- CHAPTER 8 TENDERS Z Tender ts nothing but an offer made by one party to another for execution of specified work at a specified cost in keeping with all the terms and conditions set there in the tender document including the extent of the work shown on the plans. It remains floating tll the time it receives a seal of acceptance either by the employer and/or his architect / engineer and thereafter forms a binding contract. Itis true that an offer has tocome from the contractor in the capacity of an offerer which one can observe in Bombay now-a-days for repairs amounting to reconstruction. Here the contractor offers to carry out repairs in a conventional manner with R.S. stanchinons, beams, joists. rough ladi, coba, pavement, etc., at a specified rate per S.M. of built up plinth area. The employers (Tenants Association) or the owner accepts the same and thus the contract takes birth. There may be,some excep- tions to the above. However, in case of the building work and even in case of major repairs, it is the architect of engineer who prepares detailed tender papers on behalf of the owner/employer and issues to the contractors against a specified tender fees. This is not an offer by the employer/owner but an Invitation to offer to find the extent of finance needed for execution of the work within the prescribed time Limit. Alternatively ifone were to consider offers tocome from contractors, then the architect or engineer will have to hold a conference with the bidders, supply them with copies of plans, dictate them special conditions, also copy of :rinted format of LLA., etc., and bidders directed to incorporate all documents and submit thetr bids. Though this forms an offer, but will be subject to a lot of variance with special terms of ‘the contractors incorporated therein Now to find out the lowest bid from among the bidders will be a herculean task for the architect/engineer. Thus, for the sake of uniformity as also to place all bidders on equal footings, the architect or engineer only prepare a comprehensive tender or bid papers of which the first page contains a letter of offer to be signed by the contractor. Thus, on signing the letter of offer, invitation to tender assumes the characteristics of tender where by the offerers agree to execute certain work or for supplying epecified materials subject to certain terms and conditions like rates, ume limit, etc. It presupposes that the tenderer has all the necessary materials and labour available with him or that he knows from where he can obtain them. Prior to inviting of the tenders, it is the duty of the architect to see that107 TENDERS (2) AD the plans. specifications and details are not only clear and iP . . correct, but without any ambiguity. as ‘ble (2) Bull of quantities should be as accurate pess ae (3) Special conditions if any should be thoroughly nota Single item is overlooked. Prior to filling of the tender, the contractor is required ‘o make a fareful study of plans, specifications. special conditions, etc.. ang imspect the site in order to ascertain the difficulties which Will be mast with In the execution of the work. He has to estimate the probable Period of completion of work, number of technical and non-technica) Staff that wil be ich the architect /engineer Usually meet in Practice namely: QUOTATION oF WORKS Its also an offer and does not carry detailed terms and Conditions Itis based on the Nature and Dimension of work and leave a wide scope to be gone through to become @ conti Khs. Works and Specifications undergo changes and final amount comes toRs. 12 to Rs 14 lakhs. This sends a wave of shock to the employer. This ts due to non-application of woP MP in future, which the architect or engineer sap Sasily Visualise if he Were to study the of operations of an item e &-. removal Of decayed timber t apa floor will involve the following Operations: vw {a} Propping on all floors. (b) Breaking sides of wall to remove (c) New timber post with oil paint. Post and sara08 PROFESSIONAL PRACTICE (a) Reinstatement of brick walls on side finished complete with plaster etc. {e) Providing of M.S. bracket for existing Umber beam and new timber post. (0 Removal of props. (g) Carting away the debris. Again the quotations show either absence of specifications or sketchy specifications or at times with words like “work to be carried out as per the ‘standard specifications”. What are the standard specifications, has not been set out at any place. Whether standard specifications con template tiles mosaic or terrazo; dark coloured neutral or light coloured; of value of Rs. 120/- per S.M. or Rs. 240/- per S.M. and so on. Invitation to Tender Asalready stated that tender issued by the architect/enginecr Is not in strict sense a tender or an offer. It is merely bid papers or “invitation to tender”. There are three ways in which the tenders can be called for namely: by private invitation, by public notice and by negotiations. Looking to the type and nature of "york that is a private work or a public work, a new work, or work of additions and alterations, etc., and after weighing the advantages and the disadvantages of cach of the methods of calling the tenders, the client should be advised on the most appro- priate method of calling the tenders. At times. there are specific clauses ina trust aeed or public bodies like ‘schools, hospitals, and co-operative housing societies require the tenders by public notice only. By Private Invitation (Selected or Limited Invitation) Generally, the architects and the engineers do maintain a panel of contractors and from the pancl a few are invited to quote for a particular Job, In such a case, the architect knows the contractor, together with his intelligence, integrity and financial standing and thus he is sure of the type of work that he will get from him. This method of invjting the tender from among the selected contractors prevents inexperienced persons from entering the contract line. This is suitable for private works. The usual invitation letter along with the tender notice should be sent to the contractors concerned. By Public Notice All public works are required te be advertised in the newspapers for the purpose of tenders and any Contractor can quote for the same. There are chances of getting the work at a cheaper rate and these tenders are also not free from collusion. At times the tenders are so low that it will not be possible to imagine whether the ‘contractors will be able to complete the work, Such tenders usually end in dispute, pocr quality of work and @ lot headaches for the architects. With a public tender the architect orlog TENDERS nts, a intelligent con! engil com th new and ieetiswene in contact wit inte tinglline. and thi opens the fled for new entrants In the Gees See herons ts generally given to the contractor quoting the he is otherwise equally qualified By Negotiations base or datum In this