THE TENDERING PROCESS

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 THE TENDERING PROCESS
PART 1-CLIENT/CONSULTANT
General
 Once design stage is completed and the main tender
contract documents are drawn up, the consulting
engineer or in house engineers through the procurement
department puts the project out to tender.

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 Several methods of tendering exist, these are:
 Open Tendering
 Restrictive Open Tendering
 Selective Tendering
 Pre-qualified Tendering
 Negotiated Tendering

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 Open Tendering
 Where all interested parties are invited to submit tenders
normally by public advertisement
 A small fee returnable or non-returnable may be asked for.
 Very competitive and only interested firm will submit
tender.
 New firms given chance to prove themselves
 Open Tendering is undesirable because it involves too many
contractors and may lead to abortive tendering that wastes
resources and is inefficient.
 Costly and time consuming

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 Restrictive Open Tendering
 Where all interested parties are invited to submit tenders
normally by public advertisement.
 A small fee returnable or non-returnable may be asked for.
 From this list, a selection list is chosen and tenders are
invited.

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 Selective Tendering
 Approved lists of contractors
 Where only tenders who have a proven track record of
experience in the particular field or type of work being done
in the project are invited to tender
 Where the client has a particular list of contractors that he
is prepared to have working for him-possibly also selected
on the basis of the work they’ve done for him in the past.
 List usually 6 to 8 firms according to type of project and
tender regulations.

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 Selective tendering cont’d
 Price may not be competitive
 May lead to cover prices being submitted
 Difficult for new firm to obtain work easily

 Homework
 Single stage selective tendering?
 Two stage selective tendering?
 Serial tendering?

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 Pre-Qualified Tenders
 This is a special type of selective tendering, where the
tenders are invited purely on their experience of similar
work and where a very extensive prequalification process
is carried out.
 This type of tendering is done for very big projects.
 Main focus is;
 The contractor’s financial standing

 Technical and organizational ability

 General experience and performance record

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 Pre-Qualified Tenders cont’d
 Specially Suitable For:
 Large or complex civil work

 Custom designed equipment

 Industrial plant

 Specialized services

 Complex information technology

 Turnkey, design and build, management contracting

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 Pre-Qualified Tenders cont’d
 Advantages
 Enhances participation of serious contractors (since
unqualified bidders are excluded)
 Reduces high cost of bidding
 Reduces complaints of disqualified bidders and
potential controversy
 Gives “Peace of Mind” to Employers
 Borrower able to assess interest of qualified firms
 Reduces time in evaluating bids from unqualified
bidders

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 Pre-Qualified Tenders cont’d
 Disadvantages
 Precludes emerging contractors with limited experience
 Increases overall procurement time
 Review of all application is mandatory whereas post-
qualification requires review of only winning bid
 Possibility of collusion

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Negotiated Tenders
 Where one or more selected tenders are invited to submit
prices for either the whole or part of the project.
 The selected tenders are then used as the basis of
negotiations with the clients or consultants in order to
obtain a final schedule of rates
 The guiding principle is that the confidentiality and
fairness (parity) of tendering is preserved, and that no one
tenderer is given unfair advantage over others.

 Homework:
 Pros and cons of negotiated tenders?

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 Advertising
 Notify all likely parties. It is usual to send letter of invitation
(LOI) or in the case of an open tender to advertise it in the
press
 In both cases the following details are usually required.
 i) Location of the project

 ii) Broad statement of work content

 iii) Broad statement of timing of such items as; issue of

tender documents, site inspection, tender
closing/award, probable start of project and end of
construction.
 iv) Employer

 v) Consulting engineer

In short the invitation to tender should give likely tenderers

enough detail so that they can decide if they are interested
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 Timing
 Important that the vital significance of the timing of all
tender deadlines is understood, particularly the amount
of time the tenderers are allowed to price the job.
 Consultants and clients often forget that they’ve been
intimately involved in project for a long time, often
months or years and therefore, know a great deal about
it.

