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Lecture 2 tender process n documentation

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Tender process n documentation

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Lecture 2 tender process n documentation

  1. 1. 1 LECTURE 2: TENDER PROCESS AND DOCUMENTATION
  2. 2. 2 WHAT IS TENDER?
  3. 3. 3 Tender is an offer which incorporates the sum of money, time and other conditions required to carry out the contract obligations in order to complete a project or a part of it consisting of specified works.
  4. 4. 4 WHAT IS TENDERING ?
  5. 5. 5 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
  6. 6. 6 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
  7. 7. 7 Tendering Will be started after the design complete and project budget must be approved The process that is used to obtain offers leading to a contract between: client contractor client consultant main contractor sub-contractor
  8. 8. 8 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.
  9. 9. 9  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
  10. 10. 10 General TENDERING PROCESS
  11. 11. 11 Tendering process – PRINCIPAL ACTIVITIES 1. Selection of the most preferable or appropriate contract procurement method. 2. Development of tender list 3. Preparation of tender documentation 4. Invitation / calling off tender 5. Preparation and submission of tenders
  12. 12. 12 Tendering process – PRINCIPAL ACTIVITIES (cont’d) 6. Receipt and opening of tenders 7. Evaluation of tenders 8. Acceptance of tender award or award of contract
  13. 13. 13 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.
  14. 14. 14 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.
  15. 15. 15 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
  16. 16. 16 Tendering process Stage 2: APPROVAL TO TENDER Stage 1: PREPARATION Stage 3: DOCUMENTATION Stage 4: INVITATION Stage 5: PROCESSING Stage 6: AWARD CONTRACT
  17. 17. 17 Stage 1: Preparation  Final completion of drawings, specification, measurement / take-off process.  Choose conditions of contract.  Parties involved: architect, engineers, QS, client, project manager
  18. 18. 18 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
  19. 19. 19 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
  20. 20. 20 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
  21. 21. 21 TENDER NOTICE OR NOTICE INVITING TENDER
  22. 22. 22  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.
  23. 23. 23 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.
  24. 24. 24 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
  25. 25. 25 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.
  26. 26. 26  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.  
  27. 27. 27 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
  28. 28. 28 TENDER PROCESS FOR CONTRACTOR
  29. 29. 29 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: Submissio n of tender
  30. 30. 30 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
  31. 31. 31 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)
  32. 32. 32 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
  33. 33. 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
  34. 34. 34 Stage 5: Conversion of tender estimate to tender bid  Tender committee meeting – part 2  Calculate ‘spread’ and add to estimate
  35. 35. 35 Stage 6: Submission of tender  Submit in format required  Organize delivery

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