WHAT IS TENDERING

Tendering is an administrative way of sending out drawings and bill of quantities

or specification to contractors for them to state the prices for all items of one
contract.

TYPES OF TENDERING

1. Open Tendering
an advert is placed in the press to invite any firm that wishes to do so to
submit tenders for a project, the advert will give a brief description of the
wok to be undertaken. Interested firms apply for the tender documents;
collect them upon payment of money. Money deposited is usually non-
refundable. The deposit covers the cost of producing the tender documents
and also discourages non-serious bidders
Advantages of Open Tendering
i. Give opportunity for all firms including relatively unknown but
capable ones to tender
ii. since there is no restriction there is no favorism in drawing up list of
tenders
iii. prevent firms in area from forming a clique to keep up price
iv. secure maximum competition

Disadvantages of Open Tendering

i. Increase the cost of tendering for greater number of firms likely to be

involved in tendering and only one of them successful
ii. A lot of time is taken and lost through placing of notice in press,
preparing drawings, bill of quantities, specification, sending out,
receiving the same volume of tender back, sorting out, checking errors
and analyzing.
iii. The lowest tender may not necessary be competent to handle the
project
iv. Many good firms avoid open tendering
2. Selective Tendering
This process draws a list of select limited firms and invites them to submit
tenders. Short list of 5-8 competent contractors usually drawn up, with one
or two reserves firms to replace any one of the original list who fail to accept
invitation to tender.
 The criteria for drawing up the list of tenders would depend on the character
of the project and size.
The following points have to be considered
1. The standard of workmanship required
2. The equipment such as plant and workshop owned by the firm
3. The business record and standard of the firm, completion date of previous
job, if project her brought within budget, claim policy of the firm.
4. Financial stability
5. Capacity available in relation to the firm’s current workload
6. the real willingness to tender

Advantages of selective tendering

i. Shortlisted firm is usually prepared from the clients approved list of

contractors
ii. List of contractors are those with established scheme, integrity,
responsibility and proven competence for work

Disadvantages of Selective Tendering

i. Selective tenders might mean higher quotation than that obtainable from
open tendering partly because of less competition and standard of firm,
workmanship and performance
ii. Tenders can be rigged and inflated by collusion if the firms get to know the
probable limit of the list of tenderers in an area.
iii. Some firms are not interested in a particular job but do not consider it polite
to decline invitation to tender, they put high tenders so as to put them out of
the race.
3. Negotiation
There may be times the client has satisfactory association with a particular
firm and is prepared to give them the contract on the recommendation that
their prices are reasonable. Also where work is of specialized nature or
requires a special skill which is possess but a particular agreement with that
particular firm without involving other firms.
In such cases the bill of quantity maybe prepared in the normal way and sent
to the contractor to price. When priced it is returned to the quantity surveyor
for examination and reporting.
Advantages of Negotiation
 i. time saving
ii. more factors can be discussed between the parties during negotiation
such as construction method and procedure
iii. completion no longer depends on price but competence

Disadvantages of Negotiation

i. negotiation contract lead to higher price

ii. condition for public accountability are rarely satisfied

CONVENTIONAL CONTRACTUAL ARRANGEMENT

Types of contracts

i. Fixed price contract

ii. Cost reimbursement
iii. Package deal
iv. Target Cost
v. Turnkey
vi. Management

FIXED PRICE CONTRACT

They are of three types

 Bill of quantities contract

 Lump sum contract
 Schedule contract

Bill of Quantities Contract

This is preferred by both consultant and client. In this type of contract, the tender
drawings which make it easier for firms to estimate the tender figure. The BOQ
contains every item of cost required to complete a project and the contractors is
expected to fix his price against each of the item listed.

Lump Sum Contract

The contractor agrees to carry out work for a fixed sum of money. He is provided
with drawings and specification, to calculate his tender figure. BOQ is not usually
provided. This type of contract is only used for small project especially when most
of the work is above ground and well detailed.

