PROFESSIONAL PRACTICE

MODULE II
MODULE II

Tenders: Types of tenders, Tender Notice, Inviting, Work

order, Tender document, Tender acceptance, Tender for
demolition work, Earnest money deposit, Security
deposit, Retention amount.
TENDERS
TENDERS

• Tender is an offer made by a contractor to owner

• To obtain acceptance for construction

OBJECTIVES

• to give wide publicity

• To obtain competitive bids
• To provide equal opportunity to all contractors
TYPES OF TENDERS
TYPES OF TENDERS
BASED ON INVITING METHOD
• OPEN TENDER
• LIMITED TENDER
• NEGOTIATED TENDER
• BALANCED AND UNBALANCED
TENDER
BASED ON QUOTING METHOD
• ITEM RATE TENDER
• SCHEDULE OF RATES WITH % UP &
DOWN
• LUMPSUM TENDER
• LUMPSUM PLUS % TENDER
• COST PLUS % TENDER
• LABOUR TENDER
• TENDER FOR DEMOLITION WORK
BASED ON INVITING METHOD
Open tender/public tender:
• Open to all eligible contractors.
• Eligible contractors can bid for any project
• Most transparent type of tendering
• Invited by publishing a tender notice in a newspaper or any other social
media.
• Healthy competition exists among the contractor in the open tendering
process.
• Type of work : public works
Limited/Selective tender:
• Reputed and experienced contractors invited
• Degree of competition is less.
BASED ON INVITING METHOD
Negotiated/Single tender:
• Big, special and valuable construction project –only one highly
experienced, trusted and the financially sound contractor is called for
tendering process.
• Negotiations between departmental authority and contractor (
specifications rate per item, the total cost of the project, time of
completion etc)
Balanced tender: rates quoted by contractors same as DSR of that year
Unbalanced tender: rates quoted by contractors varying much with rates
quoted in DSR
• Contractors quotes higher rates for initial items of project than DSR
without affecting the cost of the work.
• Contractor can earn more amount of money at initial stages and that
earned money can be utilized for carrying out further items of work.
ITEM RATE TENDER
• Offer based on rates of different items of work
• In this, items of work are fully described with their quantities
• Contractor is supposed to fill rates in tender form
• Payment to contractor: based on measurement of work executed at the
rates quoted by him in tender.
• Balanced method of execution
• Minimized chances of extra work
• Reasonable variation in plan and in quantities during execution of work
• Types of work -buildings, bridges, sewer lines , road etc
SCHEDULE OF RATES WITH % UP & DOWN
• Modified form of item rate tender
• In this case, bill of quantities are duly priced
• Tenderers has to quote only the % above or below the priced schedule
• Type of work : new buildings as well as maintenance work
LUMPSUM TENDER
• Contractor has to undertake the work as shown on plans and as per
specifications and supplying all the materials and labor for a fixed lump
sum or at a fixed rate for cubic or square meter of the work

LUMPSUM PLUS % TENDER

• Same as lump sum tender except that if the contractor completes the work
before the specified date, he is usually granted a certain bonus in terms of
percentage of cost of the project.

COST PLUS % TENDER

• In addition to amount agreed he paid a certain percent of his profit for his
professional services
• Fee is fixed at a certain % of the cost of work
LABOUR TENDER
• Contractor agrees to carry out the complete labor work based on rate
quoted by him.
• Contractor has to supply all tools and planks ,scaffolding, centering
materials, nails etc and owner supplies only the material required
• Contractor is responsible for level and setting out of the work
• Owner has to keep a close watch as the material used by the contractor as
he is least concerned about the wastage
• Materials and workmanship will be of standard quality & disputes are
minimized
• Works: additions, alterations and repair to existing buildings
TENDER FOR DEMOLITION WORK
• Tender called for demolition of existing building up to ground floor and
removal of all materials including the debris
• Tender usually takes away all the materials that are there in old buildings and
in turn they pays specified amount to owner.
• Highest and not the lowest tender should be approved.
• Whole of tender amount should be taken in advance before the position of
the building is given for demolition.
• Contractor should be asked to take out insurance for accidents, workman’s
compensation and other
• Contractor has to make necessary arrangements for cutting of existing water
supply, drainage, electric supply etc
PRE-REQUISITES FOR TENDERING
• Clear site free from all legal or physical obstacles
• Adequate fund
• As per demand procurement of materials
• Finalization of designs and working drawing
• Statuary clearances to commence the work.
• Essential infrastructure at the site
• Completion of pre- contract activities
• Free accessibility to site( for inspection & later)
• Problems in site should be mentioned clearly as part of tender document
Qualities of good tender

• Term of work specified in bill of quantity should be clear and specific.

