CONTRACT PROCESS IN

PRIVATE AND PUBLIC SECTOR

GROUP 3
Public Works
 works constructed for municipalities, counties, states, and nations, such as sewers,
pavements, bridges, canals, river improvements, and other works constructed at public
expense and under public control

Private Works
 works constructed by private parties, partnerships or corporations such as buildings,
hydraulic plants, railroads, and other works constructed by private capital and under
private control

The procedure of authorizing expenditures, fixing contract requirements, advertising for

proposals, receiving bids, letting work, consummating contracts, and interpreting contracts
differs materially in private work from that required in public work.
CONTRACT PROCESS IN
PUBLIC SECTOR
1. CONTRACT PREPARATION
Identify Your Needs, Establish Goals, Set Expectations, and Define Risk
 In the preparation of contracts for public works, it is therefore evident that the
engineer is in equity bound to see that his designs and specifications are especially
definite, full and complete, and as the requirements of the contract cannot be legally
waived, especial precaution should be taken to see that they are fair and reasonable.

2. AUTHOR THE CONTRACT

 Consulting with In-House Counsel or an attorney is wise, especially if there are any
uncertainties. Better yet, using a preset template drafted by your legal team to ensure all
the information is up-to-date and all required clauses and terms are automatically
included.
3. NEGOTIATE THE CONTRACT
 Public works must usually be let only after advertising, and to the "lowest responsible bidder." State laws
sometimes require public work to be advertised for a certain length of time, in certain ways, and to a
certain extent, previous to the letting of the contract. The legal or charter requirements for advertisements
are imperative to secure the validity of the contract.

4. GET APPROVAL BEFORE FINALIZING THE

CONTRACT
 After negotiations are complete and both parties agree, next comes approval. In larger companies that
need manager approval or have audit procedures, all the requirements for approval will need to be met
before finalizing the deal. For example, if a company has specific procurement policies, they will need to
be met prior to gaining approval for the contract. In a contract management platform, this is as simple as
setting up an approval workflow so that whoever needs to approve the contract receives a notification and
can view, edit, and comment on the contract in real time.
5. EXECUTE THE CONTRACT
 In the execution of public work, no departure from the contract requirements can be legally
permitted, but the specifications must be rigidly enforced, even though such change might result
in better work. The public is not bound by principles of justice and equity and is not interested in
the contractor's success or failure, and any changes which are made to benefit or assist the
contractor are apt to be misconstrued and criticized and may involve serious consequences to the
engineer.

6. KEEP UP WITH AMENDMENTS AND

REVISIONS
 Contracts are rarely stagnant. Revisions and amendments are a common part of the lifecycle of a
contract. Tracking changes and the effects for each party can be confusing; however, this is
another reason to implement a reliable process, such as a contract lifecycle management platform,
to easily record edits and add amendments. It’s important to stay ahead of the changes and make
sure both parties are fully aware and in agreement on any revisions.
7. MANAGE AFTER THE SIGNATURE —
OBLIGATIONS, AUDITING, AND RENEWALS
 Contract management doesn’t stop once the ink dries. Performing regular audits will
ensure obligations are met and value is realized. Alerts should be set for deadlines and
renewals. Missed renewals mean lost opportunities to continue a relationship, and most
importantly for a company, lost revenue. Being aware and making contact well before
the renewal time shows reliability and care for the relationship, and will continue to
build trust and loyalty.
CONTRACT PROCESS IN
PRIVATE SECTOR
1. CONTRACT PREPARATION
Identify Your Needs, Establish Goals, Set Expectations, and Define Risk
 Contracts are legally binding documents that should not be approached lightly. It’s
important to be organized and prepared with the right resources. Properly identifying the
needs, reasons, and ultimate goals that require a contract makes any decisions down the
line much easier. Contracts should seek to define and mitigate risk in a relationship,
looking ahead to any potential scenarios that could occur over the lifetime of the document
and accounting for them in the contract. For example, the terms of agreement within a
contract should address what happens if the client files for bankruptcy, goes out of
business, or sells the company, along with any other contingencies that may arise.