Schedule Contract

The contractors tendering for the project are supplied with a list of description of
work to be undertaken. Against each item is inserted a unit rate. Each contractor
will indicate whether he is prepared to do the work at the stated rate. the contractor
returns their list to the employer and the quantity surveyor on his behalf examines
the rates and recommend which rate should be awarded, the contractor
recommended is awarded the contract. All works done by the contractor will be
measured on the site and valued at the agreed rate.

COST REIMBURSEMENT CONTRACT

This is sometimes known as cost plus contract or prime cost. prime cost of a
project is the net cost of materials, labour, plant and other preliminary items
expended on the project and in addition a fee to contractor to cover his profit and
overhead. Cost reimbursement contract could be

Cost Plus Percentage Fee

This type of contract, the net cost of material, labour, plant etc. expended on a
project ascertained and percentage added to cover the contractors profit and
overhead. The percentage is agreed before the contract is signed and may be
subject to completion

Cost Plus Fixed Fee

The net cost of labour, materials and plant is ascertained on completion of the
project. The total is paid to the contractor in addition to a fixed fee to cover his
profit and overhead. The fee is fixed and agreed between the parties before the
contract is agreed

Cost Plus Fluctuation Fee

This is an improvement on cost plus fixed fee contract, the contractor fee is
increased by the agreed sliding scale sliding scale basis should the final cost be
below the estimated cost.
Target Cost with variable fee

a target estimate is agreed between parties to the contract. Should the final cost of
the project be less than the target estimate, the contractor fee will be increased by
an agreed percentage of the saving. Also if the cost exceeds the target estimate, the
contractors fee will be reduced by an agreed percentage of the over-expenditure the
greater the saving on the target estimate, the higher will his fee and vice versa

Package Deal or All-In-Service Contract

This system of contracting originated from the states of America. A contractor

agrees with his client to take full responsibility from design and construction. This
eliminates some of the delay involved in cooperation with consultant but increase
the risk to the client of unsuitable construction

The client gives the brief directly to the contractor of his choice, who then submits
a proposal in terms of design and specification cost and completion time. If his
terms are acceptable, a formal agreement is signed and the contractor undertakes
all the works of the consultant using is in-house staff or by commissioning outside
consultant and also carries out the construction of the project.

Turnkey

An agreement under which a contractor completes a project then hands it over in

fully operational form to the client who needs to do nothing but turn a key

Management Contract

The management contract is a contract procurement method in which a

management contractor provides management expertise on a construction project
in return for a fee

The role of management contractor who may be a general contractor is appointed

by the building owner to work alongside his professional consultant. The
management contractor is appointed on a similar professional basis as the
consultant to enable him gives construction management service in return for
reimbursement on a fee basis
 Employer

Management contractor

Architect Work contractors

Quantity Surveyor

Consultant

- management contractor can advise on the design implication and cost

- he co-coordinator work on site effectively
- controls tendering procedure and contractual arrangement for work element
- cost monitoring is instituted

TENDERING PROCEDURES

Estimating Department

The estimating department carries out technical functions within the building
commercial field. Basically they are responsible for the preparation of estimates,
which transform to tender.

As soon as full tender documents are available, the estimating department initiates
actions and articulates a lot of factors towards the realization of the firm’s
objectives

Establishment of All in Rates

Rates are ingredients of plant, materials, overhead and profit combined for the
purpose of inserting against each item of work in a given project so as to arrive at a
tender figure.
Labour

This is referred to contractors men working on site. labour include tested and non-
tested artisans, foremen and general labourers. All these men are paid and the
resultant cost will be labour cost for the given unit of work.

