TENDER & CONTRACT

Electrical Design, Estim

ation and Costing
Unit-8
WHAT IS TENDER?
Tender is :
an offer to contractor to do the work for a
certain amount of money
incorporate time and other conditions req
uired
to carry out the contract requirements
main reason is to complete a project
The tender which is submitted by the contr
actor is generally based on a bill of quantitie
s & specifications of the statement of work.
Difference between
TENDER & CONTRACT
TENDER CONTRACT

The term tender fo A contract is the

rmally means an inv term used when 2
itation to trade und parties have reac
er the terms of offer hed agreement.
.
TENDER SYSTEM
✓ The process of finalization of contracts is achiev
ed through the tender process.

Advantages of the Tender process

✓ Most effective method of locking competitive r

ates.
✓ New technologies and options are received thr
ough open tender process.
TENDER NOTICE
✓ The Tender Notice is a brie
f description of the job bei
ng tendered
✓ to be published in Newsp
apers and on the Internet.
✓ The Internet is a very cost
effective way of publishin
g the tenders.
Format of an ideal tender notice
1. Name of the Project. 9. Date and time up to which te
2. Name & Address of the Compa nder documents can be obtai
ny offering the tender. ned.
3. Name of work, materials or ser 10. The cost of tender documents
vices. .
11. Due date of submission
4. Place of work location.
12. Eligibility Criteria
5. Approximate estimated cost of
work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender Doc
ument sale commences.
TYPES OF TENDER
1. Open tender (tawaran terbuka)
2. Close tender (tawaran terhad) / Selectiv
e tender (tawaran terpilih)
3. Negotiated tender (tawaran perundinga
n)
Open tender
 Bidding process that is open to all q
ualified bidders
 Tender usually published in the news
paper and internet
 chosen on the basis of price and qu
ality.
 This is most effective way of obtainin
g many competitive rates.
Open tender - advantages
 Any contractor can tender their wor
k
 No favoritism occurred
 maximum competition
 No commitment( terikat) to tender,
all tender received will be genuine.
Open tender - disadvantages
 Client must bear expensive cost of tenderin
g ( reproducing number of dwgs, bq etc.
 The wrong contractor may be chosen bec
ause they are from unknown background
 Time consuming
Limited / selective tender
Limited tender
 Tender open to bidders in the category stated in t
he notice only.
 Example: limited tender is for Bumiputra bidders on
ly.

Selective tender
 A number of contractor of known reputations are s
elected by the design team to submit a price of th
e project.
 The contractor who submit the lowest tender is ge
nerally awarded the contract.
 The number chosen to bid under this tender is little
 they are chosen for their expertise and experience
s
Negotiated tender
 Under this method, only one contractor is approac
hed

 normally because the skills of the contractor are su

ch that the architect and other members of the d
esign team needed from the contractor’s specialis
t knowledge use for design stage

 Following the completion of the design, the contra

ctor will price the bill of quantities and then enter i
nto a negotiation with the quantity surveyor.
Tender process

 iklan tawaran ( tender notice)

 jemputan tawaran (tender invitation)

 pemilihan tawaran (tender selection)

 penerimaan tawaran (tender award)

WHAT IS CONTRACT?
A contract is an exchange of promises be
tween two or more parties to do, or refrain
from doing, an act which is enforceable i
n a court of law.

 It is a binding legal agreement.

TYPES OF CONTRACT
 Lump Sum Contract
 Cost Plus Contract
 Turnkey Contract
 Percentage of Construction Fee Contract
s
Lump Sum Contract
 Also named "Fixed Fee Contract".

 With this kind of contract the engineer and/or c

ontractor agrees to do- the described and spe
cified project for a fixed price.

 Often used in engineering contracts.

 Suitableif the scope and schedule of the projec

t are appropriately defined – to allow the consul
ting engineer to estimate project costs.
 Cost Plus Contract
 purchaser agrees to pay :
 the cost of all labor and materials
 plus an amount for contractor overhead and
 profit (usually as a percentage of the labor and materia
l cost).

 This types of contracts are favored because:

 the scope of the work is indeterminate
 highly uncertain
 labor, material and equipment needed are also uncert
ain.

 Under this arrangement - complete records of all tim

e and materials spent by the contractor on the work
must be maintained.
 Turnkey Contracts

 Anagreement under which a contractor

agrees to :
 complete a product so that it is ready for us
e when delivered to the other contracting
party.
Turnkey refers to something that is ready for i
mmediate use, generally used in the sale or
supply of goods or services.