In this session, We are going to discuss 10 main steps of the tendering process in construction.
Step 01 – Preparation of Tender Document
Usually, the tendering process is starting with the preparation of the tender document. This document is prepared by a cost consultancy organization.
Content of Tender Document (Bidding Document)
The nature and number of tender documents depend on the Contract types such as re-measurement contract, lump-sum contract, or cost Reimbursable contract.
For a complete tender document also called the bidding document, all the following sections will be included normally.
- Instructions to bidders (or tenderers)
- Bidding data
- Conditions of Contract (General Conditions)
- Contract Data (Particular conditions of contract)
- Form of Tender (or Bid)
- Draft form of agreement
- Specimens of all related bonds & guarantees
- Specifications (General and Particular)
- Set of Tender Drawings
- Any Others
Instructions to Bidders
All the bidders will give the necessary instruction pricing in these sections. Thus it is important to read all the instructions prior to starting the pricing carefully.
This section includes all amendments to the instructions to bidders. The Employer shall fill the necessary information and add under this section before issuing the tender document. The following details will be included usually.
- Employer’s Name and Address
- Scope of Works
- Time for Completion
- Source of funds
- Essential Equipements (Type and Capacity)
- Qualifications and Experiences of the Contract Manager
- The minimum amount of liquid assets and or credit facilities
- Employer / Engineer’s address for any clarifications (Contact details)
- Adjustment for change in cost (Allow for price adjustments or not)
- Currency of Bid
- Period of Bid validity
- Amount of Bid security
- The validity of Bid security
- Pre-Bid meeting date, time and venue
- Tender Submission address
- Deadline for submission of tender
- Bid opening date, time and venue
- Amount of Performance security
Conditions of Contract
It is important to comply with the bid with the Conditions of contract since in the end the bid is going be governed by these “Conditions of Contract”.
This document sets out the obligations and rights of the parties and the detailed conditions under which a subsequent contract will operate. If a standard form of contract, such as the FIDIC red book is used, it will not be sent out with the tender documents. It is assumed that the tenderers will have a copy or can readily obtain one.
However, We usually insert the headings of the clauses of the conditions of Contract in preliminaries bill of the BOQ or Specifications.
This section includes all amendments to the Conditions of Contract. The following conditions will be included normally.
- Employer’s, Engineer’s and Contractor’s Name and Address
- Time for Completion of the Works (No of days)
- Defects notification period (normally 365days)
- Right to access to the site (No of days after Letter of Acceptance)
- Engineer’s duties and Authorities
- Liquidated damages for the works (% of the initial Contract price per day)
- The maximum amount of liquidated damages
- Method of Measurements
- Percentage of adjustment for Provisional Sums
- Total Advance Payment (% of the initial Contract Price excluding Provisional Sums and Contingencies)
- Percentage of Retention
- Limit of retention money (% of the initial Contract Price)
- The minimum amount of Interim Payment Certificates
- The amount of third party insurance
Form of Tender/Bid
This is a pre-printed formal statement. A tenderer has to fill in the blank spaces, his name, address, the Contract Price which he going to offer. Finally, the Authorized person will Sign the document. Then, it provides legal validity for the submitted Bid.
Standard Forms (Specimens)
- Draft form of agreement
- Performance security specimen
- Advance payment specimen
- Retention Money Guarantee specimen
Advantages of specimens
- Save times – only requires to fill a few blank spaces
- It is a pre-printed document
- No need to give lawyer fees
- Limited opportunity to eliminate the negotiation process
- The forms are generally through and cover virtually any issues
Drawings, Specifications & BOQ
All these to be read together to get the full view on the project.
In the case of lump-sum contracts without quantities, a detailed specification, instead of a Bills of Quantities, will be supplied to the tenderers. A specification may be in a form for detailed pricing.
Normally general arrangement drawings will be provided, location of the site, the position of the building(s) on, and floor plans, some Cross-Sections, and elevations.
Bidders are usually not given working drawings. Anyhow, they are informed that they can check the drawings that were not provided to them at the consultant’s office.
Schedule of prices
As an alternative to a specification in the case of without quantities contracts, Bidders may be supplied with a Schedule of Works. In this schedule, we have to insert the works of the contract under the appropriate headings. The Bidders may need to price this schedule.
