Task1 A LO 1 1.1 Explain The Clients Inv

MA AYE CHAN MOE, SECTION-B, YEAR-2 SEMESTER-I
Task1 a: (LO 1:1.1)
Explain the clients involvement in the tender process.
There are two client organizations as private and public sectors.
The private sector consists of industrial, commercial, social, charitable and

professional organizations and individuals.
And the public sector means government departments, nationalized industries,

statutory authorities, local authorities and development agencies.
Clients will usually identify their involvements in terms of commercial or social

pressure to change such as
a. Space requirements: to improve production levels and production capacity, to

provide domestic or social accommodation
b. Investment: to exploit chances to capitalize in buildings
c. Identity: to develop the individuals or organizations standing in its market or
society
d. Location: to lead a better use of capitals, capture a new market or improve
facility
e. Politics: mainly in the public sector
The main aim of the client organizations is to accomplish a degree of certainty in the
building process.
On the other hand, individuals and inexperienced clients are led by their advisers and
contractors.
Clients have one of the biggest influences over the way a project is run.
They have substantial influence and contractual control and their decisions and
approach determine.
a. The time, money and other resources available for projects

b. Who makes up the project team, their competence, when they are appointed
and who does what
c. Whether the team is encouraged to co-operate and work together effectively
41 Estimating and Tendering

d. Whether the team has the information that it needs about the site and any
existing structures
e. The arrangements for managing and coordinating the work of the team.
In general, a client aims to choose a team that he can trust and depend on to reduce
uncertainties during a buildings design, construction and use.
They are
a. The design: by designing to a budget

b. The time: by contractors accepting more responsibility for meeting
completion dates,
c. The cost: by achieving realistic cost estimates and tenders which reflect the
final cost
Because of this, they are made accountable for the impact their approach has on the
health and safety of those working on or affected by the project.
Clients are not required or expected to plan or manage projects themselves.
Nor do they have to develop substantial expertise in construction health and safety,
unless this is central to their business.
Clients take on additional responsibilities.
If they specify materials or methods of working they may well become designers in
relation to those specific matters.
They will also legally be contractors if they directly manage or carry out construction
work.
Clients should consult with appointees to find out how much time they will need for
planning and preparing before work is expected to start in order that both parties can
agree a suitable time period.
Clients must inform their appointees how much time the client has allowed for
planning and preparation before the work starts.
Clients often employ more than one designer, for example architects, civil, structural
and services engineers.

In such cases they all need to know who does what, and the timing of the
appointments needs to enable the design work to be co-ordinate from an early stage.
When deciding whether management arrangements are suitable and maintained

throughout the project, clients will need to make a judgment, taking account of the
nature of the project and the risks that the work will involve.
For example, a client was aware that there were electrical and gas services passing
under the site.
He arranged for plans for these to be provided by the relevant utility suppliers, and
confirmed the exact location of the services by carrying out on-site tests.
This information was then provided to contractors who were asked to tender for the
work so that they could take account of the presence of the services when bidding for
the work.
Clients must provide designers and contractors who may be bidding for the work, with
the project-specific health and safety information needed to identify hazards and risks
associated with the design and construction work.
Many clients are prepared to pay for a good service.
The client has traditionally employed an inactive role in the construction process.
Standard forms of contract require the employer to pay for work properly performed.
The client is the most important member of the team because he is the patron for the
organization, he identifies the need for the building and he must pay everyone who is
directly or indirectly involved in the construction process.
Task 1b: (LO1: 1.2)

Analyze the constraints that apply to the tender process

For D1, your analysis should take the form of constraints for the
tender.
The Common Arrangement of Work Sections (CAWS) was developed to align
packages of work more closely with the pattern of sub-contracting in the industry.
Two of the objectives of SMM7 (Standard Method of Measurement of Building
Works: Seventh Edition, 1988) were:
(1) to simplify bills of quantities and
(2) to develop a method which could help with computer applications.
To an extent, modern bills of quantity have been accepted by estimators because they
have developed an understanding of the coding system and descriptions have not been
shortened by the amount envisaged when SMM7 was published.
Many quantity surveyors have avoided a total reliance on specifications, they are
aware that estimators need more than an abbreviated description.
The move towards computer-aided billing and estimating has been difficult, and many
doubt whether SMM7 has helped.
On first sight, the tables of measurement rules appear to be an aid to all those involved
in computer-aided bill production and pricing.
Unfortunately there have been some problems:
1. Many specifications have no page numbers.

