LAN645

TENDER DOCUMENTATION AND

PROCEDURE

By: LAr. CA. Dr. Helmi Hamzah

PREPARATION OF
TENDER
DOCUMENTS
 Objectives :

 To obtain information on tenderers’ capability to execute the project.

 An instrument to obtain costs and rates for the project.

1. Technical Proposal

- Shall be information and particular of the tenderers

- Other than basic information of the set up of the company, the

tenderers are required to provide information as the following:

i) Organization structure and particulars of personnel

ii) Main Lines of Business

iii) Previous Related Experience

iv) Registrations with related government agencies such as

CIDB, PKK, MOF, etc.

v) Ownership of machinery, equipment, factory, nursery

vi)Financial Statement

vii)Credit Facilities
 4.0 PREPARATION OF TENDER DOCUMENTS
2. Financial Proposal

- Only those tenderers qualified in the technical proposal shall be

evaluated in the financial / commercial proposal.

3. Contents of Tender Document

- Style and format of a tender document shall vary based on Clients’
set procedures.
 4.0 PREPARATION OF TENDER DOCUMENTS
3 .1 Contents of Tender Document

a) Tender Notice g) Specifications

b) Instruction to Tender h) Sample Letter of Acceptance
c) Particulars of Tender i) Conditions of Contract & Article
d) Form of Tender of Agreement

e) Form of Tender Deposit/ j) Bill of Quantities

Tender Bond k) Schedule of Rates

f) Form of Performance Bond l) Tender Drawing

a) Tender Notice
A formal announcement or document issued by a company, government agency,
or organization to inform potential bidders or contractors about an upcoming
procurement opportunity. It typically includes details about the project or
contract, requirements, specifications, submission deadlines, and instructions on
how interested parties can submit their bids or proposals. Tender notices are a
crucial part of the procurement process and are used to ensure transparency and
competitiveness in selecting the most suitable vendor or contractor for a
particular project or service.
b) Instruction of Tenderers
- To guide the tenderers to comprehend and comply with the tender
process.

c) Particulars of Tenderer
- Crucial as basis to evaluate capability of tenderers in the technical
evaluation
 d) Form of Tender

- The tenderer declare to undertake and complete the Contract within

the amount or sum of cost and completion period.

e) Form of Tender Deposit/ Tender Bond

- A form of guarantee by tenderer.

.
f) Form of Performance Bond

- A surety bond, normally issued by an established bank to guarantee

satisfactory completion of a project by the Contractor.

- Performance Bond shall be irrevocable and shall remain in force an

effect until three (3) months after the expiry of the guarantee
period or the expiry date of the Contract, and in the case of
termination of the Contract, one calendar year after the date of such
termination.

- The amount of Performance Bond is normally 5% of the Contract

sum in the form of an approved Banker’s Guarantee.
g) Specification

- Specifications specify the requirements of the works not described in

the drawing and other requirements of the contract not stipulated in
other tender document.

- Specifications are explicit set of minimum requirements to be

satisfied by a material, product, process, characteristics,
workmanship or service.

- Specifications is a standard which is often referenced by parties

involved in the contract.
h) Sample Letter of Acceptance

- Letter of Acceptance from the Client to the successful tenderer,

together with the submitted tender shall constitute a building
contract before the formal Contract Agreement is executed.
- Pertinent particulars submittals are listed such as:

1) Insurance Policies

2) Detailed Work Programme

3) Performance Bond

4) Instruction to comply with all relevant labour low relating

to employment of employees and workmen

5) Defects Liability Period

6) Date of site possession

7) Date of Completion

8) Rate of Liquidated and Ascertained Damages (LAD) per

day

9) Limit of Retention Fund

i) Conditions of Contract & Articles of Agreement

- The documents wherein the fundamental rights and obligations of

the parties to the contract are stipulated.
j) Bill of Quantities (BQ)

1- The Bills of Quantities are the basis for the contract sum. Bills of
Quantities are a document which sets down in detail the item of
work to be executed and the quantities of the same in a logical and
recognized sequence. This shall enable the tenderers to price the
work without having to extract quantities of the work from drawings
and/or specifications themselves.
k) Schedule of Rates

1- ‘Schedule of Rates’ has been variously defined the two common

descriptions being:

1) A list of unit items of work priced at a rate per unit. The

schedule thus formed is used in conjunction with the
measurement of work to calculate payment.