In calculating all-in rate for labour consideration are given for the prevailing basic
rates, statutory approved allowances, allowances such as holiday, wet weather,
annual leave, absenteeism, sick leave, Saturdays and Sundays so as to arrive at
effective working days in a year
Days in a year = 365

Less

a. Saturdays and Sundays (52 X 2) = 104

b. wet weather say = 20
c. annual leave say = 14
d. public holiday say = 10
e. absenteeism and sick leave = 10
total = 152 =152
effective working days =207
effective working hours 9hours less 1 hour break =8hours.
Calculating all in rate for labour
unskilled labour

Cost of unskilled labour per month = 12480

Cost of unskilled labour per year = 12480 X 12 = N 149760.00
Add 2% for gang leader N 2995.20
1
Add for pension and gratuity 2 % N3744.00
2
1
Add for compensation and insurance 1 % N2246.40
2
Add for transport allowance 5% N7488.00
Add for housing allowance 40% N59904.00
Add for leave allowance 10% N1497.00

TOTAL N241111.40

241111.40
Cost of labour to employer per day = 207
= N1165.00
1165.00
Cost of labour per hour = 8
= N145.63

Calculating all in rate for labour

skilled labour

Cost of unskilled labour per month = 16700

Cost of unskilled labour per year = 16700 X 12 = N 200,400.00
Add 2% for gang leader N 4008
Add for pension and gratuity 3% N6012
Add for compensation and insurance 2% N4008
add tools allowance say N50.00 per week: N50 X 4 X 12 N10,020
Add for transport allowance 5% N10020
 Add for housing allowance 40% N80160
Add for leave allowance 10% N20040

TOTAL N334668

334668
Cost of labour to employer per day = 207
= N1616.75
1616.75
Cost of labour per hour = 8
= N202.09

Materials

This are varying component delivered to the site which when properly combined
result to a functional element of a building project.

the calculation for material cost usually consider the cost of delivery to site, cost of
unloading, the cost of transportation to site, waste or breakage, cutting,
depreciation, bulk compaction and shrinkage.

Plants

Plants are equipment employed on a building site in order to save money labour or
time. Plant includes mechanical and non-mechanical items. mechanical items like
bulldozer, concrete mixers, vibratos, cranes, dumpers, excavators while non-
mechanical plants include tool taken care of in the preliminaries and are normally
calculated on a percentage basis. Non-mechanical tools include water tank, work
bench, pulley and re-sharpening tool.

The cost of mechanical plant is calculated based on the work item to be executed.
Consideration is usually given to hiring or purchase, running cost, depreciation,
insurance, license among other in arriving at the cost to be inserted.

Cost of Plant
Assuming that the capacity of the tractor and scrapper is 4m3
Capital cost N150000000
Replacement after 5 Years
Replacement every year 20% N3000000
Cost of capital 25% N3750000
Repairs and maintenance 20% N3000000
Total Cost N9750000
Considering Usage 160days in a year
9750000
Cost per day = = N60937.50
160
Labour Operating
Assistant to driver = N145.63 per hour
2 Labourers (2 X145.63) = N291.26 per hour
Driver = N202.09 per hour
Total = N638.98
Cost per day = N638.98 x 8 = N 5111.84
Fuel cost
Assume fuel N3500/day N3500

Summary
Plant N60937.50
Labour N5111.84
Fuel N3500
Total N69549.34

Considering the plant turns 5 times per hour

Capacity per hour = 5 X 4 = 20m3
Capacity per day = 20 X 8 = 160m3
69549.34
Cost per m3 = = N434.68
160
Add profit and overhead say 25% = N108.67
Cost Per Unit Rate N543.35

Build Up Hourly Rate for Plant and Equipment

Considerations

 capital cost
 depreciation
 interest on capital
 expected life of plant
 number of hours worked per annum
 maintenance
 insurance
 road license
 operational wages
 fuel
 lubricants

Capital cost (purchase price) =N37, 000

Residual value (resale/scrap value = N6, 000
Interest on capital = 6% compound
Expected life = 5 years
Hours worked per annum = 1600
Maintenance cost = 10% of capital cost
Insurance: included in company overhead
Road license = N200 per annum
Operative rate N7.50 per hour
Fuel = 5 litres/hour @ N40per litre
Lubricant = allow 10% of fuel cost
 Solution 𝑟
A= P (1+ )n
100
Standing Charges
Capital cost 37,000 6
= 37000 (1+ )5
100
Less Residual value 6000
Depreciation 31,000 = 37000 (1+0.06) 5
Interest 6% compound of 37,000 over 5 years 12, 514
= 37000 (1.06) 5
Maintenance cost 10% of capital 18, 500
Road License 200per annum for 5 years 1000 = 37000 X 1.338225578
Total for 5 years 63,014
Amount at end of five years = 49514.34637
Cost per hour
Number of hours per annum 1600 Compound interest = 49514.34637- 37000
Total number of hours at 5 years 1600 X 5=8000
63,014
= 12,514.34637
Cost per hour = N7.88
8000