case the architect/engineer eee wa cost more than for negotiations like the work of a bs bein Rs, 3.000/. per SM. of plinth area(S.B.A.) or datum like lee eee fi assigned by the Repair Board at certain percentage abows /Oclow ae schedule ofrates. With this datum, negotfations are done with he contractors and work thereafter is assigned to the right contractor. This mode is popular with developersand for repair jobs with schedule of rates as the base. Nature of Tender Tenders set out paths for completion of building jobs. The paths may vary from item rate to labour work and the said paths have different terms and conditions. The accepted contracts derive thelr names from the type of tender like item rate contracts derived from item rate tender, lump-sum contract from lump-sum tender ete. Besides the above other Paths available are: tT execution of the works (1) Day work (2) Piece work. (3) Daily labour. Thus, nature of tenders leads to nature of contrac ts, c hereunder will apply to nature of contract also honey 1 eeussIOn chapter, problems related tosuch types of contracts Ieee Ceeesiann along with brief synopsis. een dealt with Nature of Tender can be Classified as Under () (a) Item rate tender. (b) Schedule of rates with per with rise and fall clauses) (2) (a) Lump-sum tender. (b) Lump-sum percentage tender ( (3) (a) Cost plus percentage or “cost pi (b) Cost plus fixed fee tender. (c) Cost plus fixed fee with bonus a, (4) Labour tender. (5) Tender for demolition work, Teenlage up or down (basic rate ‘arget tender), lus fee lender, nd penalty.PROFESSIONAL PRACTICE 110 Item Rate Tender It is an offer to execute the work based on the rates of different items of work. The tender form usually contains the bill of quantities wherein all the items ‘of work are fully described with their quantitics “The ntities given are always approximate and are not binding on the ‘¢ contractor {s required to fill in the rates of the ems arid thus owner. Th! it becomes a simplified Job so far as the calculations and estimating are concerned The contractor is paid on the measure: the rates quoted by him in the tender. In fact the rates o} part of the contract and the approximate quantities are not This is a balanced method of execution and the chances for extra ed. It Is not risky for the contractor and hence quality ill be assered. Reasonable variations can be made in in the quantities during the execution of work f works like buildings, bridges, culverts, ment of the work executed at {the items are the works are minimis of workmanship W! the plans and also It is suitable for all types oF sewer lines, roads, etc. schedule of Rates with Percentage Up or Dow? It is also known as basic rates with rise and fall clauses. It is 2 in this case @ bull of quantities duly modified form of item rate tender. I W of the tenderers and they are asked '9 quote only iced schedule of rates, at which below the pri vate the work. Allother facts as given for the item in this case also. : the repair works, new buildings as they are prepared to exec rate tender will hold good This type of tender is suitable fo well as for maintenance works: Lump-sum Tender In a lump-sum tender the con! work as shown on the plans and : 2 : completion, supplying all the Materials and labours fora fixed lump: sure or at a fixed rate per cubic or square metre of work. The contractor will be paid from time-to-time if specified in the contract and if not specified, then he has to recover the full amount on completion of the work. He cannot make part payments as a ground for leaving the work if the contract does not specify the same: tractor undertakes to carry out the described in the specifications till Essentfal Characteristics 1. Work to be executed should be clearly shown on the plans with. all the relevant details and 2. Work should be dese special conditions. if any- 3. Time for completion of the wor elevations. ribed in details In the specifications with should be specified in advance. |Ma TENDERS t payments for the mn) 4. If the contractor ts not to be fareaanelas otherwise, it is works, the same should be specified in ed as mutually agreed. ‘understood that part payments will be eflect that he can ascertain ’ 7 FSO 5. Site shall be accessible to the conte tion and other relevans the nature of soil, approximate cost of founda! working conditions. 6. No serious variations are contemplated 7. Contract ammount is not decided on the basis of measurements except for additions and omissions. At times the contractor is asked to submit a priced bull of quantities along with the tender whiclr will not form part of the contract. The owner Mill not be entitled todeduct any amount from the lump-sum contract on the ground that quantities worked out by the contractor are less; even the mistakes in the quantities are not taken into consideration The Advantages of this Type of the Tender 1. Total cost of construction 1s known in advance and as such the owner can make the necessary arrangements for tite fiance 2. The contractor will try to complete the work as carly as possible So as to have good margin of profit and that his equipments will be free earlier which can be utilised on his other jobs 3. Work load of the engineer and the architect is reduced, as no detailed measurements are required to be taken fox each item of the work executed. Disadvantages Q) Mere and more of the extra works. (2) Design is Likely to be adversely atiected unless heavy v. are made. (3) Quality of work is not guaranteed (4) Contains more elements of Speculation and a Tisky form of ariations This Type of Tender is Not Suitable 1. For such works where the nature of so tions cannct be ascertained in advance, 2. For works of additions and alterations to 3. Works of repairs to a building, 4. Works under water like foundations for bridges, culverts etc. il and the type of founda- an existing building. It is Suitable for (1) All building works. (2) Laying of main sewers.12 , PROFESSIONAL PRACTICE (a) General drainage and plumbing. (4) Electric installation works. (6) Road works. jump-sum Plus Percentage (Target) Tender It is the same as the lump-sum tender ex: t that if the con- tractor completes the works before the specified date, he. is jsually granted certain bonus in terms of percentage of the cost of the project. All other facts as given for lump-sum tenders will hold good in this case also. -cost Plus Percentage Tender” or “Cost Plus Fee Method” ‘The expenditure incurred by the contractor iespaid by the owner as ageed and over and above he {s paid certain percentage as profii for his professional services. At times such tenders are invited from a few contractors asking. them to name the price at ‘which they will execute the work and fees that they expect for the same. ‘The fees are usually fixed at acertain percentage of the cost of work: (1) The work on the site can be commenced immediately