• Working drawing need to be supplied wherever details involved( eg:
doors, windows, grills etc.)
• All factory made products trade name to be mentioned.
• Basic price of material can be mentioned in case of certain materials like
marble, granite etc.
• All tenders shall be treated equally with same information like
specifications, drawings and bill of quantities.
Stage involved in finalizing tender

• Announcement of tender- TENDER NOTICE

• Submission of tender
• Opening of tender
• Tender scrutiny
• Rate analysis
• Scrutiny report
• Work order
Tender Notice
TENDER NOTICE
 Tender Notice • Documents for obtaining blank
• Notice invite tenders tender documents
Characteristics • Eligibility criteria for tendering
• Clear and brief • Last date for receipt of application
for issue of blank tender
• Name of owner documents
• Site address and building type • Place and period of issue of tender
• Work brief documents
• Type of tender • Last date for receipt of tenders &
place of submission
• Estimated cost • Cost of tender documents
• Earnest money deposit • Date, time, & place of opening of
• Period of completion tenders
Inviting Tender
Inviting Tender

• There are three ways:

• Selection depends on private or
public works, new work or work
Private invitation of additions and alterations etc

Public notice • Special clause: schools ,hospitals,

and cooperative housing societies
requires the tender by public
Negotiation notice only
PRIVATE INVITATION
• Suitable for private works- small scale.
• Only 5-6 contractors invited.
• It prevents the inexperienced persons from entering contract line.
• This require invitation letter along with tender notice should be sent to the
contractors concerned.

PUBLIC NOTICE
• All public works are required to be advertised in newspapers.
• Any contractors can quote for same.
• Chances of getting tenders at a cheaper rate.
• Tenders are not free from agreements.
• The architects/engineers may come in contact with new and intelligent contractors.
PUBLIC NOTICE
• Work is given to contractor quoting lowest amount provided , he is otherwise
equally qualified.
• If tenders are so low that it will not be possible to imagine whether the
contractors will be able to complete the work.
• Such tenders end in dispute, poor quality of work and a lot headaches for the
architects

NEGOTIATION
• In this case , architects / engineers do possess some base or datum for negotiations.
• With this datum negotiations are done with one or two contractors and given to right
contractors
• Most popular with developers and for repair jobs with schedule of rates as the base.
Tender document
• Elaborated form of tender notice .

INSTRUCTIONS TO CONTRACTOR

Type of tender
Name of work, address and owners name
CONTENTS Availability of site
Price of blank tender form
Amount of EMD
Time and place of tender submission
Advice to tenderers to inspect the site
Validity of tenders
Tender document
GENERAL CONDITIONS AND PRELIMINARIES
Basic rate of building materials and list of approved
manufacturers of materials
LETTER OF OFFER
From contractor to architects office
Letter is prescribed by architect’s office
CONTENTS
COPY OF ARTICLES OF AGREEMENT AND GENERAL
CONDITIONS OF CONTRACTS
Printed papers available with IIA
DRAWINGS
Copies of drawings .
WORK ORDER
• This is a letter for contractor by architects, engineers and surveyors to in
behalf of owner inform him that client has accepted tender and
appointment of contractor is confirmed.
• The letter also shows date of commencement of work and reference of
tender submitted by contractor
• This is a part of contract document.
Tender acceptance
• A Letter by architects to contractor.
• Before accepting- written confirmation to that effect from his client.
• Made clear to contractor that tender is accepted subjected to conditions
that he will sign necessary contract for same with owner.
• Once accepted he cannot withdraw from same.
Tender acceptance
Essential aspects before selecting a contractor

• Contractors financial stability depending upon estimated cost of proposed work

• Intelligence, capacity to organize and credit in market.
• Previous works executed and certificates to that effect from the previous architects
• Works at present in hand
• General behavior and temperament
Tender acceptance

Special features for acceptance

• Acceptance within prescribed time limit.

• No such time limit then within reasonable time.
• Tender must be accepted as an absolute without making any counter
offer as otherwise the original offer does not stand.
• Contractor can alter or withdraw tender at any time before
acceptance and he will forfeit his deposit in case of withdrawal.
Earnest money deposit
• It is a guarantee for due performance of contract.

• Amount paid along with tender.

• Retained in Architect’s office without payable interest.

• Normally 2-2.5% of estimated cost

For large projects:1% of estimated cost

• Mode: in cash, bank guarantee etc.

Earnest money deposit
Forfeiture of EMD :

1. Tenderer fails to commence-earnest money along with performance

guarantee is forfeited.

2. If tenderer withdraws before validity period or if makes any

modifications in terms & conditions which are not acceptable by the
owner(50% of earnest money)

3. If successful tenderer fails to furnish security deposit then the earnest

money is forfeited.
Earnest money deposit

Refund of earnest money :

• Earnest money of successful tenderer can be adjusted against security

deposit required to be furnished by him.

• Of Unsuccessful tenderer is returned after the expiry of validity period or

after the award of contract
SECURITY DEPOSIT

• Check or safeguard for owner to ensure that contractor fulfills all terms
and conditions of contract.

• Rate: 2-5% of estimated cost

• Mode: cash, fixed deposit etc.

SECURITY DEPOSIT

• Forfeiture: in full or in parts

• Refund:

Completion of work after expiry of defect liability period

On obtaining labor clearance certificate
On finalization of final bills and work accounts
RETENTION AMOUNT
• Amount as guarantee for owner when any claim ( any defects) arises against
contractor.

• Engineer in charge withhold the amount from security deposit in of claim

against contractor.

• If security deposit is insufficient, amount is deducted from running bill.

• Not a compulsory amount and very rarely arise out of contract.

• It has no relation with tendered amount.

• This has no relation with maintenance period and can only be released after
finalization or adjustment of claim

• Mode: cash, fixed deposit etc.

RETENTION AMOUNT- Refund

• 50 % of the said amount is paid after the virtual completion of the work

• Final installment of 50 % is paid after the defect liability period has

passed and after issue of final certificate by architect

• RF doesn’t carry any interest

Thank u……

Prepared by
Abitha S Thampi
Associate Professor
BJI