Definition of 'Request For Proposal - RFP' A type of bidding solicitation in which a company or organization announces that funding is available

for a particular project or program, and companies can place bids for the project's completion. The Request For Proposal (RFP) outlines the bidding process and contract terms, and provides guidance on how the bid should be formatted and presented. A RFP is typically open to a wide range of bidders, creating open competition between companies looking for work. Investopedia explains 'Request For Proposal - RFP' A Request For Proposal for a specific program may require the company to review the bids not only examine their feasibility , but also the health of the bidding company and the ability of the bidder to actually do what is proposed. The RFP may provide detailed information on the project or program, but can leave leeway for the bidder to fill in the blanks with how the project would be completed or program run. http://www.investopedia.com/terms/r/request-for-proposal.asp What is mobilisation guarantee and advance payment guarantee? In civil construction projects advance is given to the contractor which is known is as Mobilization Advance. It is normally 15% of the total contract value. The prerequisite for the issue of advance is that contractor has to provide a guarantee in the shape of Bank or Insurance equal to the amount being issued to the contractor. Mobilization advance is deducted from the bills of contractor in equal installments covering the project period. On completion of recovery Guarantee provided by the contractor is released. http://wiki.answers.com/Q/What_is_mobilisation_guarantee_and_advance_payment_guarantee Defects Liability Period Definition Defects Liability Period: the period commencing on the date that the Sub-Contract Works have achieved Practical Completion and expiring on the date twelve (12) months after the date of practical completion of the Works as certified by the Employer's Agent under the Contract. Defects Liability Period A period of usually twelve months following practical completion, during which the employer can require the contractor to return to the site to complete any omissions in the works and to make good any defective work or materials. When all omissions and defects have been made good, the contract administrator or Employer's Agent must issue a certificate or statement of completion of making good defects. http://www.longworthconsulting.co.uk/construction_contracts/defects_liability_period.htm

"The National Highways Authority of India was constituted by an act of Parliament, the National Highways Authority of India Act, 1988. It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto. The

Authority was operationalized in February, 1995 with the appointment of full time Chairman and other Members. " http://www.nhai.org/

NHAI

RFQ of Company A

RFQ of Company B

RFQ of Company C

NHAI selects few qualifiers based on their technical qualifications

RFP of Company A

RFP of Company C

Project allotted to the lowest bidder

Assuming the GMR wins the bid and gets the project worth Rs.1000 Cr. for the development of road. The Structure is as shown below,

NHAI Rs.1000 Cr. SPV (Special Purpose Vehicle) Financial Closure

Subcontract ing to other contractors

Subcontractin g to GMR-EPC divisions

Constructio n of Roads Working capital management involves the relationship between a firm's short-term assets and its shortterm liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. Float is defined as the difference between the book balance and the bank balance of an account. For example, assume that you go to the bank and open a checking account with $500. You receive no interest on the $500 and pay no fee to have the account. Now assume that you receive your water bill in the mail and that it is for $100. You write a check for $100 and mail it to the water company. At the time you write the $100 check you also record the payment in your bank register. Your bank register reflects the book value of the checking account. The check will literally be "in the mail" for a few days before it is received by the water company and may go several more days before the water company cashes it. The time between the moment you write the check and the time the bank cashes the check there is a difference in your book balance and the balance the bank lists for your checking account. That difference is float. This float can be managed. If you know that the bank will not learn about your check for five days, you could take the $100 and invest it in a savings account at the bank for the five days and then place it back into your checking account "just in time" to cover the $100 check.

Time Book Balance Bank Balance Time 0 (make deposit) $500 $500 Time 1 (write $100 check) $400 $500 Time 2 (bank receives $400 $400 check) Float is calculated by subtracting the book balance from the bank balance. Float at Time 0: $500 $500 = $0 Float at Time 1: $500 $400 = $100 Float at Time 2: $400 $400 = $0 http://www.studyfinance.com/lessons/workcap/ Pdf downloaded http://www.caalley.com/art/WorkingCapitalManagement.pdf

Construction Sector Analysis Report

India is on the verge of witnessing a sustained growth in infrastructure build up. The construction industry has been witness to a strong growth wave powered by large spends on housing, road, ports, water supply, rail transport and airport development. While the construction sector's growth has fallen as compared to the pre-2008 period, it has picked up in the recent past. Its share as a percentage of GDP has increased considerably as compared to the last decade. To put things in perspective, the total investment in infrastructure - which in this case includes roads, railways, ports, airports, electricity, telecommunications, oil gas pipelines and irrigation - is estimated to have increased from 5.7% of GDP in 2007 to around 8.0% by 2012. The Planning Commission of India has proposed an investment of around US$ 1 trillion in the Twelfth five-year plan (2012-2017), which is double of that in the Eleventh five-year plan. From a policy perspective, there has been a growing consensus that a private-public partnership is required to remove difficulties concerning the development of infrastructure in the country. Given that the resource constraints of the public sector will continue to limit public investment in infrastructure, especially backward and rural areas - the PPP based development will be needed wherever feasible. At the same time, reviewing the factors that constrain private investments would be necessary to encourage and speed up the process. The share of private investments is expected to increase to half in the Twelfth five-year plan as compared to the intended 30% for the Eleventh five-year plan. The real estate industry comprising of construction and development of properties has grown from family based entities with focus on single products and having one market presence into corporate entities with multi-city presence having differentiated products. The industry has witnessed considerable shift from traditional financing methods and limited debt support to an era of structured finance, private equity and public offering. The construction sector is a major employment driver, being the second largest employer in the country, next only to agriculture. This is because of the chain of backward and forward linkages that the sector has with other sectors of the economy. About 250 ancillary industries such as cement, steel, brick, timber, and building material are dependent on the construction industry. A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times. Key Points Supply The past few years has seen a substantial increase in the number of contractors and builders, especially in the housing and road construction segment. Demand exceeds supply by a large margin. Demand for quality infrastructure construction is mainly emanating from the housing, transportation and urban development segments. Barriers to entry Low for road and housing construction. However, high working capital requirements can create growth problems for companies with weak financial muscle. Bargaining power of suppliers Low. Due to the rapid increase in the number of contractors and construction service providers, margins have been stagnant despite strong growth in volumes.