2. AUTHOR THE CONTRACT

 When authoring the terms of the contract, it’s also important to pay attention to specific
wording. Any ambiguity leaves contracts up for interpretation, even down to a comma.
State and country laws will also need to be taken into consideration, especially if the two
parties are in different locations.
3. NEGOTIATE THE CONTRACT
 may be advertised or it may be let without advertisements, by public competition, by competition between
selected parties or by agreement with a single contractor, as the owner or corporation may elect. In a
private contract a verbal acceptance of a proposal may consummate the contract, and awards should
therefore usually be made subject to the making of a written contract, if such written contract is desired.

4. GET APPROVAL BEFORE FINALIZING THE

CONTRACT
 After negotiations are complete and both parties agree, next comes approval. In larger companies that
need manager approval or have audit procedures, all the requirements for approval will need to be met
before finalizing the deal. For example, if a company has specific procurement policies, they will need to
be met prior to gaining approval for the contract. In a contract management platform, this is as simple as
setting up an approval workflow so that whoever needs to approve the contract receives a notification and
can view, edit, and comment on the contract in real time.
5. EXECUTE THE CONTRACT
 In private work, other conditions and requirements are also radically different from those for
public works; alternate bids, modifications of requirements, adjustments and betterments that
conditions seem to require in carrying out the work in hand may be made whenever the parties to
the contract agree. Rights may be waived, obligations cancelled, and extra compensation granted,
whenever it appears that such actions are warranted by justice and equity or by expediency.

6. KEEP UP WITH AMENDMENTS AND

REVISIONS
 Contracts are rarely stagnant. Revisions and amendments are a common part of the lifecycle of a
contract. Tracking changes and the effects for each party can be confusing; however, this is
another reason to implement a reliable process, such as a contract lifecycle management platform,
to easily record edits and add amendments. It’s important to stay ahead of the changes and make
sure both parties are fully aware and in agreement on any revisions.
7. MANAGE AFTER THE SIGNATURE —
OBLIGATIONS, AUDITING, AND RENEWALS
 Contract management can be a time-consuming task, but if properly managed, can be
one of the most lucrative areas for building business relationships and generating
revenue. A contract lifecycle management platform simplifies contract management
processes, providing the ability to manage and avoid risk and compliance issues through
templates and approval workflows, streamline negotiations with online redlining, deliver
more revenue and faster with e-signatures, and more easily manage documents after
their signed helping organizations grab opportunities that may otherwise have been
missed.
BIDDING PROCESS IN PUBLIC SECTOR
 The bidding process in connection with public contracts is generally very formal,
with a raft of existing rules and regulations that must be strictly followed in order
to emerge with the winning bid. If you are bidding on a state or local government
contract, you will need to e familiar with the laws and regulations of that
jurisdiction.

The public project building process generally follows

these steps according to Philippine Bidding Documents.
Section I. Invitation to Bid
Section II. Instruction to Bidders  Submission and Opening of Bids
 General  Evaluation and Comparison of Bids
 Content of Bidding Documents  Award of Contract
 Preparetion of Bids
Section I. Invitation to Bid
Notes on the Invitation to Bid
The Invitation to Bid provides information that enables potential Bidders to decide whether to
participate in the procurement at hand. The Invitation to Bid shall be:

 Advertised at least once in a newspaper of general nationwide circulation which has

