lecture 2 tender process n documentation
TRANSCRIPT
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LECTURE 2: TENDER PROCESS
AND DOCUMENTATION
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WHAT IS TENDER?
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Tender is an offer which incorporatesthe sum of money, time and otherconditions required to carry out thecontract obligations in order to completea project or a part of it consisting ofspecified works.
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WHAT IS TENDERING ?
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Stages of a project Stage 1: inception & feasibility – identifying
project objectives / set up project brief
Stage 2: design – develop further project brief / develop concept & schematic design / Undertake detailed design & detailing / prepare cost plan & budget
Stage 3: tendering – issue tender documents / prepare & submit tender / evaluation of tender / award tenders / prepare contract documents
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Stages of a project
Stage 4: construction – site possession & mobilization / undertake procurement fabrication, installation, construction / carry out contract admin
Stage 5: handover & maintenance – undertake all testing, commissioning & training / obtain CF / handover project to owner /carry out necessary maintenance / Defect rectification / etc
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Tendering
Will be started after the design complete and project budget must be approvedThe process that is used to obtain offers
leading to a contract between:
client contractor
client consultantmain contractor sub-contractor
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Purpose of tendering process
To select a suitable contractor at a time appropriate to the situation of the project.
To obtain from the contractor selected at the proper time, an acceptable tender or offer upon which a contract can be let.
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A tender formally means an invitation to trade under the terms of offer.
A contract is the term used for when the parties have reached agreement.
Difference between a contract and a tender
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General TENDERING PROCESS
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Tendering process – PRINCIPAL ACTIVITIES
1. Selection of the most preferable or appropriate contract procurement method.
2. Development of tender list3. Preparation of tender documentation4. Invitation / calling off tender5. Preparation and submission of
tenders
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Tendering process – PRINCIPAL ACTIVITIES (cont’d)
6. Receipt and opening of tenders7. Evaluation of tenders8. Acceptance of tender award or award
of contract
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Stage 1: Selection of the most preferable or appropriate contract procurement method.
Traditional contract procurement route Longer time – lead to critical work
scheduling Less errors – more precise
Fast-track contract procurement route Shorter time Consequences – may be lead to critical
error, variation.
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Stage 2: Development of tender list
Potential tenderers can directly apply to the employer for future works.
Employer generate list based on previous dealings
The professional team generate their own list and recommend to the employer.
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Stage 3: Preparation of tender documentation – typical contents
Letter of invitation Checklist for submission of tender Articles of agreement Conditions of contract Form of tender Tender specifications Bills of quantities Tender drawings Sample copy of letter of acceptance Sample copy of bang guarantee for performance
bond Schedule of day work rates Sample copy bank guarantee for advance payment
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Tendering process
Stage 2:
APPROVAL TO TENDER
Stage 1:
PREPARATION
Stage 3:
DOCUMENTATION
Stage 4:
INVITATION
Stage 5:
PROCESSING
Stage 6:
AWARD CONTRACT
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Stage 1: Preparation
Final completion of drawings, specification, measurement / take-off process.
Choose conditions of contract. Parties involved: architect, engineers,
QS, client, project manager
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Stage 2: Approval to tender
Discussion and decision on type of tender to be used.
Selection of tender: Open Selective Negotiate
Parties involved: CLIENT, CONSULTANT, PROJECT MANAGER
Shortlist the selected contractor
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Stage 3: Documentation Contract based on quantities Compilation of:
Letter of invitation to tenderers Articles of agreement /
conditions of contract Form of tender Form of tenderer’s details. i.e:
contractor’s registration, organization background, track record (past and present projects)
Letter of acceptance Bank and insurance guarantee
forms (performance bond) Bank and insurance guarantee
forms (advance payments) Specifications Bills of quantities Relevant drawings
Contract based on tender & specs Compilation of:
Letter of invitation to tenderers Articles of agreement / conditions
of contract Form of tender Form of tenderer’s details. i.e:
contractor’s registration, organization background, track record (past and present projects)
Letter of acceptance Bank and insurance guarantee
forms (performance bond) Bank and insurance guarantee
forms (advance payments) Specifications Summary of tender Schedule of rates Relevant drawings
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Stage 4: Invitation
Based on selection of tendering methods Open / competitive / bid tender –
produce tender notice Selective – shot listed contractors will
be invited to tender if they wish Negotiated – only one contractor is
approached- direct entry to project
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TENDER NOTICE OR NOTICE
INVITING TENDER
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The Tender Notice is a brief description of the job being tendered which is to be published in Newspapers and on the Internet.
The Internet is a very cost effective way of publishing the tenders.
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Format of an ideal Tender Notice
a. Name of the Project.b. Name & Address of the
Company floating the tender.
c. Name of work, materials or services.
d. Place of work location. e. Approximate estimated
cost of work. f. Earnest Money. g. Period of completion. h. Date on which the Tender
Document sale commences.
i. Date on which the Tender Document sale commences.
j. Date and time up to which tender documents can be obtained.
k. The cost of tender documents.
l. The date and time up to which the tenders to be submitted and are to be opened.
m. Specification. n. Eligibility Criterion.
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Stage 5: Processing Received tender submitted by contractor Tender assessment / evaluation
Completed tenders are received Arithmetical check Reasonable tender sum Reasonable completion time Capabilities of tenderers under considerations
Tender recommendation / report – tender board
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Guidelines to fulfill in the Tender System
The capacity, past credentials and financial status of the tendered is thoroughly investigated before awarding the contract. These aspects should be commented in detail along with the tender documents.
The rates should be quoted in the numbers and words without any corrections. To take advantage of any possible increase in statutory taxes & duties, the tax component such as excise duty, Sales Tax, Works Contract Tax, etc. should be clearly indicated.
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Tenderers should not quote many special conditions as some of them may have financial implications, did this can be added to your quoted cost. Also it creates confusion and creates room for manipulative forces.
The rates quoted for individual items should be realistic and should not be abnormal and unworkable.
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Stage 6: Award contract
Pre-award meeting with contractors – validation of lowest complying bid
Validate lowest bid - Pre-contract meeting with contractor for contract signing
Approval by tender board / treasury (tender exceeds RM10 mill.) – an acceptance of tender form is issued to tenderer , signed by the authorised officer
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TENDER PROCESS FOR CONTRACTOR
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Tendering process
Stage 2:
Determine basis of tender
Stage 1:
Decision to tender
Stage 3:
Preparation of cost estimates
Stage 4:
Commercial appreciation
Stage 5:
Conversion of estimate to tender
Stage 6:
Submission of tender
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Stage 1: Decision to tender Receipt of tender documents Pre-tender data sheet Decision to tender Consider implications of:
Bonds Warranties Parent company Guarantees
Funding
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Stage 2: Determine basis of tender Abstract materials and subcons Sent out enquiries Consider construction methods / prepare method
statement Design temporary works / consider alternatives Prepare outline programme Check major quantities Identify restrictions Visit site and compile site report Campaigning meeting (designating areas
responsibilities)
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Stage 3: Preparation of cost estimate Calculate recurrent rates using:
Operational Unit rates Man-hours estimating
Analyse and check subcontractors’ quotations Price prelims / general items (in association
with members of the team Prepare summary sheets
LOC1/AC2 33
Stage 4: Commercial appreciation Tender committee meeting part 1- Review:
Method Programme Technical and commercial risks Cash flow and finance Use of own plant Competition Commercial opportunities Economic climate Check prelims against historical cost data
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Stage 5: Conversion of tender estimate to tender bid
Tender committee meeting – part 2 Calculate ‘spread’ and add to estimate
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Stage 6: Submission of tender
Submit in format required Organize delivery