without waiting for all the formalities. (2) Contractor can be chosen at any time and he shculd be trust- worthy for the successful execution of the work. ce acts as the manager of the owner and assumes the position parallel to that of an architect. (3) Suitable for public (4) All details need not be wor of the work. (5) Necessary variations as are required can be made, so as not to spoil the design. (6) No guarantee of the is not known. (7) No tume limit for completion of work. (8) Owner will be entitl (9) Noeconomy in the pt! and private works. ed out prior to the commencement cost of project in advance and ultimate cost jed to discounts, rebates and refunds. rehase of the materials and employment of the labour. (10) Thereare chances of fictitious bills creeping in and calls for more care. t of the work al the cost of economy (1) The et the bes! and owner lanl. as the inferior and ill-planned works will - be demolished at the cost of the owner, thus increasing the ultimate cost. Cost Plus Fixed Fee Tender ‘A modified form of this system of tendering is “Cost plus Fixed fee” von a fixed fee irrespective of the cost of the wherein the contractor 1s11g work and as such, he becomes a disinterested adviser and tries tg complete the work in time. + All the cost of the materials and dae ae ee een and thus the contractor's financial liability 1s nil. As a ts paid 5 higher percentage for works done by him and lower percent ee fr those works which are given on sub-contract. The fees c arged Py will include his professional services as well as the rentals for all his implements, plants, etc., including the cost of repairs if required. His fees should be paid in four to five instalments and the last instalment should be paid after the completion of the work. The contract can be terminated by the owner at will, provided that the comiractor has been compensated for his fees and minor losses, if ay. The contractor's fee includes the following: (2) Contractor's proft. (2) Use of his skill, energy, overhead, and administrative expenses. (3) Contractor's full time supervisor on site. (4)¢Contractor's office on site. (5) Contractor's legal expenses. (6) Interest on any amount invested by him in the work. Cost Plus Fixed Fee with Bonus and Penalty In order to keepa check over the 1s slightly modified and is known as "G Penalty”. Ifthe cost of the work asex estimated in advance, the contractor receives his agreed fees with no Profit and no penalty deduction. If thy e . uctions sg] a than 66 per cent of his agreed fees hall not be mor Mlustration Estimated cost of work Rs 2 00,000/- Fees of the contractor 5% Bonus and penalty 30% of the saving or excess amount Case No. 1 Ifthe actual cost of the work comes to Rs. 2 00,000, /- the contractor will receive his fees @ 5% of Rs. 2,00.000/. = Rs 19. oo, hee 0/-.UU 4 SAONAL PRACTICE case No- 2 1 the actual cost of the work comes to Rs yoo then the contractor will receive Fees @ 5% on Rs. 1,80,000 Ra 9.000 Bonus @ 30% on Rs. 20,000 Ks. 6.000 Rs 15.000 — case No. 3 the amount required to be deduct s 30,000/- = But the clause mn should not Ifactual cost is Rs. 2.30,000 tom his fees will be 30 per cent of the excess 2°80 Hence. he ts to receive onty Rs. 1.00 Rs. 9.000/- further states that the deductions on account of Pe cxceed 66 per cent of his fees om the original cost, In view off above contractor will be paid a sum of Rs 3.400/. only for his professional Labour Tender arry out the complete labour contractor agrees to & aork of all the items of the work at the rates quoted by him The Master has to supply all the tools pisnss. scaffolding. centering verialg, colrsand nails, etc. and the own supplies only the materials required for the construction 6 x >te for tine. level and setting out of the work The labour tender generals struction of water tank for storage of W2 5 wel! as labour work for puting & yt godown of reasonable The owner has to keep a clos 63! tractor as he is least concered with Uh This method of execution of work is very popular as the materials used and the workmanship Will be o! standard quality. The points of ¢ are minimised and the payments for extra works are restricted to ur charges only The labour tenders are invited some’ Per square meter or cubic meter of the cons) agrees to execute the complete sock of fe rt: ~ ~ - rom th nase cf foundation ull the compiction = building at a sj 7 ed rate per square meter or cubic Meter, EXT ng dramage and elec Works. Itas suitable for all types of werks like buildings, brid and s, culverts specially the works of additions. alterauons and fecansyes ti re Musting buudings. In this case the is respons The contra’ includes the labour work for the con- required fer construction > temporary Sheds for office tch over the materials used by the wastages. es on the basis of rate ntractoris TENDERS Advantages () Saving in the cost of work. ae (2) Disputes are reduced to the barest anol affected. We hip ts good and design ol iminated. {a} Archiwate: worry for certifying of the materials 18 eliminated Demolition Tender These tenders are usually called for the demolition of the existing building up to ground level or up to road level and a al the materials of the same including carting away of the eeu Beil Set usually takes away all the materials that are there in the old building an in tum he pays a specified amount to the owner: (1) The highest and not the lowest tender should be approved (2) The tender should be accompanied with a specified deposit so that the work can be carried out as per the terms of the contract, It has generally been observed that the contractor will be reluctant to do the removal work of the plinth as the labour required to do so 1s more as compared to the materials that can be obtained from the same. Moreover, the contractor becomes careless so far as the carting away of the debris is concerned. The owner can well utilise the deposit money for the above two items (3) The whole of the tender amount should be taken in advance before the possession of the building is given for demolition. At no me the payments should be accepted in parts as the contractor will leave the Job if he feels that most of the butlding materials are decayed and uscless. The filing of the legal suit for such a small work Is not worth the trouble and the owner can only forfeit the deposit. : (4) The contractor should be asked to take out insurance for accident, workmen's compensation, third party risks and for other claims, etc. (5) The contractor has to make the cutting off the existing water su electric supply, etc. necessary arrangements for ply, drainage, connection Other Modes of Execution of Works The execution of the works can also by following arrangements depending upon factors: (1) Day work. (2) Plece work. (3) Dally labour. Day Work This method of execution of the work ts adopted for all small items of work which cannot either