Running Charges
Drivers wages 1856 hours at 7.50 13920
Fuel 1600 X 5 X40 320000
Lubricant 10% of fuel 32,000
Total for 1600 hours 365920
365920
Cost per hour = N228.7
1600

Summary
Total cost =N7.88
Running = N228.7
Total hourly cost = 236.58
Calculate the net rate m3 using an excavator with output 5m3/hour for excavating and loading in lorries.
hour cost of excavation
Cost per m3 = 𝑜𝑢𝑡𝑝𝑢𝑡
236.58
Cost per m3 = 5
=N47.316

Pricing preliminaries

Preliminaries are temporary work items that service all races and activities on
building construction site. Preliminaries items are items of cost which do not
related to any particular wok section and is usually listed first in the bill of
quantity. Many estimators prefer to insert a lump sum for all the preliminaries
usually worked out as a percentage of the total measured work. It is a good practice
however to put a price to each of the item. Therefore al items must be enumerated
and clearly stated. Any omission of the item must result to claim of variation.
Some principal items of preliminaries include scaffolding, water for works lighting
power, electrical supply, temporary roads, temporary telephone, control of traffic,
welfare and safety, temporary fencing, site security, site meeting, setting out etc.

Scaffolding

The total height and type of construction determine the amount and type of
scaffolding required for a project. The contractor may purchase for use in the work.
Pricing scaffolding consideration is usually given to

a. Hire rate for the duration of the project

b. Labour cost for erecting scaffold on site
c. Labour cost for adopting scaffold for special uses
d. Labour cost for dismantling scaffold at the end of the project
e. transportation cost for bring to site and removing from site all scaffolding

Water for Works

Water required for the project is provided either by supply by water tankers/ if site
is far from source of pipe born water. In pricing, consideration is given for the
following

1. Supply by Tanker
It is necessary to write an approximate estimate of the quantity of water
required for the project from previous project
For block work = 300litres/m2
Rendering = 30litres/m2
Concrete = 480litres/m3
Workman hut = 2000litres/day
Site accommodation = 20,000litres/day
The total quantity estimated for the whole project and priced at the
prevailing water tanker rate for that area
Cost of temporary storage includes:
a. cost of labour and materials in constructing surface tank, overhead tank,
pipe work and pump
b. cost of removal of water storage and temporary pipe and making good
ground disturbed
c. overhead and profit
2. pipe born water
Pricing include
 a. cost of water connection by water board
b. cost of labour and material for laying pipe
c. cost of temporary storage
d. water rate
e. cost of disconnecting, removal of pipe and making good defects
f. profit and overhead

Lighting and Power for Work

Provision of power is effected in two ways

1. power gearing set: if the site is far from existing main power source, pricing
include
a. cost of hiring generating set for the duration of the period
b. cost of cable, wiring and light fittings
c. cost of running and maintaining generating set for duration of the period
d. cost of labour and material for constructing temporary shed for generator
e. cost of dismantling shed and making good ground disturbed
f. cost of transporting generating set to site and removal on completion of
project
g. profit and overhead
2. electrical supply from electrical authority main, pricing include
a. cost of connection to the electrical authority
b. cost of cables, wiring, lighting and fittings
c. cost of disconnection on completion of project
d. cost of hiring a standby generator in case of power failure
e. overhead and profit

