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PROFESSIONAL PRACTICE I [QSD 289] Mohammad Nasharudine Shuib 1 SECTION 1 2 3 4 5 6 7 8 9 10 11 DESCRIPTIONS INTRODUCTION WHAT IS TENDER? WHAT IS TENDERING? DIFFERENCE BETWEEN TENDER & CONTRACT TENDER NOTICE OPEN TENDER SELECTIVE TENDER DIRECT NEGOTIATED TENDER TENDER VALIDITY PERIOD TENDER SUBMISSION TENDER OPENING PROCESS 2 LINKS 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1. 2. The objective of tendering is to select a suitable contractor at an appropriate time and obtain from him an acceptable offer upon which a contract can be let. Generally there three (3) types of tendering used: a. Open Tendering b. Selective Tendering c. Negotiated Tender 19 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. 21 Tendering is the management and commercial function of determining the tender based upon the estimate and other details prepared by contractor’s estimator and other personal. 23 People often use the same terms for different things and different terms for the same thing. The term 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. 25 Format of ideal Tender Notice Name of the Project. Name & Address of the Client. Name of work, materials or services. Place of work location. Period of completion. 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. 27 28 29 30 31 32 33 34 35 36 37 38 Base on degree of competition:Competitive Tendering i. Open Tender / Open Competition ii. Selective Tender / Selective Competition Negotiation Other Variables: continuity & stage or time of calling tender i. Serial Contract ii. Term Contract iii. Fast-Tracking 40 Method of Selection Negotiated Tendering Others Serial Contract Pre-Qualification 41 Competitive Open Tendering Selective Tendering Factors to be considered when deciding on the method:The building type & size Nature & complexity of projects Method of construction Extent of completion of design document Time available before a start on site Time required to complete the project Financial resources of the client 43 45 46 Method of Selection Negotiated Open Choose Contractor Advertisement Select Basis for Payment Sign Contract Late tenders returned Invitation to Bid Competitive Selective Specified Tendering Period Tender Validity Period Tender Submitted + Tender Deposit Tenders Opened Evaluate Tenders 47 Tender Closing Date Reject all Tenders Accepted Tender Notify other Tenderers Return Deposits Prepare Contract Document Sign Contract Notify Successful Tenderer 48 Tendering methods consist of:- Tendering Methods Negotiated Tendering Others Serial Contract Pre-Qualification 50 Competitive Open Tendering Selective Tendering Most Effective Way Obtaining Competitive Rates Competitive Tender Open To All Contractors Complete Design is Necessary CHARACTERISTICS Maximum Competition To Ensure Accountability Invitation Through Advertisements 52 Open to all eligible contractors Invitation to tenders through the mass media (e.g. general press) A tender that received a result of competitive tender. Maximum competition A tender document fee is required from each contractor. The system of invitation of tender by public advertisements through Newspapers or the Internet in the most open public manner is called the Open Tender System. This is most effective way of obtaining competitive rates. 53 Advantages of Open Tendering No favoritism Introduction to new firms. Maximum competition. Disadvantages of Open Tendering Is the lowest firm capable? Is it financially secure? Experience in tender submission? Cost of tendering increased as number of tenderer increases 54 Obtaining Competitive Rates Competitive Tender Open To All Contractors Obtaining Lowest Price ADVANTAGES Maximum Competition Accountability No. Favoritism 55 Experience in Construction? Is the Lowest Tenderers Capable? Is it Financially Secure? Problems of Selecting the Best Tender DISADVANTAGES No assurance About Quality Higher Cost of Administration: Duplicating Documents Experience in Tender Submission? 56 As the name implies, a list of selected tenderers is produced as a basis for this method of obtaining tenders. The design team together with Client will normally determine which contractors will be invited to tender. Design team will take into account contractors’ track records, business record, financial stability and capacity to carry out project. 58 Most Effective Way Obtaining The Best Tender Fulfilled Certain Criteria Limited Number of Contractors Complete Design is Necessary CHARACTERISTICS A Maximum of 6 Tenderers To Ensure Accountability Invitation Through Invitation Letter 59 Obtaining The Best Tender Obtaining Lowest Price Quality Financially Secure ADVANTAGES Experience in Tender Submission Accountability Cost of Tendering reduced 60 Favoritism during selection of Tenderers Higher Cost DISADVANTAGES Limited to Certain Contractor Only Collusion during tender 61 Series of negotiation will take place between the client and selected contractor. Normally under design and build procurement. In this method the price to be paid in return of the work to be done is negotiated with a single contractor. This , obviously, does not provide the owner with a comparative prices. 63 Though the cost of a work will be higher in this method, an owner may expect some advantages from employing a particular contractor whose policies and methods are known and who has in the past proved capable of fulfilling his obligations. The higher cost may be offset by better quality, early completion, and smooth administration. 64 The negotiated construction bid procedure can be adopted to the owner’s advantage if the chosen contractor is one in which the Owner and the Engineer have confidence, and which is of known integrity and reliability. Moreover, the work to be carried out is within his special scope and experience. 65 Most Effective Way Obtaining The Best Tender Fulfilled Certain Criteria Only negotiated with single contractor Complete Design is Necessary CHARACTERISTICS A Maximum of 6 Tenderers To Ensure Accountability Invitation Through Invitation Letter 66 Obtaining The Best Tender Early Completion Better Quality Financially Secure ADVANTAGES Work carried out within scope and experience Smooth in Administration Cost of Tendering reduced 67 Favoritism Public Accountability are Rarely Satisfied Higher Cost DISADVANTAGES Limited to Certain Contractor Only not provide the owner with a comparative prices 68 QUANTITY SURVEYING: PRACTICE & ADMINISTRATION (1983), DENNIS F TURNER, U.S.A 70