been regularly published for at least two (2) years before the date of issue of the
advertisement, subject to Sections 21.2.2 of the IRR of RA 9184;
 Posted continuously in the Philippine Government Electronic Procurement System
(PhilGEPS) website, the website of the Procuring Entity concerned, if available, and the
website prescribed by the foreign government/foreign or international financing institution,
if applicable, for a minimum period of seven (7) calendar days starting on the date of
advertisement; and
 Posted at any conspicuous place reserved for this purpose in the premises of the
Procuring Entity concerned for a minimum period of seven (7) calendar days, as certified
by the head of the Bids and Awards Committee (BAC) Secretariat of the Procuring Entity
concerned.
Section I. Invitation to Bid
Apart from the essential items listed in the Bidding Documents, the Invitation to
Bid should also indicate the following:
 The date of availability of the Bidding Documents, which shall be from the time
the Invitation to Bid is first advertised/posted until the deadline for the
submission and receipt of bids;
 The place where the Bidding Documents may be purchased or the website where
it may be downloaded;
 The deadline for the submission and receipt of bids from the last day of posting of
the Invitation to Bid; and
 Any important bid evaluation criteria (e.g., the application of a margin of
preference in bid evaluation).
Section II. Instruction to Bidders
This Section of the Bidding Documents provides the information necessary for bidders to
prepare responsive bids, in accordance with the requirements of the Procuring Entity. It also
provides information on bid submission, eligibility check, opening and evaluation of bids,
post-qualification and on the award of contract.
A. GENERAL
 Scope of Bid
 Source of Funds
 Corrupt, Fraudulent, Collusive, and Coercive Practices
 Conflict of Interest
 Eligible Bidders
 Bidder’s Responsibilities
 Origin of Goods
 Subcontracts
Section II. Instruction to Bidders
B. CONTENTS OF BIDDING DOCUMENTS
 Pre-Bid Conference
 Clarification and Amendment of Bidding Documents

C. PREPARATION OF BIDS
 Language of Bid
 Documents Comprising the Bid: Eligibility and Technical Components
 Documents Comprising the Bid: Financial Component
 Alternative Bids
 Bid Prices
 Bid Currencies
 Bid Validity
 Bid Security
 Format and Signing of Bids
 Sealing and Marking of Bids
Section II. Instruction to Bidders
D. SUBMISSION AND OPENING OF BIDS
 Deadline for Submission of Bids
 Late Bids
 Modification and Withdrawal of Bids
 Opening and Preliminary Examination of Bids

E. EVALUATION AND COMPARISON OF BIDS

 Process to be Confidential
 Clarification of Bids
 Domestic Preference
 Detailed Evaluation and Comparison of Bids
 Post-Qualification
 Reservation Clause
Section II. Instruction to Bidders
F. AWARD OF CONTRACT
 Contract Award
 Signing of the Contract
 Performance Security
 Notice to Proceed
 BIDDING PROCESS IN PRIVATE
SECTOR
In connection with private contracts, the bidding process is less formal and not
generally constrained by detailed government-imposed rules and regulations. In
the private sector, the owner or prime contractor requesting bids has wide latitude
in setting its own rules for soliciting bids, and in selecting among the various bids
submitted.

The private project bidding process generally follows

these steps: 
1. Bid Solicitation
 This is when the owner sends out an Invitation for Bid (IFB) or a Request for
Proposals (RFP). Unlike public projects, these aren’t usually large, open
invitations. Rather, they’re sent to a smaller group of contractors. This phase
will lay out all the specifications, requirements, contract type, and delivery
method.
 BIDDING PROCESS IN PRIVATE
SECTOR
Generally, the contract will most likely be awarded based heavily on the bid
price. Still, the bid solicitation phase of the procurement process will require
other information beyond the price – like a request for qualifications
(RFQs) asking for more information on the prospective contractor’s company
history.

2. Bid Submission
 A bid submission should include all of the bidder’s relevant business
information. This will be a list of the contractor’s past projects, plans for
management, and their track record of staying on schedule and under budget.
When calculating a bid, it should be as accurate as possible.
BIDDING PROCESS IN PRIVATE
SECTOR
3. Bid Selection
 On government construction projects, rules are in place to make sure the
government selects the low bidder (or, one of the low bidders). Meaning, the
lowest contract price wins out. The reason behind this is to prevent any fraud,
abuses, or favoritism. By mandating that the lowest responsible bid be
accepted, the idea is that price will be the ultimate equalizer.

 On private projects, owners have much more leeway to pick a bid for reasons
beyond price. Don’t get us wrong – price is almost always among the
determining factors when it comes to bid selection. But, if two contractors
have comparable bids, factors other than price might matter a lot more than
they do with public projects.
BIDDING PROCESS IN PRIVATE
SECTOR
4. Contract Formation
 When the owner selects which bid or proposal best suits their needs, the
contract must still be formed and signed. If your company wins the bid, this
is an opportunity to negotiate. At this point in the process, the type of contract
has already been established, but there’s still an opportunity to set out the final
pricing and terms of the contract itself.

