PRE-CONTRACT ADMINISTRATION (DQS259)

TOPIC 6

TENDER EVALUATION

1.0 Introduction

1.1 Tender Evaluation

- The process of evaluating the conditions, prices and competency of tender
submitted by the tenderers is called tender evaluation.
- To select the appropriate/eligible/suitable contractor to execute the proposed
project
- Evaluators is function to examine whether those records are genuine, correct,
and updated.

1.2 The flowchart of tender evaluation

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i) QS task during tender evaluation

- QS task during Tender Validity Period (TVP): – Evaluate the tenders –
Technical & Commercial – Prepare Tender Report – Present to Tender Board
– Prepare Letter of Acceptance before expiry of TVP.
• Purpose of tender evaluation - to select the appropriate contractor that
tenders the most advantageous to the client in terms of technical and
commercial criteria.
• Before tender is evaluated, QS or architect will check whether the
tenderer has provided all the information required as stated in the tender
document (as per Instruction to Tenderers)
• QS will also check whether all mandatory requirements to be submitted by
the tenderer is available – the forms, earnest money, etc.
• All mandatory requirements are stated in Instruction to Tenderers (ITT)

- The consultants should examine the following:

• Compliance with conditions of tendering
• completion time, etc
• Financial status
• financial standing/bank statement, credit and debit
• Arithmetically – arithmetic error, correct transfer of total to summary of
tender sum
• Pricing error – items priced in relation to the correct unit of measurement,
whether similar rates entered for similar items in different sections,
consistency
• Pricing method
• Basic price list

- Submission of tender
◦ Before tender submission, the tenderer is required to submit technical
document and commercial document in a separate envelope.

2.0 Types of Evaluation

i) The bulk of tendering exercises undertaken in the construction industry involve

elements of the evaluation process owing to the serious legal ramifications of the
contract formation process and to ensure that a suitable contractor offering an optimal
technical and commercial bid secures the ensuing contract.

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ii) Two types of evaluation process

a) Single-stage type
◦ This variety of the evaluation process is confined to projects which are
essentially;
a. Small in value
b. Simple in nature
c. Involving a small number of tenderers
d. Employer with limited resources for evaluation
e. Involving minimal tender submission documents
◦ Either the employer himself or his nominated representatives undertake all
aspects of the assessment’ i.e technical and commercial, from initial review
until the final recommendations without incurring activities such as interim
recommendations, interview of tenders etc.

b) Two-stage type
• Evaluation on a stepped or two-stage basis is applicable where some or all
of the following circumstances are applicable;
a. The project cost is relatively high
b. The works are technically and organizationally complex
c. The number of tenderers are large or relatively more specialized
• Employer having sufficient resources for detailed assessment
• Elaborate criteria for evaluation
• Relatively higher number of tender documents submitted and of a complex
nature and content

3.0 Criteria of Evaluation

- Divided into two criteria:

TECHNICAL EVALUATION COMMERCIAL EVALUATION

• Contractor’s organization • Tender price offered by the tenderers
• Experience • Rates
• Work load • Any percentage adjustment to be
• Contractor’s resources made – due to error/mistakes
• Quality control/assurance
• Health & safety management
• Disputes (if any)

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3.1 Technical Evaluation

- In the technical evaluation stage, following major activities are undertaken:

i. The evaluators assess the submissions based on the approved evaluation

criteria

• This is the core activity of the entire evaluation process

• It should be governed by objective considerations based on unbiased

reviews and assessments driven by principles of fairness and
professionalism.

• The assessments would entail aspects involving:

a. Completeness of Offer

b. Reasonableness of Work Programme

c. Technical Conformance

d. Capability of Tenderers

e. Alternatives

a. Completeness of Offer
- The tender submissions must be reviewed to establish any material
omissions, deficiencies and/or patent errors that will render such an offer
incomplete and incapable of forming the basis of acceptance by the
employer. Examples;
◦ Form of tender: Incomplete or not signed at all
◦ BQ/Summary of Prices: Incomplete
◦ Schedule of Technical Data: Incomplete/ Unclear

b. Reasonableness of Work Programme

- A major area of concern for most employers are issues pertaining to the
completion times such may be related to the overall completion or to
phases/sections as expressly required by the employer.
- Evaluators must assess not only the comparative merits of completion
times for the base bids and the alternative bids but also issues such as the
effect of these completion times on the final contract sum.