2) Contracts which do not include Bills of Quantities but rely

on drawings and specifications required the contractor to
submit a schedule of his rates to arrive at the tender figure
in order that the variations can be accurately and fairly
value.
2- From the above two definitions the following salient points can be
distilled:

1) The Schedule of Rates is normally employed for a contract

based on drawings and specifications.

2) The primary purpose of the schedule is for its use in the

valuation of variation work undertaken during the
construction stage of the project.

3) Such a schedule may also be employed in a ‘Re-

measurement’ type of contract where it is used for the
dual purpose of tender evaluation and final payment to the
contractor upon execution of the work.
3- In preparing the Schedule of Rates, it is necessary to be mindful of
matters as listed below:

1) For the sake of effectiveness the schedule should be as

detailed as possible, i.e. covering all major trades,
equipment, elements, etc.

2) Where it is intended to be used for the valuation of

variation work items anticipated to be varied should be
identified and listed out for completeness.
3) For each item, the precise scope to be covered by the unit
rate should be indicated, e.g. ‘design, supply, install, test
and commission’ or merely design or supply or installation
or testing and commissioning. Such description should be
unambiguous and unequivocal, leaving no room for future
misinterpretation or dispute.

4) Against each item the unit rate involved should be clearly

indicated, e.g. per metre run, square metre, number, etc.
use of the mere description of ‘Lump Sum’ should be
avoided unless it is the most appropriate description under
the circumstances.
In some contracts another document that normally constitutes part of
the tender documents is the ‘Schedule of Day Work Rates’. Day Work
rates are utilized to value varied work which cannot be properly
measured and for which consequently the contract rates cannot
directly apply. The basis of payment to the contractor is total cost
reimbursement. The ‘day work rates’ are ‘essentially pre-determined
rates of skilled and unskilled labour as well as percentages of profits
and overheads which the contractor requires to be added to the prime
cost of materials and plat for the execution of the subject varied work.
l) Tender Drawings

Most, if not all tender documents will have a major component

consisting of drawings of varying number, form and detail. As part of
the tender documents, the purpose of these drawings depends upon
the type of contract involved.
1- For Contract Based on Bills of Quantities

The tender drawings are used for:

1) Furnishing the prospective tenderers with an overview of

the nature and extent of the work involved.

2) Augment and provide clarifications / details on the items

of work as set out in the bills of quantities.

3) Pursuant to items (i) and (ii) above, assist tenderers in the

pricing of the bills of quantities especially in cases where
provisional / approximate quantities are used.
2- For Contracts Based on Drawings and Specifications

In such applications, the tender drawings serve even more important

purposes than that for contracts based essentially on bills of
quantities. These include, inter alia the following:

1) Identifying and describing in detail the nature and more

extent of the work involved whether described in the
specifications or otherwise.

2) Amplifying and clarifying the detailed nature and extent of

the complete works as contained in other parts of the
tender documents, e.g. specifications, summary of tender,
etc.
3) Providing information to the tenderers to better
comprehend the designers’ intent fabrication and
manufacturing processes and the requirements of the
finished product.

4) Assisting the tenderers in assessing the risk factors and in

the pricing of the works involved for the purposes of the
tender submission.

5) Forming the basis of the eventual preparation of

construction drawings, fabrication drawings, shop
drawings or installation drawings during the construction
phase of the project.
3- Particular attention is drawn to the following points vis-à-vis the
issued of tender drawings.

1) It is necessary for the drawings to be as complete and

detailed as possible especially for contracts based on
drawings and specifications in respect of the nature and
extent of work, design intent, etc.
2) All tender drawings must be fully coordinated and checked
for errors, omissions, discrepancies, ambiguities, unclarities,
etc before being issued as part of the tender documents. This
exercise should be undertaken not only by the designers for
their particular disciplines but also between the various
designers / disciplines to prevent future variations and / or
other claims. It is incumbent for the principal designer for
each discipline and the lead consultant to verify this fact as
part of the quality control procedures for the project.
3) The actual contents and details of the tender drawings will
vary with factors such as the type of contract involved the
nature of the works undertaken, etc but it is common to have
at least the following typical contents:

 Site location / layout plan

 Plans showing limit of works
 Floor plans
 Sections
 Elevations
 Schematic / single line drawings
 Detailing of various parts of the work including
equipment, systems, etc.
4) Advantage should be taken of the adoption of any
standard drawings / details commonly employed in the
industry or for the particular discipline or employer as it
saves time and ensure consistency. If amendments are
necessitated by particular applications these should be
properly documented.