Temporary Road

Temporary road has to be constructed from the existing road to the site in order to
get access to make possible the distribution of material to various part of the site.
Pricing for access road consideration include

a. cost of labour during clearing

b. cost of excavation either mechanical or by hand
c. cost of material and labour in laying laterite, blinding and gravel
d. cost of maintaining the road for the duration of project
 e. cost of removing of temporary road if not required at the completion of all
works on the site and making good ground disturbed
f. overhead and profit

Temporary Telephone

For effective communication, the contractor must arrange for telephone

communication to be installed for the duration of the project. Pricing include

a. cost of telephone installing by authority

b. cost of telephone bill
c. cost of maintenance
d. cost of disconnection
e. overhead and profit

Control of traffic

Pricing include

a. cost of speed breakers

b. cost of construction of baririers
c. cost of red flags
d. cost of labour flagging traffic
e. cost of providing diversion
f. cost of removing sign boards

Welfare and safety of work

a. first aid box

b. drugs, antiseptics and bandage
c. provide nurse or medical attendance
d. maintain first aid box
e. removal of first aid box
f. protective clothing’s e.g. overall, helmets, nose mask, face mask, ear plugs,
boots, hand gloves, eye shield
g. safety equipment, firefighting equipment
h. overhead and profit
Temporary Fencing

a. cost of labour and materials

b. maintenance
c. removal and making good ground disturbed
d. profit and overhead

Site Security

Pricing comprises of

a. cost of labour and material to construct temporary security shed post

b. labour and material cost to install security light and intrudes alarms
c. furniture and stationeries tag, torch, I.D cards
d. wages for workman
e. hiring of watch dogs
f. removal of sheds and lighting on completion of project and making good
ground disturbed
g. overhead and profit

Site meeting

a. provision of stationeries for each meeting

b. provision of refreshment for each meeting
c. wages of attendance
d. overhead and profit

Setting Out

Cost comprises of

a. pegs, templates, ropes and line

b. hiring of theodolite, precise level and other survey equipment
c. bring to site and removing from site the above named equipment
d. fee for engineer and assign team
e. profit and overhead

Removing Rubbish and Site Clearance on Completion of Project

 Pricing include

a. labour and material for clearing such rubbish

b. plant, lorry loading of such rubbish
c. transport the rubbish from site
d. labour and material cleaning up doors and windows
e. overhead and profit

Estimating For Typical Preliminaries

Site supervision: this include salaries and allowances paid to the site agent or
engineers and administrative staff on the site such as cashier, Clark, time keeper,
material checkers, store controllers etc. When these staffs are sent away from the
area in which they normally work, this necessitates them having to leave away
from their usual place of resident for a period of time. A subsistence additional
allowance may have to be added to cover the additional expenses they will incur
e.g.

Site Agent
Salary/Month N10, 000
Housing allowances N 8000
Transport allowances N2500
Total N20500 N20, 500
Cashier
Salary/Month N5, 000
Housing allowances N 4000
Transport allowances N2000
Total N11,000 N11,000
Clerk
Salary/Month N3 500
Housing allowances N 1600
Transport allowances N1500
Total N6600 N6600
Store Controller
Salary/Month N3 500
Housing allowances N 1600
Transport allowances N1500
Total N6600 N6600
Messenger
Salary/Month N1000
Housing allowances N 800
Transport allowances N 500
Total N2300 N2300
N47,000
Contract duration 12 months
Add 1 month before contract and 3 months for defect liability period
Total period =16 months
16 X 47,000 = N752000
Add 25% for profit and over head N188000
TOTAL N940,000
Site Accommodation
The contractor is usually expected to provide and maintain temporary site accommodation for
i. Supervisory consultant on site
ii. Site agent and site staff
iii. Hut for workers/rest room
iv. Storage steed for materials, tool etc.
Price for site accommodation must cover the cost of
i. Initial construction of accommodation
ii. Removal on completion and making good ground disturbed
iii. maintenance throughout the duration of the project
iv. furniture and air condition
v. over head and profit from the estimator must remove the resale value of items which are still usage at the end of the
project
Initial construction cost
Architect office 7.5m2
Engineer’s office 7.5m2
Quantity surveyors office 7.5m2
Site agent office 7.5m2
General office 10m2
Contractor’s room 12m2
Rest room 2.5m2
Total m2 54.5m2 approximate 55m3
Circulation space 10% 5.5m2
Total 60.5m2
Approximate 61m3
61m2@9000 N549000
Less resale of item (27%) N148230
N400700
Demolish cart away from site include making good @ 500/m2 X 61m2 N30000
Cost of Site accommodation N431270