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c. Technical Conformance

- The technical conformance assessments involve a review of;

i. Technical information submitted, e.g schedule of technical data, product
information etc.
ii. Drawings, sketches, schematics, etc.
iii. Method statements (if applicable)
iv. Details on proprietary systems, alternative proposals, design solutions,
etc.
v. Any relevant technical information enclosed to explain, clarify any
technical matter forming part of the tender submissions.

d. Capability of Tenderers

- The basis of the technical capability evaluation would be review of the

tenderer’s experience in relation to;

• Previous experience of works of a similar nature to the works being

tendered
• Current projects being undertaken

e. Alternatives
- Where alternatives have been expressly solicited and/or implied permitted, a
detailed evaluation of such alternatives be undertaken on similar lines to the
base bid

ii) An interim tender report is prepared

- This report should;

• Be in essence a mere technical evaluation
• Contain the assessment of various parties responsible
• Be compiled, coordinated and signed off by the chairman or head of the
tender valuation committee
• On being signed off be circulated to the employer and the tender committee

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3.1 Commercial Evaluation

- The second stage of evaluation process involves only the commercial aspects that is
undertaken on the successful completion of the first stage technical evaluation
exercise
- It is accordingly confined to the list of tenderers as approved at the end of the first
stage that have been found to be technically compliant.
- In the commercial evaluation stage, following major activities are undertaken:

i) The evaluators assess the commercial submissions based on the approved

evaluation criteria

- The assessments involving the following reviews:

a. Completeness and accuracy of commercial offer
b. Reasonableness of prices
c. Financial capability of tenderers
d. Alternatives

a. Completeness and accuracy of commercial offer

- The commercial submissions must be assessed on a two-prong basis:

• To identify any material deviations, omissions, deficiencies, etc.

• To establish the accuracy of the commercial offer made, e.g arithmetical

mistakes, etc.

- The entire commercial submission must be reviewed inclusive of;

• Bills of quantities

• Summary of tender

• Schedule of unit rates

• Daywork schedule

• Form of tender

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b. Reasonableness of prices

- The reasonableness of the following categories must be assessed;

• Price of works as contained in the BQ or summary of tender,et
• Rates of variation works, e.g schedule of unit rates or daywork schedule;
• Miscellaneous prices, e.g service and maintenance, facilities management, etc.
- Since the pre-tender estimate is used as the benchmark, it is imperative for such
an estimate to be reasonable in the first place.
- Such an estimate must never be altered to suit the tender prices received as it
compromises the fairness of the process and the professionalism and integrity of
the QS/project team.

c. Financial Capability of Tenderers

- Assessment must be undertaken of the tenderer’s financial capability which can
gauged from the details furnished as well as necessary inquiries made to the
tenderer’s banker, funders, creditor, etc ( with the tenderer’s consent).

d. Alternatives
- The assessment should also encompass any alternatives expressly requested or
implied cleared for evaluation. The likely impact of different completion times
proffered in relation to the stipulated liquidated ascertained damages and any price
fluctuation clauses should be thoroughly reviewed to provide a true picture from
the commercial perspective.

ii) An interim tender report is prepared

- It is circulated to the employer and/or the tender committee/ tender board.

4.0 Tenderers to be evaluated

- Schedule of Tender Received

• For PWD projects, tender board committee is divided into 3 categories:
o Large Scale Project (exceed RM10.0 million)
o Medium Scale Project (RM2.0 to RM10.0 million)
o Small Scale Project (less than RM2.0 million)
• For PWD projects, the tenderers are evaluated based on ‘cut-off’ system. It is
based on statistical analysis
o Standard deviation

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4.1 First Stage Evaluation

- To ensure that the submitted tenders are fulfilled with the conditions of tendering,
reasonable, sufficient and complete.

4.1.1 Evaluation criteria:

i) Analysis on Tender Fulfillment

• Tenderer signed the Form of Tender?
• Tender Sum is indicated in the Form of Tender?
• PKK/CIDB registration is still valid?
• All basic tender documents are submitted?
• Construction Period offered by the tenderer? (Must be in reasonable time
– not later than the date as stipulated in the Instruction to Tenderers)
ii) Analysis on Sufficiency of Mandatory Documents
• Overdraft allowance?
• Financial status report from Bank/Finance Institution
• Company’s balance sheet (last 2 years)
• Other documents: refer to handouts “Submission of Tender Documents”
• If any of the mandatory documents is not complete, the tenderer shall be disqualified and
shall not proceed to the next assessment.