* In CIAP Document 102 does not explicitly give a step-by-step process for the
bidding. Nevertheless, it defines several terms in relation to the bidding
process.
BIDDING PROCESS IN PRIVATE
SECTOR
1. Invitation to Bid
 this is the notice published by the Owner or the invitation issued to
prospective bidders, giving information as to the nature of the proposed
project, conditions for the issuance of Contract documents, date of bidding,
and information that would give the Contractor a general idea of the
magnitude and extent of the project (1.02).

2. Bid Documents
 collectively refer to all documents provided or made available to prospective
bidders, which include the Invitation to Bid and a copy of the Contract
which the winning bidders would be required to sign with the Owner and the
Contract Documents (1.06).
BIDDING PROCESS IN PRIVATE
SECTOR
3. Bid Bulletin
 contains additional information on Bid Documents issued to bidders
before the date of bidding (1.07).

4. Bid
 is the tender, or proposal, or quotation, or offer of a bidder to perform the
work described in the Contract (1.04).

5. Bid Bond
 serves as a guarantee that the bidder will enter into the Contract with the
Owner for the construction of the Work, if the Contract is awarded to
him (1.05).
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
1. Construction Contract Agreement
 This is the principal agreement between the construction contractor and the
private property owner or the contracting officer for a business. It's the
essential component of the bundle of various contract documents—the
main document to which most of the other documents attach or refer.
a) Date of agreement
b) Names and addresses of the contracting parties
c) Description of the Scope of Work
d) Time Limitations
e) Payment Conditions
f) Signatures
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS

2. General Conditions
 The General Conditions portion of an overall construction contract is the
portion that sets forth the right, responsibilities, and relationships between the
client and contractors. Most important is the delineation of rights and
responsibilities of each party.
 The General Conditions portion of the contract offers the legal framework for
the overall construction contract. It includes stipulations for how any disputes
will be resolved.
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
a) The Owner
b) The Contractor
c) Administration of the contract
d) Subcontractors
e) Changes in the work
f) Time
g) Payments and Completion
h) Retainage
i) Protection of Persons and Property
j) Insurances and Bonds
k) Uncovering and corrections of work
l) Termination or Suspension of the contract
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
3. Special Conditions
 This is usually an extension of the contract and an addendum to the General
Conditions. The Special Conditions document should specify certain
conditions and clauses that pertain to specific portions of the job. For
example, if there are specific instructions that apply to only one portion of the
job, the Special Conditions section is where this will be described.
a) The number of copies of documents to be received by the both
parties
b) Survey Information to be provided by the owner
c) Materials Provided by the owner
d) Changes in insurance requirements
e) Site visits
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
f) Start date of construction
g) Cost and schedule reports
h) Traffic control and street cleaning requirements
i) Responsibilities for testing of materials
j) Actions to be taken in the event of discovery of items with
historical value

4. Constructions Drawings
 All contracts should include a set of whatever drawings that are applicable to
the work being performed. This might include the actual blueprints for the
project, or it may be one or more simple drawings that provide a graphic
representation of the scope, extent, and character of the work that will be
performed by the contractor.
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
This are the two dimensional representation of the physical structure that
meets the objective of the owner.

a) Architectural Drawings
b) Structural Drawings
c) Electrical Drawings
d) Sanitary Drawings
e) Mechanical Drawings
f) Site Drawings
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
5. Specifications
 The Specifications section of a contract is where all the technical data and
requirements are listed. Information should detail all the materials and
techniques that are expected to be used.
 These specifications should be discussed and negotiated at the time the
contract is developed, and later changes to the specifications are often handled
under whatever conditions are laid for change orders in the Scope of Work
section.
CONTENTS OF SPECIFICATIONS
a) The quality of the materials.
b) The quality of workmanship
c) Erection and installation methods
d) Test and inspection requirements and methods.
 CONTRACT DOCUMENTS FOR
CONSTRUCTION PROJECTS
6. Addenda
 Addenda may be issued to change the bid opening , to modify original design,
to delete or add items, or to correct errors.
 Bidders must acknowledge all the addenda.