be measured or valued, e.g., architeetural © carried out by any one of the the nature of works and other> 116 PROFESSIONAL PRACTICS seatures like petals or domes for mosques or temples. decorative design in work or for works under water where time of working ts Pie ee and fall of tide level —— ‘The payments made to the contractor consist of net cost of materials and labour to complete the work and usually about 20 to 25 per cent on the same which will cover contractor's profit, establishment charges, and rentals for the plants. if any. It requires proper check on the materials consu: sed and labour employed and the reports to that eflect must be countersigned dally by the clerk of work. The contractor is required to submit a weekly report of the same to the architect concerned. Tt is the duty of the architect and the engineer to sanction those extra works in writing which cannot be measured or valued properly to be peid at day work prices. For the purpose of day work, the payments mfade to the labour for the specified item of work shall be as per the Payment of Wages Act The cost of the materials will be the net after deducting the trade discount werose benefit should go to the owner. Cash discounts if allowed. can De tained by the contractor. If the materials consumed are taken fom the vractor’s store, the same should be priced at the market rate including le taxes and cost of transportation DAY WORK SHEET Name of Work { Owner (architect or the Engineer ——————_—_$_$____ which day work ts sanctioned Particulars of extra item for Date of sanction: 19 _ Date of commencement: 19 Material Consumed | __Lenot Erwles Out Turn Particulars | Quantity Particulars No. + of Work Cement Cum. | Male Mazdoors 1 ‘Completed one Sand Cum. | Female Mazdoors} 1 ceiling Nower with Mason 2 petals Date: Working time: Oe a Signature of the clerk of work. Signature of the contractor. (Note To be submitted in duplicate to the architect's office}: (1) Day work should not be commenced till the necessary sanction has been obtained from the architect (2) Doe notice of its commencement should be given to the architect or the engineer.TENDERS: at tect o (3) Day work statement should be certified wackly bY dhed wa kedy fe engineer I the contractor is found irregular in t satel the cent the architect or the engineer may not certify the paym later on. The day work method of execution should be ea far as Possible as it forms an expensive method. A close supe! neces. sary for proper out turn of the work. Piece Work Ifthe work is ofan urgent nature and where day work isnot possible, {tis divided into parts and each part Is given toa contractor, known as Piece work. The items of the work and their rates are agreed upon prior to its commencement. It cannot be called a contract in the strict sense as there is no time limit, no security deposit or no penalty P.W.D. and other Government agencies usually carry out the works upto Rs. 2,000/- by this system and when the work ts likely to cost r upto a Umit of Rs. 75,000/- special sanction is required from th executive engineer to that effect. The rates quoted by the varic contractors must be within the limits of sanctioned rates. The measure ments in this case are recorded in the measurement book and are checked by the executive engineer to sce that the payment made with the work executed For example. excavation for the canal work about a mile lo, divided into parts and each contractor is emtrusted with the work excavation to a specified length and dumping of the excavated materials within a specified lead, subject to time limit. Daily Labour This method }s suitable for the maintenance works of roads. ca. etc., and is also known as departmental method of execution. The own. or the Government agencies usually employ all the labours required like masons, bhistis, mazdoors, ete., whose attendance is recorded dail the muster roll by the Jr. Engineer. The materials of construct tools, etc., are obtained from the central stores departmen’ the necessary indent for the same. The works executed are the measurement book and are checked by the sub divisional engineer and executive engineer before the payments are clicted. The latent | usually paid weekly, fortnightly or monthly as agreed ups t by s € recorded 1 on Earnest Money It can be defined as an initial deposit which ts sent along with the tender in order to show the genuineness of the contractor. The amount of earnest money varies from 1 to 2 per cent of the estimated cost of the project. This amount remains in the safe custody of the architect or the engineer ull the work is allotted to a particular contractor who will be asked to deposit further sum towards the security deposit. The earnest money of the other contractors whose tenders are not accepted are118 PROFESSIONAL PRACTICE refunded to them. The main purpose of the earnest money is to see that a fair competition takes place for the work. The earnest money is forfeited in favour of the owner in case the contractor refuses to enter into a contract after his tender has been accepted. It is accepted in cash or cheque at times in the form of negotiable Government secu- rites, Security Deposit When the tender of a particular contractor 1s accepted, he is asked todeposita further amount ‘with the architect varying from 2 to5 percent of the estimated cost of the project and Is known as security deposit. This amount of security deposit includes the earnest money already deposited by the contractor. It ts paid in cash or cheque ‘and at times tn the form of negotiable Government securities. This amount is kept asa check so that the contractor fulfills all the terms and conditions of the contract, carries out the work to entire satisfaction and maintains proper progress of the work. If he fails in the same, his whole or part of the security deposit ts forfeited. It does not carry any interest and Is returned to the contractor after his defect liability period ts over Retention Amount When a contract of the work Is assigned, Jt 1s essential for a contractor to deposit a fixed amount either with the architect or with the owner as a guranatee for the faithful performance of the terms of the contract. Itis very difficult for a contractor to pay such amount all at once as his business depends mostly on the rollingof his capital. This amount of the contractor gets blocked up and does not bear any interest. Hence, by prior agreement, It is arranged that the contractor should pay the so called security deposit by instalments from the payments due to him for ited. These instalments are retained with the Owner and is known as “Retention amount”. Usually 10 per cent of the value of the work is retained by the owner towarde the retention money and the architect Issues atevery stage of the work interim certificates to the value of 90 per cent of the work done. As soon as the total retention fund of 10 per centof the tendered amount has been collected, the subsequent interim cé@rtificates are required to be issued at their full values. in fact Retention Amount is nothing but Security Deposit. On the acceptance of the tender contractor is asked to pay the necessary security deposit. In order to avoid the burden of depositing the full security amount the contractor requests the architect that the balance of the security deposit over and above already paid at the time of submitting the tender, be deducted from his running bill accounts tll the deducted amount reaches its full value. Thus, the amount thus retained from the R.A. bills is called the Retention Amount and the same form: parcel of the Security Deposit. s part andle TENDERS Eeecntial Characteristics 1. Its the money that has been earned by the contractor but has not Decome payable under the contract. pyr 2.1 be assigned by the contractor to any one 8. 