Bargaining power of customers Low. The country still lacks adequate infrastructure facilities and citizens have to pay for using public services. Competition Very high across segments like road construction, housing and urban infrastructure development. Relatively less in airport and port development. Financial Year '12 The construction industry witnessed a slowdown in FY12, after the economy showed some resilience in the preceding two years. With the overall GDP growth slowing down, the growth in the construction industry dipped to 4.8% in FY12. In addition, the high levels of inflation led the RBI to keep the interest rates high, thereby reducing investments. Project financing also became difficult on the back of the increasing gestation periods of the projects, thereby leading financial institutions to take a cautious approach towards funding projects in the sector. The 2011-12 budget saw the government double the financing limit of financing infrastructure projects to Rs 600 bn. For the power and coal sector, the Government proposed External Commercial Borrowings (ECB) to part finance rupee debt of existing power projects. To encourage PPP in road construction projects, the budget proposed to allow ECB for capital expenditure on the maintenance and operations of toll systems for roads and highways. FY12 was a challenging year for the Indian real estate sector marked by declining volumes, over supply (in certain pockets) and lack of sustained economic activity. The leasing business witnessed a slowdown on factors such as oversupply, lower foreign investments and poor domestic triggers. The retail segment however witnessed a mixed year as overcapacities got absorbed. As for the residential segment, the same remained muted. The trends varied in different markets with some witnessing price correction and other seeing higher volume growth. On an overall basis, companies from the real estate and construction sector faced issues related to higher interest costs on the back of leveraged balance sheets. The Reserve Bank of India kept the interest rates on the higher side due to concerns over the high inflation levels. Towards the end of the year, a handful of companies announced plans to improve the health of their balance sheets by selling off their stakes in the non-core businesses and improving the cash collection cycles, launching and bidding for projects on a selective basis, amongst others. Prospects India requires quality infrastructure. This simple fact is the long term driver of the construction sector as infrastructure investments are the most important growth driver for construction companies. While short term factors will keep the sentiments subdued, over the long term, demand will remain strong. The proposed increase in allocation in the twelfth five-year plan (2012-2017) will translate into a healthy business for construction companies. Demand-supply gap for residential housing, favourable demographics, rising affordability levels, availability of financing options as well as fiscal benefits available on availing of home loan are the key drivers supporting the demand for residential construction. According to a technical committee set up by the Ministry of Housing & Poverty Alleviation, the total housing shortage in the country stood at about

18.78 m at the start of the twelfth five-year plan. This provides a big investment opportunity. The commercial segment however is going through a tough phase and is likely to do so in the short to medium term on account of overcapacity. While long-term factors are likely to work in favour of the real estate developers, the outlook for the short term remains uncertain. High interest rates and negative consumer sentiments continue to impact business for the real estate players. Also, the fact that banks have been turning cautious towards rescheduling debt or issuing fresh loans to real estate companies is a dampener for the sector. The overall long term risks also include increased prices of the essential raw materials like cement, bricks and steel coupled with the increasing in labour costs, which together make for almost 75% of overall construction cost. Liquidity is also another factor that will determine overall project execution. While entry into affordable housing by many players would curb the declining trend of the topline as witnessed during the downturn, it is likely to put pressurize on margins. http://www.equitymaster.com/research-it/sector-info/construction/Construction-Sector-AnalysisReport.asp

Working Capital Management WCM involves the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. Debtors The main source of working capital for GMR Infrastructure Limited is Debtors. Control of Working Capital Internal Control Assets Debtor Inventory Liability Creditor Short term loan

At GMR Contract Expenditure To GR/IR GR / IR To Party Creditors Process of getting Creditors inside GMR is done by C&C (Commercial and Contractor) / Procurement department. Illustration For procurement of 100 tons of steel, Check for existing contractor/supplier form database. Control Account

Check for new players in market. Send RFQ, benefits and so on. Make comparative statement and decide whom to give.

Example, Company A 49000/ton No transit Insurance Advance payment required Company B 49500/ton Transit Insurance (2000) 10 days credit period Company C 50500/ton Transit Insurance (2000) 30 days credit period

In the above example, we are comparing companies A,B and C with respect to cost, benefits and payment terms. Need to Fill Work Contract