Calculation of Unit Rate

Unit rates are the major items in bills which consist of element of labor, plant and
materials. Each element is estimated separately so that total element cost for
labour, plant and materials can be provided.

Overhead
Overheads may be defined as the cost of maintaining (running) the contractors
organization. They include cost of staff salaries, expenses, rents, gas, water,
electricity, telephone, office equipment, postage, insurance, maintenance of
building and equipment etc. all the cost of these items are expressed as a
percentage and included in the tender.
Profit
Profit of a contractor is determined by a number of factors. Factors affecting profit
level include
- Market force of supply and demand
- Amount of competition
- Size/value of project
 - Risk involved in contract
- Interest rate
STAGES IN TENDERING
Tender Documents
Depending on the form of contract and contract arrangement tender document are
as follows
Contract with documents
i. Complete set of drawings
ii. Bill of Quantities
iii. form of tender
iv. article of agreement
v. form of performance bond
vi. schedule of basic prices of labour, materials and plants charges
vii. resource questionnaire
 personnel
 plant
 details of job previously completed
viii. specially marked envelop
 submission of priced bill of quantity
 submission of form of tender containing the tender sum
Contract without Quantities
i. complete set of drawings
ii. form of tender
iii. detailed specification
iv. article of agreement
v. Specially marked envelops for return of form of tenders. The contractor
will have to measure quantities to arrive at his tender figure.
Preparation of Tender Document
1. Done by consultants after detailed design of the project
2. Usually includes drawings and bill of quantity
3. Where bill of quantities is not provided (which is not advisable all
contractors prepare their own).
Bill of Quantity contains the following
- Instruction to tender
- Forms of tender
- Preambles (specification)
- Condition of contracts
 - Preliminaries
- Measured works
- List of basic labour and materials prices.
Prequalification
To prevent unqualified firms form tendering, prequalified exercise comes before
actual tendering in most projects of significant value
- advert is placed for prequalification
- interested contractors submit particulars of the technical and financial
capabilities and legal status for assessment
- all contractors who meet the minimum requirement are then shortlisted for
tender
Documents usually required from contractors include
- Certificate of business registration or cooperation CAC
- Tax Clearance Certificate
- VAT registration certificate
- Certificate as contractor
- Personnel available
- Plant and equipment available
- List of previous and ongoing projects
- Financial audit reports
- Evidence of financial capability
Invitation to Tender
Depending on the type of tendering
Open tendering: through adverts in newspaper, media (radio and television),
technical journals like tender journal and website. Selective tendering and
negotiation by letter of invitation, and sometimes through the media informing
shortlisted firms.
Preparation of Tender
Each tendering contractor will estimate the prime or net cost of the project then
add profit and overhead to arrive at the tender sum
Submission of Tender
Time and place of submission is usually stated in submission of tender in the bill of
quantity and in the advert or letter of invitation.
- Late submission will be rejected
- tender submitted in sealed envelope
 - tenders may be required to submit tenders with bid bond which is bond from
a bank or insurance company to guarantee that the tender will accept the
contract if awarded.
Opening of Tender
Tenderers are invited to witness the opening of tender, tender sum, completion
periods and special conditions given in any tender should be publicly announced,
recorded and signed by client and consultant and tenderers respectively

CONTRACTORS ACTIVITIES DURING TENDERING

Decision to Tenders

Factors to be considered by a contractor

FACTORS ISSUES TO ASSESS
Existing workload How busy now?
Anticipated workload High hopes in already tendered projects?
Type of project Reputation of client
Location of project Logistics and security: how strategic is the project location
Size and complexity of project Technical, financial and managerial competence
Caliber of other tenderers Who are the competitors
After assessing the factors, a decision to or not to is taken. f positive the tender
documents will be collected.