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 Tender documents
 The tender documents should give the tenderer a complete
a statement of the project that he is bidding for as possible.
 It is vital he is given information to price accurately and in a
way which is easy to assimilate as problems (especially
claims) may arise after the tender has been awarded due to
misinterpretations.
 Ideally, the tender documents should give the tenders full
picture of what is to be done, an idea of how it should be
done, and a complete overview of the contractual setup
involved i.e.,
 (what? How? Where?) (these question should be answered
in the tender documents)

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 Site Inspection
 This is one of the most important part of the tendering
process and allows tenderers to obtain visual idea of the
site and is an amplification of the details given in the
tender documents.
 Some typical items to watch for are as follows:
 a) The site should be clearly demarcated with flags or
something similar e.g. Road project following should be
clearly marked:
 Centre line including km values
 Corners of major structures
 Borrow areas and spoil areas
 Major intersections
 Special areas e.g. swamps, valuable crops, trees
 Tops of major cuts and fills

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 Site Inspection cont’d
 b) Where there are possible foundation or material problems
a geotechnical expert must be brought along to explain the
soil conditions to the tenderers
 c) A conducted tour of the site should generally be done as a
matter of course, stopping at major points of interest or
possible contention. Tenderers should be allowed every
opportunity to stop and view any point and work as desired.
 d) All information should be made available to all tenderers and
therefore the client should arrange in some cases for formal
question-answer sessions.

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 Tender Period
 Sufficient time should allowed for tendering process.
 Engineer’s responsibility (client may lose money over-priced
tenders or bankrupted contractor).
 ‘Notice to tenderer’ must be communicated to all.
 Tender Opening
 The tender opening can cause much sadness unless done in an
open handed way (transparent way)-therefore, great care should
be taken to see it is fair. The best tender opening is the public
one.
 Tenders should be placed in a sealed box before the advertised closing
time.
 The opening should be done in full view of all present
 Each sealed envelope should be stamped, dated and initialed
by the opener.
 Once opened, only announce those tender details previously
stipulated.
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 Tender Adjudication and Award
 Once the tenders are received and opened, it is the
Engineer’s job to adjudicate them and recommend to
the client the tenderer best qualified to carry out the
contract.
 According to Tedesco (1973):
 “a contract should not simply go to the lowest bidder but to the
qualified contractor whose price, considering the overall total
price picture appears to be the most logical. The client should
not think in terms of the lowest first but should consider the
total price for his final operational facility including the cost of
engineering, future maintenance, insurance rates,
construction time too, should enter evaluation”.

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PART 2-CONTRACTOR

General

According to Vance (1988):

 “The preparation of the tender is the most important aspect of
running a construction business and the success or failure of
running a construction company is largely dependent of the
tendering philosophy and it therefore follows that contractors
spends large amounts of time and money”

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 General cont’d
 The percentage turnout as part of the actual
contract/tender price and generally consists of the
following:
 Cost of materials
 Labour
 Plant (equipment) and
 Preliminaries and General items (P&Gs) items (including P&G
plant)*

 * Civil Engineering Standard Methods of Measurement

(CESMM3): find document!!

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 General cont’d
 Cost of subcontractors
 Provisional sums in Bill of Quantities (quantities which may
arise during construction and were not priced for)
 Margin (for overheads/profits)
 Contingencies (sum of money reserved - in case of
anything)
 Other levies (local authority levies)
 Each category requires further breakdown to minimize error.

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 General cont’d : Example –Summary Sheet
Bill No. Description Amount(ZMK)

1 Preliminary and General Items

2 Drainage

3 Earthworks and Pavement Layers of Gravel or Crushed Stone

4 Pavements and Seals

5 Ancillary Roadworks

6 Testing and Quality Control

8 Dayworks

Sub-Total 1

Add 10 % of sub total (1) for contingencies to be expended only with

the express approval of the Employer on the recommendation by the
Engineer and for variation in price in accordance with the Conditions
of Contract

Sub-Total 2

Add VAT @16% of Sub Total 2

Grand Total Carried to Form of Bid

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 Materials, Labour and Plant
 In admeasured tender, quantities will usually be estimated by
the consultant in the BOQ,
 therefore, no measurement will be required by the tenderer
(constructor).
 [CESMM 3- Civil Engineering Standard of Measurement,
Thomas Telford.]
 The major problem is found when allocating the correct
productivity of labor and plant component.

