1. LECTURE 2: TENDER PROCESS AND DOCUMENTATION
Lecture by:
Ms. Noorhidayah Sunarti ( )
LOC1/AC2

2. WHAT IS TENDER?
LOC1/AC2

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.
LOC1/AC2

4. WHAT IS TENDERING ?
LOC1/AC2

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
LOC1/AC2

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
LOC1/AC2

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
LOC1/AC2

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.
LOC1/AC2

9. Difference between a contract and a tender
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.
LOC1/AC2

10. General TENDERING PROCESS
LOC1/AC2

11. Tendering process – PRINCIPAL ACTIVITIES
Selection of the most preferable or appropriate contract procurement method.
Development of tender list
Preparation of tender documentation
Invitation / calling off tender
Preparation and submission of tenders
LOC1/AC2

12. Tendering process – PRINCIPAL ACTIVITIES (cont’d)
Receipt and opening of tenders
Evaluation of tenders
Acceptance of tender award or award of contract
LOC1/AC2

13. Traditional contract procurement route
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.
LOC1/AC2

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.
LOC1/AC2

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
LOC1/AC2

16. Tendering process Stage 1: PREPARATION Stage 2: APPROVAL TO TENDER
DOCUMENTATION
Stage 6:
AWARD CONTRACT
Stage 5:
PROCESSING
Stage 4:
INVITATION
LOC1/AC2

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
LOC1/AC2

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
LOC1/AC2

19. Stage 3: Documentation 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
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
LOC1/AC2

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
LOC1/AC2

21. TENDER NOTICE OR NOTICE INVITING TENDER
LOC1/AC2

22. The Internet is a very cost effective way of publishing the tenders.
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.
LOC1/AC2

23. Format of an ideal Tender Notice
Name of the Project.
Name & Address of the Company floating the tender.
Name of work, materials or services.
Place of work location.
Approximate estimated cost of work.
Earnest Money.
Period of completion.
Date on which the Tender Document sale commences.
Date on which the Tender Document sale commences.
Date and time up to which tender documents can be obtained.
The cost of tender documents.
The date and time up to which the tenders to be submitted and are to be opened.
Specification.
Eligibility Criterion.
LOC1/AC2

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
LOC1/AC2

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.
LOC1/AC2

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.  
LOC1/AC2

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
LOC1/AC2

28. TENDER PROCESS FOR CONTRACTOR
LOC1/AC2

29. Tendering process Stage 1: Decision to tender Stage 2:
Determine basis of tender
Stage 3:
Preparation of cost estimates
Stage 6:
Submission of tender
Stage 5:
Conversion of estimate to tender
Stage 4:
Commercial appreciation
LOC1/AC2

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
LOC1/AC2

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)
LOC1/AC2

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
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
LOC1/AC2

34. Stage 5: Conversion of tender estimate to tender bid
Tender committee meeting – part 2
Calculate ‘spread’ and add to estimate
LOC1/AC2

35. Stage 6: Submission of tender
Submit in format required
Organize delivery
LOC1/AC2