iii) Analysis on Capital Requirement

• Minimum capital = 3% of consultant’s estimate
• Actual Tenderer Capital < Minimum Capital = Disqualified for
recommendation.
iv) Analysis on Current Project Performance
• Project on going before tender closed
• No abandoned project or delay
• After the evaluation in the first stage is complete, the consultants will make conclusion
based on the analysis.
• The tenderers shall be listed in a table composition to view whether they FAIL
(disqualified) or PASS

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Example:
Appendix A: Analysis of Tenderer’s Fulfillment with the Conditions of Tendering

• Appendix B: Analysis of Tender Sufficiency

4.2 Second Stage Evaluation

- Assessment is made only to the tenderers that have PASS in the first stage evaluation
• Evaluation criteria:
◦ Financial Capability
◦ Technical Capability
• Staff or key personnel?
• Project experience?
• Current workload?
◦ Tenderer’s asset? (plant and machineries)

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4.3 Third Stage Evaluation

- Assessment in 3rd stage is conducted for the tenderers that have PASS in the second
stage.
- In this stage, adjustment of tender sum is made in order to delineate the most
appropriate tenderer for the project.
- Consultants will provide Recommendation to the tender board committee.

4.4 Other analysis

- Checking for arithmetical errors – need to adjust by Percentage Adjustment

- Table of Tender Summary - comparison of tender sum (offered by the tenderers) with
consultant’s estimate
- Analysis of major rate item - to identify competitive rate

5.0 Issues during tender stage

5.1 Falsification Document

- Falsify is defined by Cambridge Dictionary as to change something, such as a document

in order to deceive people.
- Means the contractor give false information such as changed the figures, records etc in
the tender
- The Document Falsification Occurrence According to the Contractor Registration Grade
mostly involving the G1 contractors (27%), G2 and G3 contractors (23%), G4
contractors (19%), G5, G6 and G7 contractors (4%). All contractors must register the
grades and get the Registration of Contractor licences from CIDB
- The site visit certificate is missing, the tender / bid should be rejected and the bid price
not disclosed

5.2 Forgery of Experience and Qualification Claims

- Doubtful or suspicious document such as relevant experience, qualification approved,

financial capability and integrity. Any contractor or consultant that has recent, relevant
convictions or has been disbarred for irregular, financial activities, or failure to complete
contracts, should not be allowed to prequalify.

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- It causes extra work on the part of the evaluators and incurs time to get the feedback or
authentication from the authorised person from the related agency

5.3 Signing of The Letter in The Document

- Some of the contractor are not signed the form inserted in the tender such as
agreement Form.

5.4 Incomplete Form

- Not complete detail information of tenderer such as company background, bank

statement (not approved by the bank)
- Didn’t submit the CA form about the financial data of the tenderer
- The tenderers are not submitted the detail about the current project in the Form G.
This is important to make sure the tenderer have experienced in handling the propose
project.

5.5 Problem Identified based on previous study

i. Corruption in terms of providing payments to gain profits or avoid losses during the
tender process
ii. Provision of commission and compensation to win the tender
iii. Initial bidding document outside the tender process
iv. Collusion in term of reduction contract price for the procurement manager by contract
awarded.
v. The price evaluation has no clearly basis and criteria
vi. The mechanism of objections and appeals that are of limited scope. It only allow the
tender participants to refute the tender result but not to provide prospective bidders
who feel disadvantaged by the procurement documents
vii. Compounding or breakdown of work packages with a specific purpose
viii. Mark up in determining Owner Estimate
ix. Collusion between providers and procurement officer
x. Using other company’s name to join the tender process
xi. The pattern of bid document in the framework of unfair competition
xii. Political intervention or controlled by others
xiii. The procurement plan leads to a particular product or contractor
xiv. The execution construction timeframe of the tendered is unrealistic
xv. The procurement committee is unfair, dishonest and unprofessional

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xvi. Partner documents are incomplete or not eligible

xvii. Unfair qualification criteria
xviii. Bidding document does not meet the specified standards
xix. Incomplete tender document
xx. The announcement period is too short
xxi. There is no communication between PPK, Pokja, and Expert team at tender process
xxii. Excessive technical requirements over construction project tendered
xxiii. Bidding time frame is too short, especially when it is too close to the end of fiscal
year
xxiv. Proforma tendering
xxv. Falsification of qualification documents
xxvi. Leak of the lowest bid value

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