50% of the ete eae aael after the virtual completion of the work, 4. Final instalment of 50% 1s paid after the defect br hosies has Paseed and after issue of the final certificate by faa i ee 5. In case of bankruptcy of the contractor, a Tuptcy will have no claim er the retention fund, till the final certificate has been issued by the architect for the work. 6. Retention fund does not carry any interest. Purpose of Retention Fund 1. To make good the defect before the final certificate has been issued. 2. To meet the claim, damages, compensation, etc., if any, by the adjolning owner or any of the workmen for any reason whatsoever 3. To make the necessary payments to the nominated sub-contrac tor in case the contractor falis in the same. 4. To meet any compensation which may become due from the con. tractor for delay in completion. 5. It can be utilised for the necessary adjustments in the final bill, over payment and in the make up of the bills for extra works. 6. Any work left out by the contractor before virtual completion can be executed by this amount 7. Disposal of materials wrongly supplied, Mobilisation Fund In building contracts the contractors are paid by interim certificates wherein the cost of works is paid at 90% or even 95% of tts value and materials on site paid at varying percentages from 50% to 75% of tie value of such materials on site depending upon the terme and conditions as may have been agreed upon subject to 2% deduction of the amount released as deduction of Income-tax at Source. For works of sma!l magnitudes these arrangements of part Payments have proved to be satisfactory. However, construction works of Dig projects stand on a different footing and require different treatments on financial sides besides payments effected on interim Certificates, Before executing actual work and receipt of payments on account, the contractor is Tequired to incur initial expenditure for preparatory works, such as recruitment of labour (labour usually demands advance “Kharcht"). travel of staff, erection of wemporary structures on site, Purchase of centering materials, insurance premium, eto. Such pre) tory works involve financial outlay at the beginning for whicr ligula nance Is essential which will be considerable in case of big projects,120 PROFESSIONAL PRACTICE One mode of raleing initial finance needed by the contractors has teen the banks. Here again aince construction is not treated as an industry and comtractors being treated as traders, banks are cautious in arcing ans and overdraft faciiities and tfat all granted the same will x against the fixed asects of the contractors. The above difficulties are Fe oe by the eraployers in advancing certain amounts after the works have teen awarded to the contractors and contracts executed. Such navance payraents are called Mobilisation Funds, the main of yftich are to enable the contractors to make all initial arrangements for ronnmerceTaent Of works. Characteristics of Mobilisation Fund 1. Maxisnum amount of mobilisation fund Is Lumited to about 10% of tage depends upon the terms of the contract amount, exact percen' contract 2. It is paid in full tn one instalmen of the work and after signing of the cor Y) mobilisation fund advanced or paid for the full us t within one month of the award ntract against bank guarantee in two to three stages 50% of the mobilisation fund as agreed Is paid within one month of the award of the work and signing of the contract against bank guarantec for It. Stage-tl: Part released on completion of preparatory works depending upon thelr value. Part released on bringing plants and machineries on site again depending ul 4. It ts recovered from each of the Interim bill at specified percentage of interim payment and entire mobilisation fund 1s recovered on comple- tion of BO% of the work 4 It can be interest free fund or carrying a 8] However, the contractors usually expect interest free fund. If mobilisa- ton fund clause carries interest, the same will result in the enhanced ratee of items of works. In other words contractor recovers interest by the way of enhanced rates from the employer and pays the employer's own money in the form of interest. Hence, itis advisable to advance mobilisa- tion fund free of interest: It is rightly said that the mobilisation fund is the backbone of successful troplementauion of big construction projects. Stage-l: Stage HT: ecified rate of interest. Tender Documents The tender documents occupy important position not only from the View point of contractors ‘and employers, but also to the architects. They find their place in the contract documents with required modl- frations if any. The tender documents are to comprise of the follo- wing: a121 (1) Tender notice. (2) Spectal notice. (3) Letter of offer. (4) Special conditions. (5) Form of contract with conditions. (6) General Specifications. (7) One set of building plans. (8) One set of R.C.C. plans. (9) Bill of quantities. (OR) Detalied description of work for tender on lump-sum basis. (OR) Unit of SM. basis: which at times take the form of “Supplementary specifications”. Tender Notice and Cost of Tendering It 1s the notification for the contractors at large possessing cither expertise in that branch of civil work for which the notification has been issued or having the skill and human resources to get the work in question executed, to give their offers for the specified work. In the notification the employer invites the offer and does not make an offer by himself that he is prepared to give the contract for the work for a specified sum. Even if the owner has made an offer, still he has got rights to Witheraw the same at any time before acceptance {s confirmed by The tender notice usually carries the clause like “the owner is not bound to accept the lowest or ary tender”. Since the tender in the legal term is an offer to negotiate, the absence of the above clause will not make either the owner or architect /engineer liable for damages for any expenses