Technological University of the Philippines – Taguig Campus

Km. 14, East Service Rd., Western, Bicutan, Taguig City

Construction Engineering Management

Module 1
Bidding Process

5. Who are the following responsive bidders?

P.D. 1594 f
6. What is the average of all the responsive
The implementing rules and regulations of P.D. 1594 bids?
states that no award of contracts shall be made to a bidder 7. What is the Allowable Government Estimates
whose bid price is higher than the Allowable 8. Which bidder should the project be awarded
Government Estimate (AGE) or the Approve Agency to?
Estimate (AAE), whichever is higher, or lower than the
70% of the AGE. The Allowable Government Estimate P.D. 1594 for Unbalanced Bids
(AGE) is defined as one-half the sum of the AAE and the
average of all responsive bids. For purposes of The implementing rules of P.D. 1594 defines
determining the average of all responsive bids, bids an unbalanced bid as a bid containing one or
higher than one hundred twenty (120%) of the AAE or more pay items that are 30% higher than the
lower than the sixty percent (60%) of the AAE shall not unit Allowable Government Estimate (AGE) in
be considered/ No negotiation will be allowed to bring respect to major items whereas other pay items
down the bid to the level of the AAE/AGE. are priced lower than the unit AGE. AGE is
defined as one-half the sum of the AAE and the
Sample Problems average of all responsive bids. For purposes of
Situation I: determining the average of all responsive bids,
bids higher than 120% of the AAE or lower than
A project has been bid out by the Department of Public 60% of the AAE shall not be considered. Major
Works and Highways. The Approved Agency Estimate items are defined as pay items representing at
(AAE) is 500 million pesos. The results of responsive bids least 20% of the AAE or those indicated or
are as follows: specified in the instruction to bidders.
Bidders Bid Price
Situation III:
Bidder A ₱ 354,000,000
The responsive bids for a government project
Bidder B ₱ 639,000,000
with 8 bid items are as follows (all cost figures are
Bidder C ₱ 483,000,000
Bidder D ₱ 583,000,000 in thousands of pesos):
Bidder E ₱ 295,000,000
Bidder F ₱ 385,000,000 Qty AAE Bid A Bid B Bid C
Item 100 1,000 1,000 1,250 750
1. Who are the following responsive bidders? 1
2. What is the average of all the responsive bids? Item 100 20,000 22,000 16,000 19,000
3. What is the Allowable Government Estimates? 2
4. Which bidder should the project be awarded to? Item 500 5,000 4,000 6,100 5,100
3
Situation II: Item 60 6,000 6,000 4,800 5,600
4
A project has been bid out by the Department of Public
Item 1,000 3,000 2,900 3,300 2,800
Works and Highways. The Approved Agency Estimate 5
(AAE) is 280 million pesos. The results of responsive bids Item 400 1,600 1,000 1,600 2,100
are as follows: 6
Bidders Bid Price Item 3,000 3,000 2,500 2,400 3,200
Bidder A ₱ 354,000,000 7
Item 20 25,000 31,000 20,000 26,000
Bidder B ₱ 639,000,000
8
Bidder C ₱ 483,000,000
Bidder D ₱ 583,000,000
Bidder E ₱ 295,000,000
Bidder F ₱ 385,000,000
 Technological University of the Philippines – Taguig Campus
Km. 14, East Service Rd., Western, Bicutan, Taguig City

Construction Engineering Management

Module 1
Bidding Process

9. What is the total AAE?

10. What are/is considered as major item/s? Situation V:
11. What are/is considered as unbalanced bids?
The quantities and contract prices for a
P.D. 1594 for Change Order government project are as follows (all cost figures
The implementing rules and regulations of P.D. 1594 are in thousands of pesos):
prescribe the conditions where a change order may be Unit Price
issued. Change orders are limited to 25% of the original Qty
AAE Contract
contact cost excluding the effects of price escalation Item 1 120 100 80
and provided that no major item shall be increased by Item 2 50 2,400 2,500
more than 100% of its original cost. Major items are Item 3 600 160 150
defined as pay items representing at least 20% of the AAE Item 4 80 1,000 900
or the first two items having the highest percentage of the Item 5 800 40 45
AAE or those indicated/specified in the instruction to Item 6 500 80 90
bidders. Item 7 25 1,200 1,100
Item 8 3,500 20 18
The Implementing rules and regulations of P.D. 1594
states that for a unit-price contract, quantity overruns or
15. What is the total AAE?
under runs of not more than fifteen percent (15%) of
the estimates per major pay item (i.e pay items which 16. What item/s are/is considered as major
represents at least 20% of the total estimated cost) and item/s?
twenty five percent (25%) per minor item in the Bill of 17. What item/s should be covered by a change
order given the following table?
Quantities need not to be covered by Change Order
provided that the same is authorized by the Approving Change
Qty
Order
Authority for the contract.
Item 1 120 150
Item 2 50 55
Situation IV:
Item 3 600 500
The quantities and contract prices for a government Item 4 80 90
project are as follows (all cost figures are in thousands of Item 5 800 650
pesos): Item 6 500 380
Unit Price Item 7 25 15
Qty
AAE Contract Item 8 3,000 4,200
Item 1 100 1,000 800
Item 2 50 10,000 12,000
Item 3 500 5,000 6,000 -END-
Item 4 60 6,000 5,000
Item 5 1,000 3,000 2,500
Item 6 400 1,500 1,600
Item 7 3,000 2,000 1,800
Item 8 20 25,000 30,000

12. What is the total AAE?

13. What are/is considered as major item/s?
14. Assuming that a Change Order is necessary for item
5, what will be the maximum allowable increase in
contract amount?