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 Materials, Labour and Plant

 The tenderer will have many different cost codes into which
he splits his rates for example ;
 Materials such as: cement, sand, stones, reinforcement, shuttering
boards, labor, etc.
 Labour: skilled, semi-skilled, unskilled.

 Example

Description Qty Unit Material Labor Plant Sub- Total

contractor

Shutt to Wall 1000 m2 K80 K50 - - K130,000

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 Preliminary and General Items
 Preliminary and General (P&Gs) items are frequently priced
as either;
 Lump Sums

 Method-Related Charges (fixed or time related)

 This is the most difficult part of the tender and relies on a

realistic program, having been drawn up for the job which
can then be used to estimate the time that the supervisory
staff and contractor’s plants will be required on site.

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 Preliminary and General Items
 Classified (ICE )as:

 Contractual requirements
 bonds, insurances etc

 Specified requirements
 The ‘specified requirements’ cover accommodation and
services for the engineer’s (consultant) site staff, tests on
materials, etc., and a range of temporary works that the
engineer might wish to itemize.
 Accommodation, services, equipment for the consultant,
testing, temporary works.
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 Preliminary and General Items

 Method related charges

 Fixed Charges: Cost is fixed and does not change with
time
 Examples: One off activities like construct offices,
provide pump etc
 Time Related: Cost changes with time
 Examples: recurrent activities like maintain offices, de-
watering etc

 See bill next slide.

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 Preliminary and General Items
 Prime cost and provisional sums
 Some parts of the project are not measured in detail but are
included in the bill lump sum items.
 Prime cost sums

 Are intended to cover specialist work not normally

undertaken by the general contractor.
 Therefore they are undertaken by nominated
subcontractors, nominated suppliers and statutory
undertakings.
 They include lump sums that have been based upon
quotations for items of work such as electrical
installations, lifts, escalators and other similar
conveyancing systems, etc.
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 Preliminary and General Items
 Prime cost and provisional sums cont’d
 Provisional Sums
 Involve work which cannot be entirely foreseen, defined or detailed
at the time that the tendering documents are issued.
 They are separately described as for defined or undefined work.
Examples include work such as landscaping, small changes to
drainages, rock excavation etc
 Provisional quantities should be used with care. They should relate
to something known to be required, the quantity being a
reasonable judgement as to what might be required.
 This could apply to such matters as bedding pipes on soft material,
or bedding and haunching pipes in concrete, or fully surrounding
pipes in concrete where the actual extent of such work depends on
the site conditions encountered.

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Summary: Contractors’ Perspective

 Source: Principles of Construction Management by Roy Pilcher

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 In order to FINALIZE the tender
 Know what is to be built including the time frame
involved.
 Thus in general the planning from the contractor’s
perspective starts at or even before receipt of tender and is
an on going process throughout the project.

 Important for the contractor to establish;

 Construction planning

 Technology and methods

 Method statements

 Programming and scheduling

 Time and resource scheduling

 Work Breakdown Structure (WBS)

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 The WBS provides a common framework from which:
 The total program can be described as a summation of subdivided
elements.
 Planning can be performed.
 Costs and budgets can be established.
 Time, cost, and performance can be tracked.
 Objectives can be linked to company resources in a logical
manner.
 Schedules and status-reporting procedures can be established.
 Network construction and control planning can be initiated.
 The responsibility assignments for each element can be
established

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 Unethical Behavior In Tendering

 Case study: Zambian Construction Industry?

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