incurred by the contractors for inspection of the site, prepara- tion of tender document etc. This clause is introduced in the tender notice out of abundant caution. This cost of tendering incurred by the contractor has got certain exceptions too as given hereunder. Cost of Tendering It is usually a practice in vogue that cost involved in preparation and completion of the tender papers including site inspection by the con. tractor as well his administrative expenses are to be borne by the contractors alone and the owners are not saddled with such tender expenses. However, at time the contractor render additional services at the request of the owner on understanding that the works will be allotted to him. Such services may be of varied nature like demarcation of plot boundaries by means of survey work, working out actual quantities of work, making use of his influence to get the plans approved from the local authority and to get controlled materials, arranging for Sais work is not alloted, then the contractor will be esuneatie eee payment for all his labour put in. Feaso:Ss 122 PROFESSIONAL PRACTICE An owner invited the contractor to tender for the design and con- struction of a new factory. The tender was finalised in May 1969. The owner showed his intention to allot the work to the contractor subject to agreement on acceptable terms. The contractor thereafter began detailed design work and started to negotlate with the owner's architect about the form of contract. Since the work did not start till December 1969, the contractor demanded an interim payment of £ 3500. The owner repudi- ated the liability on the ground that no contract did exist and complete matter was subject to agreement on acceptable contract. Held by the Court A contract had been made ancillary to the intended contract to construct the works, by which the empioyers were bound to pay the contractors their interim cost. (Turiff Construction Ltd. vs. Regalia Knitting Muls Ltd., (1971) 9 BLR 20; A Building Contract case book by Vincent Powell-Smith and Furm- ston, (p. 8 — 1987 Ed.). In another case the contractors tendered for reconstruction of war- damaged premises and the owner led the contractors to believe that the contractors would receive the contract. At the request of the owner the contractors calculated the timber and steel requirements for the butiding and prepared verious further schedules and estimates which the owner made use of in negouations with the War Damage Commission. Eventu- informed the contractor that he intended to employ er to do the work. ractors claimed damages for breach of contract, and, alter- uuneration on a Quantum Meruit in respect of the work done 's in connection with the reconstruction scheme Held: Although no binding contract has been concluded between the parties, a promise would be implied that the owner would pay a rea- sonable sum to the contractors tn respect of the services rendered AVilllam Lacey (Hounslow) Ltd., vs. Davis (1957), 2 ALL E.R. 712,A Build fng Contract case book by Vincent Powell-Smith aad Furmstcn, p. 11 — 1987 Ed.) Essential Characteristics of a Tender Notice 1, Tender notice must mention the name of the owner, the place, nature and extent of work, and the estimated cost. 2. It must mention amount of earnest money and tender fees. 3, Minimum Ume of returning the tender by the contractor should be atleast 15 to 20 days from the date of issue of the same. 4. The place of delivery of the tenders by the contractors should be specified. 5. The contractors should be requested to inspect the site prior to filling of the tender, so that they can ascertain well in advance the working conditions, the nature of soil for the foundation etc.123 TENDERS 6. Now-a-days there is a trend with some of peleonneroe he introduce non-obstante clause like. “Notwithstanding the a Si Vides LS. mode of measurements for the works, the same stand: as under: (0 For plaster work deductions for openings will be Limited to 25% of their physical openings: . (i) Rolling shutter measurements to be based on manufacturer's measurements, etc. Such practice must be rejected in totality as non-obstante clause has no place in tender as the said clause makes the tender a conditional one. If it goes unchecked, disputes are bound to crop up. 7. Lastly the architect/engineer have to be very careful in inviting the tenders in ume, as the delay in the same way prove to be dangerous both for the client as well as for the architect. The delay on the part of the architect may result in: () The plot being acquired for a public purpose. (i) A new road may be proposed through: the plot. (i) Rise in the price of the materials and wages of the labour. {¥)_ Loss of rent due to non-completion of the work in time. These will be the causes of action for claiming damages by the client against the architect unless circumstances differ Tender Notice M/s XYZ & Co., 22, Bombay Samachar Marg, Bombay 400023. “Sealed tenders are invited from contractors of repute for the con- struction of residential bullding at Juhu for Purnima Co-omrane Society Limited. The approximate cost of the worke is Rs. 25,00,000/- and the last date of submitting the tender is (Davo, horone 5.30 p.m. Tender forms can be had from the office of the undersionehog (Date) on payment of tender fees of Rs. 500/- (non-refundable) epics of the drawings can De wasbected at the office-during ofice hours or can be had from the office on payment of Rs. 200/- per building (non refundable). A tender must be accompanied with an earees (38 (00 Rs. 50,000/-. The architect or the owner is not bou: y ind (Q accept th: t tender or any tender or assign any reason for the same. Pt the lowes! Dated peer enya) 5 & Surveyors. The above tender notler 1s slightly modified by prot adding “the tenders will be ret-Wed on (date) upto 2 30 nor goes, BY* 124 PROFESSIONAL PRACTICE opened on the same day at 3.30 p.m. in presence of the tenderers who choose to remain present” Special Notice M/s. P.Q.R. & Co., Dated. . 19 Building Contractors, Bombay 400004. Dear Sir/Strs, Re: Proposed construction of residential building at 19, Bhulabhat Desat Road, Bombay. Owned by Shri A. P. Natk We hereby invite you to send your tender for the above work in a sealed enveloped at our office on or before 25th June, 1994, upto 5.30 p.m. The tender document can be had from our office on payment of Rs. ....