After collecting tender document, a lot of activities are involved before a

contractor aims at his final tender sum.
ACTIVITIES
Examination of tender document
Visit to proposed project site
Type of project
Pretender meetings
Preparation of estimates
Adjudication of tender
PURPOSE
To note details and any ambiguity
To get necessary information
Reputation of client
For estimation
To arrive at total project cost
To arrive at final tender sum to be submitted

After adjudication the tender is sealed and submitted to the specified location
before the slated submission deadline

Examination of tender document

- note detailed conditions
- any ambiguities
- get information from client or consultant
 - prepare B.O.Q if not provided

Site visit
Visit to site could be done with a contract manager, who will be able to advice on
the practical working conditions that may be encountered. A comprehensive report
should be produced to established clearly the following aspect
- topography of the site and ground conditions
- availability of existing site services
- need for temporary road and any site difficulties
- security need such as fencing the perimeter, hoarding or security guards
- nature and use of any adjacent building
- any demolition work requirement
- site accommodation and material storage location
- general availability of labour and materials
- Special difficulties, such as restriction e.g. on the use of tower cranes and
other similar mechanical plant.
Pre-tender meetings
Agenda to decide on
- construction method
- plan requirement
- major material source
- level of profit required
- attendance by relevant staff
TENDER ANALYSIS
Tenders Received
S/N TENDERERS TENDER FIGURE COMPLETION PERIOD
1 ABC Engineering Ltd 56080690.00 Not stated
2 Newtons & John Ltd 53950000.00 12 months
3 Sijang Turnkey Ltd 59420280.00 Not stated
4 Project Quantity Surveyor Estimate 53558987.57 9 months

Breakdown of Tenders Received

Table 1
S/N TENDERERS PRELIMINARIES CONTINGENCIES MAIN EXTERNAL
& INSURANCE BUILDING WORKS
1 ABC Engineering Ltd 6953500.00 3300000.00 43769275.00 2057915.00
2 Newtons & John Ltd 2498750.00 3300000.00 46345418.00 1805832.00
3 Sijang Turnkey Ltd 2276874.00 3300000.00 52045556.00 1797850.00
4 Project Quantity Surveyor 4320000.00 3300000.00 44151419.87 1787567.76
Estimate

Table 2
S/N Tenderers Tender Prime cost and contingencies Preliminaries Total builder’s % of
Figure provisional sum & insurance work builder’s
work from
tender figure
1 ABC 56080690.00 14,175,000.00 3300000.00 6953500.00 31652190.00 56.44
Engineering Ltd
2 Newtons & 53950000.00 14,175,000.00 3300000.00 2498750.00 33976250.00 62.98
John Ltd
3 Sijang Turnkey 59420280.00 14,175,000.00 3300000.00 2276874.00 39668406.00 66.76
Ltd
4 Project Quantity 53558987.57 14,175,000.00 3300000.00 4320000.00 1787567.00 59.31
Surveyor
Estimate

Table 3
Corrected Tender Figure
S/N Tenderers Tender Prime cost and contingencies Preliminaries Total builder’s % of
Figure provisional sum & insurance work builder’s
work from
tender figure
1 ABC 55796276.00 14,175,000.00 3300000.00 6953500.00 31367776.00 56.22
Engineering Ltd
2 Newtons & 54154870.00 14,175,000.00 3300000.00 2498750.00 34181120.00 63.12
John Ltd
3 Sijang Turnkey 59729986.00 14,175,000.00 3300000.00 2276874.00 39978112.00 66.93
Ltd
4 Project Quantity 53558987.57 14,175,000.00 3300000.00 4320000.00 1787567.00 59.31
Surveyor
Estimate

