risks
Cash flow and finance
Use of own plant
Competition
Commercial opportunities
Economic climate
Check prelims against historical cost data
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Stage 5: Conversion of tender
estimate to tender bid
Tender committee meeting – part 2
Calculate ‘spread’ and add to estimate
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Stage 6: Submission of tender
Submit in format required
Organize delivery
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