-. as tender fees which is non refundable. Drawings can be inspected in the office on any working day between 12 noon to 5.00 p.m or can be had from our office on payment of Rs per set (non refundable). Tenders must be accompanied with free of interest earnest money deposit of Rs.... +++ ‘which will be returned to unsuccessful tenderers The successful tenderer will have to deposit within fifteen days of the acceptance of the tender a further sum of Rs. ... which will be kept as security deposit, bearing 29 Interest The successful tenderer who fails to deposit the further amount in the specified time Limit mentioned above and fails to execute the agrec- ment or commence the work, will forfeit his deposit. You are requested to inspect the site prior to filling of the tender. The tender not fulfilling any of the conditions mentioned above, will not be considered at all. The architect or the owner 1s not bound to accept the lowest or any tender and no reasons will be given for the same. Yours faithfully, XYZ. . Architects, Engineers & Surveyors. Typical Form of Letter of Offer M/s. X.Y.Z. & Co. Dated ........--+- 19 Architects/Engineers. Bombay 400004. Dear Sirs, Re: Proposed residential building on plot bearing.............. 2 ‘Santacruz, at Datta Mandir Road, Santacruz, Bombay. O1 of by M/s. A.B.C. iy. Owned125 TENDERS With reference to the construction of the or an red baidiak including civil work, drainage and plumbing, electric te the works under also development of site, I/we do hereby offer to execu. the contract at: (a) Lump-sum amount of Rs.10,00,000/- (Ten eae on (b) The rate of Rs. 3,500/- per S.M. of the built up Pp ae (c) At the respective rates for each item of work as given of quantities attached herewith to roman or (plus or minus percentage above); at (a) Costof materia eee oflabour and . .. . % above the overall cost. Adopt the appropriate one from above. 1/We have examined the drawings and read (special conditions if any), Articles of Agreement, conditions of contract, specifications, (bill of quantities) etc. 1/We have also taken into consideration the nature and location of site, the surroundings and conditions under which the works will have to be carried out, and agree to complete the work within months from the date of commencement of the work 1/We send herewith as Earnest Money a sum of Rs Demand Draft, Bearing No. ... . Dated M/s. XYZ & Co., This amount will be refur ifthe tender in question ts not accepted. I/ 1s accepted and contract awarded to me. money will be retained by you as Secu implementation of the work. '/We further agree that the deposited Earnest Money of Rs. . to be forfeited in the event of our tender being accepted and contract awarded to me/us and I/we fail toexecute the contract whe, called upon to do so. by cheque/ . Drawn on in favour of ded to me/us without interest We agree that if my/our tender /us, the above referred sum of rity Depostt for the successful Incorporate further ttem as may be applicable like (1) This tender to remain in force fo; closing date of tender. (2) Agrecing to employ Mr... ss asRce Specialist and agrecing to pay his professional fees at , % of the R.C.c work (3) Agreeing to pay Rs........ ascharges (or preparation, stamping and execution of contract document, T @ period of 3 Months from Yours faithfully, sd/ Note: — Without signature, the above letter remai OPTar ns as an “Invitation to tendep and on signing and submitting the same n to tender” to the authority recetvin, th tenders, may be architects/engincers or may be the owners, this format takes the form of a offer ora proposal. On acceptance an offer, valld contract takes birth tance of such' Ue PROFESSIONAL PRACTICE Tender Bids Evaluation is the process It me Em dealing in analysis of offers made by the contractors for execution of the job tendered. The purpose of this exercise Is to select right contractor for right Job so that the work reaches its completion without troubles and to the satisfaction of all concerned. Bids evalugtion puts all the tenderers on equal footing, eliminates all uncertainties as also converts special terms and conditions subject to which the offers have been made, into the moncy contents. ‘The tenders can be one part tender or two part tender depending upon the procedure proposed to be followed and other aspects. For the purpose of Bids Evaluation the tender document submitted by the tenderer Is divided in 3 parts namely: Part - 1: Tender document comprising of Articles of Agreement, Ben eral conditions of the contract, Bill of Quantities, specifications, special terme and conditions, drawings and any crratas Issued forming part of the tender. Part - 2: Earnest money deposit Part - 3: Letter of offer by the tenderer The process of Bid Evaluation runs through all the three parts given above: OPERATION NO. 1 Part - 1:(1) Make a comparative statement of all the tenders quoted as given below: Tender TI Tender T2 Tender T3 ate | Total [Rate | Total | Rate Total Rs. _| Rs. Rs. Rs Rs. _|Remarks Partl- | Quan- cutars | tty | RS- (1:2:4) | 70 C.M.|2000 |140000 ~| 1900 | 133000 | 2100 | 147000 - Cone. for slabs : Mosaic |400 SM.| 100| 40000) 150 60000| 160] 64000|T1 = To tile _ lw. floor- ing 100 100 S.M.| 650 65000 | 610 61000 | 400| 40000|T3 = T mm. : low RCC. Chajja. al | ; = =T go | 3000] 30| 300)TI = not en ad quote! Cem- T3=Arith- ent metic. | pattas. mistake.127 TENDERS The above comparative statement has the advantages of bringing to Surface the following aspects namely: ted () Whether all the items have been quoted or not eit sie Partially. Evaluate quantum of loading necessary an relevant amount for comparison. (b) It will show which items have been quoted too high or he ew (c) Check any over writings in the wordings and/or specification and/or rates and set them out separately. (4) Ttwill also show that if Errata have been issued after Issue of the tender, whether the same has been put in proper perspective by the tenderers or not. Thereafter make a revised comparative statement after loading and deloading for all the factors cited above. Part - 2: Check if the Earnest money is tendered in the prescribed format like cheques /demand draft/bank guarantee bond ete , for the amount specified as also their Periods of validity. Part - 3: Check letter of offer of the tenderers. hether the same is conditional or otherwise The quoting of spectal conditions by th tenderers must be strongly discouraged. If the letter of offer is a condi onal one, make a list of the conditions and evaluate their financial impiication. OPERATION NO. 2 Loaded Sunmary Prepare a loaded summary of all the tend, ers received showing the tendered amounts in their right perspective wit! Out of the loaded summary usually two to three sa@lected depending upon their financial sfanding, rece: construction with job of similar nature as alee his adequacy of management and man power ete They are asked to resubmit their tenders incorporating various aspects as discussed above Similar scrutiny is carried out for the umited tenderers (2 to 3) and final recommendation is made to the owner for acceptance. Note: (1) The mistakes in the tender mai contractors are nt experience of Past experience ¥ be mathemetical typographical same should be duly initialled by tenderer. On correction it ts Got corrected Possible that he may lose the rank of bein lowest. If the contractor not to con moat e his etidorsement on the