Analysis of tender for ABC Engineering Ltd

Tender figure (T) = 56080690.00
Corrected Tender Figure (C) = 55796276.00
Arithmetical error (A) =C–T
= 55796276.00 – 56080690.00
 = -284414.00
𝐴
Percentage (%) Error = x 100
𝐶
284414
= x 100
55796276
=0.51%
Project Quantity Surveyors Estimate (E) = 53558987.57
𝐸−𝐶
Percentage below/above estimate = x 100
𝐸
53558987.57−55796276
= x 100
53558987.57
= 4.18% Above
Completion period not state
Recommended award range + or – 5 of estimate

Comment
Tender for ABC engineering limited contains high arithmetical error, the tender is within + or – 5 of project quantity surveyor
estimate but completion period not stated

Analysis of tender for Newton and John Ltd

Tender figure (T) = 53950000.00
Corrected Tender Figure (C) = 54154870.00

Arithmetical error (A) =C–T

= 54154870.00 – 53950000.00
= 204870
𝐴
Percentage (%) Error = x 100
𝐶
204870
= x 100
54154870
=0.38%
Project Quantity Surveyors Estimate (E) = 53558987.57
𝐸−𝐶
Percentage below/above estimate = x 100
𝐸
53558987.57−54154870.00
= x 100
53558987.57
= 1.11% Above
Completion period not state
Recommended award range + or – 5 of estimate

Comment
The corrected figure is 1.11% above, is within the range recommended for consideration for an award. The completion period of
12 month is feasible, tender can be considered for award.
Analysis of tender for Sijang Turnkey Ltd
Tender figure (T) = 59420280.00
Corrected Tender Figure (C) = 59729986.00

Arithmetical error (A) =C–T

= 59729986.00– 59420280.00
= 309706
𝐴
Percentage (%) Error = x 100
𝐶
 309706
= x 100
59729986
=0.52%
Project Quantity Surveyors Estimate (E) = 53558987.57
𝐸−𝐶
Percentage below/above estimate = x 100
𝐸
53558987.57−59729986.00
= x 100
53558987.57
= 11.52% Above
Completion period not state
Recommended award range + or – 5 of estimate
Comment
The tender is 11.52% above the project quantity surveyors estimate and therefore outside the range for consideration for an award

General Remark/Recommendation
The tender received are very wide apart to be considered competitive. The
difference between the highest and lowest tender is N5, 470,280 (Five million four
hundred and seventy thousand two hundred and eighty).
From the yardstick recommended as award range. The following qualify for
consideration

1. ABC Engineering Ltd.

2. Newton’s & John Ltd.
but Newton’s & John Ltd be considered for award as their corrected tender is not
only lowest but reasonable and realistic even though above the quantity surveyors
N53.56 million.
TENDER REPORT
When the client and his advisers are considering the tenders received, factors other
than price may be of importance. Such as the time requirement carrying out the
work if stated as a requirement on the form of tender, may be compared. Time is
frequently an important matter to the client, although they may reasonable excuses
for failing to keep to time agreed.
Also if contract is subject to adjustment for the material, the schedule of basic rate
of materials can also be considered. The question should be asked. ‘Has the tender
assumed reasonable basic prices for materials? Where tenders are very close, the
schedule of basic rates may be compare, since the lower tender may have less
favourable price. Only a preliminary examination will be made at this stage to
ascertain which tender or tenders should be considered for acceptance. The
quantity surveyor will write a report for client or committee concerned, setting out
clearly, the arguments in favour of acceptance of one tender or another
Contractor selection or appointment
There are essentially two ways of selecting a contractor: through competition or by
negotiation
With reference to construction industry board (CIB) document, the key principles
of good practice to be adopted when appointing contractors in competition are
- clear procedure should be followed that ensure fair and transparent
competition in single round of tendering consisting one or more stages
- tender list should be compiled systematically from a number of qualified
contractors
- tender list should be short as possible condition should be same for all
tenderers
- confidentiality should be respected by all parties
- sufficient time should be given for the preparation and evaluation of tenders
- sufficient information should be provided to enable the preparation of
tenders
- tenders should be assessed and accepted on quality as well as price
- practice that avoid or discourage collusion should be followed