Engineering Project Tendering

General principles in tendering Money and time Economic use of resources Contractor’s contribution to design and contract Production cost savings Continuity Risk

Preliminary enquiry(before Tendering) Letter to the potential selected contractors asking them whether they are interested to tender Typical information provided including Employer, Consultants, Location of site, General description of works Date of return,…and etc

Tender period Ample time must be allowed Depend on any addendum will be issued Normally four weeks should be allowed

Tender Documents Bills of quantities Drawings Form of tender An addressed envelope for the return of the tender Information and instructions for tendering

Information and Instructions for tendering Date and time for the return of tender Place where all other drawings may be inspected Arrangements for site inspection Time and place of opening of tenders Instruction that contractors are to acknowledge receipt of all documents

Receipt of tender The tenders should be opened in the scheduled time in the presence of employer’s and consultant’s representatives Tender prices of the tenders are recorded. Consultants should carry out tender appraisal subsequently

Question and Answer The lowest three or four tenders would be analyzed Tenders would be asked to qualify or withdraw the qualification of some unclear items Tender interviews would be hold amongst the client’s and consultants’ representative, and tenderer one by one

Report on tenders and acceptance Tenderer would be recommended based on the price, planning, programme, financial, capability and competence Contractor would be appointed upon client blessing is obtained Letter of intent would be issued to the contractor

Tendering method Open Competitive Tendering Selective Competitive Tendering Negotiated Tendering

Competition and negotiation The relationship between competition and negotiation When to negotiate The basis for negotiation How to negotiate

Competition Price Quality Design Management Time

Advantages of competition Accountability A true reflection of current market prices Quotations easily define and measure contract period, design and management

Disadvantages of competition A waste of resources Restriction on full communication between design team and tenderers on details The lowest tender price may be much greater than the cost plan

Negotiation Pre-contract negotiation Post-contract negotiation

Situations adopted Negotiation Business relationship Contractor-financed projects Continuation of contract Special circumstances Special expertise or equipment Tendering climate Quick start

Basis for negotiation Competitive price for similar work under similar conditions in another or previous contract An agreed assessment of the estimated cost plus percentage of overheads and mark up

How to negotiate Equality of negotiators Parity of information Structure of estimate Apportionment of cost

Advantages of negotiation Save time Full communication Progressive agreement is feasible Elimination of many claim items

Disadvantages of negotiation Possible unnecessary higher price Loss of time if unsuccessful Lack of accountability

Non-traditional arrangements The work is not to be quantified and measured in a bill of quantities Information for the contractor to carry out the work is same as traditional arrangement

Advantages of quantities system Risk is lower for the contractor Competition is fairer Lower tenderers’ overheads during tendering Allow the total price to be analyzed in great detail Best means of cost control

Disadvantages of quantities system Design must be substantially complete for measurement For small jobs, it is inefficient Some quantities are partially speculative

Specification-based documentation Normal specification-based contracts Performance specifications

Review The advantage of competitive tendering is? Restriction on full communication between design team and tenderers on details and site operations Resource in preparing several unsuccessful tenders can be avoided. The lowest tender price may be much greater than the cost plan Contract period, design and management can be easy to define and measure