Step 02 – Invitation to Tender
First of all, the Client should decide the type of tendering to give an invitation to tenderers in the tendering process.
After completion of the tender document, the client/Employer will publish the tender notice. In the notice of tender following details will be included for the information of the prospective bidders.
- Name of the project
- Brief description of the project
- Details of the Client
- In some cases source of funds
- Eligibility criteria for the biding
- Time & place for the collection of Bids
- Cost of tender documents (Tender Fees)
- Time & place to return the sealed bids
- Submission criteria of the Bids, etc..
For most of the government project Engineer’s Estimated value also will be published in the tender notice.
Tender notice is behaving as an invitation to treat in the Contract law.
Preliminary Inquiry of Tendering Process
In the selective tendering method, a preliminary inquiry letter is sent to each of the proposed companies about a month in advance.
Sufficient information about the project should be given in the preliminary inquiry letter to enable each contractor to decide whether he is in a position to comply and, if so, whether he would be able in view of other commitments, to execute the contract if it is awarded to him.
Step 03 – Tender Collections
After receiving the notice of tender, the contractors are to decide whether to bid or not.
If the decision is to bid, then the contractors to obtain the tender documents from the relevant place by paying the relevant fees. There are two types of tender fees.
- Refundable Tender fees (Higher valve)
- Non-refundable tender fees (To recover the cost of the documents)
Step 04 – Tender Clarifications
After purchasing the tender documents then in the tendering division of the contractor, it is required to examine the documents carefully.
During this process contractor’s quantity surveyors are required to identify & list out all the ambiguities in the documents & need to notify them to the consultants as stated in the tender documents.
Next, in the pre-bid meeting, these notified questions will be answered by the consultants.
Step 05 – Tender addenda
The next step in the tendering process is preparing addenda by the consultant’s quantity surveyor. Based on these questions & answers necessary addenda (Plural of addendum) will be issued & circulated to all the contractors who have purchased the tender documents.
Parity of Tender
It is very important that all tenders should be based on the same information. Consequently, all the tender documents must be identical. It would be possible for some copies of a drawing to contain the latest amendments while other copies are of the un-amended drawings.
A tenderer may telephone the consultants about an item in the bills of quantities or a clause in the specification. He may question the accuracy of a quantity in a billing item. Such queries should be answered and must be dealt with promptly. If the answer given to that tenderer is in any way different from the information given in the tender documents, it should be communicated to all the bidders.
If a contractor wants to offer to do the work in a shorter time, then the procedure which he should follow is the same as for any other qualification to the printed documents, as described above.
Step 06 – Tender Submission
Thereafter contractors are required to complete the tender and to submit the documents according to the given instruction to the given place prior to the deadline state in the tender document.
Period for Preparation of Tenders
It is important that bidders be given enough time to do all the necessary inquiries from suppliers, sub-traders, etc.
According to the size of the job and characteristics of the proposed project, the Return Date of the tenders (bids) should be fixed.
Time of day should be specified as the latest time for tenders to be received on the date fixed. Any tenders arriving later should be returned and should be excluded from the competition.
Step 07 – Tender Closing
At the time of tender closing, a list of all the bidders will be announced according to the alphabetical order and then the bid valued will be announced according to the ascending order.
Step 08 – Tender Evaluation
Tender evaluation is the most important step in the tendering process. The tender evaluation process is taking place in the consultancy organization.
As the very first item, it will be checked on the Bid security.
If anyone has not submitted the bid security or if the submitted bid security is not in the correct order, the bids may immediately be rejected without evaluating.
Next, Arithmetical errors will be checked, and necessary corrections will be done to the tender sums. If there any arithmetical errors, that will be immediately notified to the relevant bidders by the consultant.
Then the evaluation process carried out, and Evaluation reports will be submitted to the client, including the consultant’s suggestions.
Step 09 – Tender Negotiation
After the Tender evaluation, If the Employer will not satisfy with the submitted bids, He would directly invite two or three selected bidders according to the evaluation report to the purpose of negotiating the tender sum.
In that case, the Employer will request discounts from the bidders.
Step 10 – Tender Award
As the final stage of the tendering process, the successful bidder will be selected according to the evaluations and negotiations. Finally, the project will be awarded to the successful bidder called as “Contractor” of the project.