tender or confirm the same ny writing,ar ages of Drag 1 or not or quoted and add to the co high OF too low xi yor specification od after tssue of the ser perspective By paArAUve s cited tm the prescribed bond ete , for the hether the same ts conditions by the of offer is a con: their financial sco showing the iue loadings being difference un inter ccs, ete. This will '€e Contractors are ‘cent experience of © Past experience “asked to resubm nit 'ssed above. nderers (2 8(2 to 3} ean yand pucel typographical, ‘ould be got corrected sta that he may lowe aime me correct, get me in writing, Ls 128 PROFESSIONAL PRACTICE, (2) Check the rates bo earart ioe both in Ngures and words and carry out necessary ae @ Seance Quoted with the market rates or rates given In the aaa esas the contractor may price some work high and other ‘ork low tn the belief that variations or increases In quantities will mean more of the high priced work and less of low priced work. Two Part Tendering Whether it is one part tendering or two part tendering, the basic premise in both remains the same namely “Negotiate and Choose”, though the procedure differ with different statutory and/or corporate bodies. It depends upon the policy laid down by the bodies for bid evaluation and settlement of the tenders both for one part tendering as well as two part tendering. The procedure for two part tendering in general encompasses the following. Pre-bid Conference: To make necessary clerifications on the points raised by the contractors after issue of the tenders as also to issue any deviations ete., necessary . Three Envelope System for Submission: The tender is submitted in an outer envelope (third envelope) which contains two envelopes marked as Envelope No. | and Envelope No. 2: all are sealed individually. Envelope No. 1; (Submission) It must contain all documents prescribed like (a) Forwarding letter about submission of tender as also tenderer agreeing to fulfill all terms and conditions of the tender. (b) Details of partnership as also Power of Attorney for signing of the contract, as may be applicable. (c) Earnest money deposit (d) Income-tax clearance certificate. (e) List of projects in hand as also those tendered herein before with their extents. () Resource allocation chart and Bar chart proposed for progress land completion of work. List of Plant and Machinery as also man power both technical and managerial. (h) List of counter terms and conditions tf any 'g starts with opening of the outer Envelope No. 3 and taken first which is known as “submission”, Tenderers fed counter conditions or deviations are allowed to withdraw but if they insist for their quoted terms and conditions, the statutory authorities reject their tenders, In certain specialised and complicated jobs the terms and condi- tions quoted by the tenderers: subject to which they are prepared to ir) The proces: Envelope No. 1 ts who have stipulat129 TENDERS. undertake the work, cannot be ruled out. After opening. een : the owner alongwith his consultants deliberate the condit! et condition m4 the tenderers and cull out a minimum set of acceptabl (aera Thereafter the tenderers are supplied with such a set ee Conditions and requested to submit a fresh submission ww Envelore, " loading or deloading of their priced offers, as contained ES No. 2 which have not yet been opened The process of Envelope No. | again starts with revised Seen Non-acceptance of revised set of conditions or revision in an ambiguou ; manner ts rejected and Envelope No. 2 submitted by such tenderers are not opened. ~ Those who have complied with revised set of conditions their Envelopes No. 2 are opened and checked. After loading or deloading as the case may be, to their priced offers contained in Envelopes No. 2, Tesults are tabulated and the lowest is called upon to execute the contract. Even for Envelope No. 2 such of the items which are either not Puvted oF partially quoted, the same stand disqualifications and no farther negotiations are held on such matters, The work is allotted to the lowest provided his Priced offer in final Stage after adjustments falls within the prescribed linit of the estimated Cost of project put to tender, otherwise the tenders are Te-Invited. Procedure for Two Part Tendering ; “A | Envelope No. 1 Envelope No. 2 opened net epened Priced offer “2 Resubmission Envelope No. 2 ‘opened for ‘not opened check130 PROFESSIONAL PRACTICE opening of Tenders in General in Architect's Office. 1. The tenders should be o; pened in presence of the owner or the committee members. The contractors are generally not asked to remain present at the time of opening of the tenders called by private invitation, 2. A list of the tenders along with the tender deposits should be recorded. Deposits should as far as possible be accepted in cheques only. It is likely that a contractor may forget to enclose the necessary cheque towards the tender deposit and hence immediate endorse- ment to that effect should be made on his envelope in presence of the clients and the contractor concerned should be informed tmmedi- ately. 3. If the owner does not remain present, the tenders should be opened by the architect himself who should call upon one of the meas: bers of his staff to assist him. The architect should scrutinise the same, prepare his findings and forward the same to his clicnt with his recommendation as to whom the work should be assigned and why. 4. The lowest tender should ing upon the reputation and standing of the contra g of the tenders by the clients as far as possible be accepted depend- ctor. 5. The practice of receiving and openin should always be discouraged 6. The tender deposits and such other amounts except professional fees should be deposited in a separate account of the firm usually known as an “Agency account” and at no time should the amounts be paid in the trading account wherein the amount of professional [ces are depo- sited. 7. Public tenders are invarlably opened who choose to remain present Before any tender is accepted. It is very essential that all the tenders are thoroughly checked so that they are without any mistakes. Those tenders which are very low as compared to the estimated cost of the ed in spite of the fact that the contractors are Project should be reject! bound by the same. Such works are generally spoiled for use 1s made of sub-standard quality of materials, delay in completion arfd thus result- ing in litigations in which the architect should be the last person to get entangled. If the client insists upon the same, then all these facts should be brought to his attention in writing and the work should be given as per his instructions without the architect in any way taking responsibility for the same. hat all the tenders should be signed, dated and bear tt and the engineer should scrutinise the in presence of the tenderers Its essential t the addresses. The architec’