The explanation is that the estimator must use the National Building
Specification (NBS) codes to find the relevant clauses.

The problem for the estimator is that the page numbers are needed for printing
and distributing pages to sub-contractors.

2. There is confusion with the way work section numbers are used in
specifications.
The work category numbers must be repeated on each new page if this problem
is to be solved.
3. Some sub-contractors have argued that they received the bill but not the
specification, with SMM6 (Standard Method of Measurement of Building
Works: Sixth Edition, 1978), the bill description often had enough detail to
price the work.

This may be the estimators fault but in some cases the specification references
are more complex.

The estimator might find the correct clause referred to in the bill but not notice
the specification clause includes references to other clauses.

For example, a patent glazing specification could itself refer to a separate
glazing specification, which the estimator must also send to the patent glazing
sub-contractor.
4. Defined provisional sums are being used incorrectly.
The tender documents should provide information about the nature of the work,
a statement about how and where the work is fixed, quantities to show the
scope of work, and any limitations.

It is common to see defined provisional sums such as: drainage outfall to
culvert or additional dry-rot treatment.

5. The number of drawings needed by sub-contractors at tender stage has
increased dramatically.
This is due to the reduction in the number of bill items; or as some would say,
the quantity surveyor doing less work.

Many contractors have incurred an increase in printing costs since the
introduction of SMM7.
This may also be due to smaller margins and the need to ensure that sub-
contractors will tender on exactly the same basis as the main contractor.

Now that main contract bids rely heavily on quotations from sub-contractors, the
estimator must exercise great skill and care in dealing which changing procedures and
new methods of measurement for bills of quantities.
The Private Quantity Surveyor (PQS) still has the responsibility to provide adequate
information for the estimator to price.


Task 1c (LO 1: 1.3)

Discuss the contractual documentation required to support the tender
process
For D1, you must provide conclusions at the end of Task 1c, based on
synthesis of information and justification through references.
Documents used as the basis of a tender

The basis of the tender will dictate the way in which the contractor will be paid and
the relative accuracy of the estimate.
The contractors bid will be for one of the following:
1. Fixed price contract: where the sum of money is stated in the contract as
payment for work, the payment may be adjusted according to strict conditions
in the contract.
2. Measurement contract: will allow the contract sum to be calculated later,
usually as the aggregate of various rates submitted by the contractor. The
contract sometimes includes a target price.
3. Cost-reimbursement contract: an arrangement whereby the cost, whatever it
may be, will be paid by the client on the basis of the actual incurred by the
contractor, plus overheads and profit.
Fixed price contracts
The price is fixed in advance but is subject to variation under the terms of the contract.
This could include a fluctuations clause to pay for the increases caused by inflation.
Lump-sum contracts are the simplest type where a lump-sum offer is made by a
contractor to carry out the work which might be outlined on drawings and described in
a specification but no quantities have been prepared.
This is the usual form for a small job carried out by a local builder.
Bills of quantities provide the most detailed basis for estimating cost.
Each contractor tendering for work will be familiar with their use and can save
wasteful effort in preparing quantities for the same building.
They represent a clear list of items included in the contract and a schedule on which
variations may be valued.

Bill of quantities gives a fair basis for competition and a firm contract sum is known
in advance.
The contractors proposals include a contract sum analysis.
The purposes of the contract sum analysis are:
1. To value changes in the employers requirements;

2. To value provisional sums given in the employers requirements;
3. To allow the use of price adjustment formulae where they apply.
The contract sum analysis should be divided into sums of money for design work
carried out before and during construction, and the following;
1. Preliminaries
2. Provisional sums
3. Trade headings similar to those in SMM6 or SMM7.
Measured contracts
The total cost of a contract can be calculated by measuring the work as it advances on
site and pricing the measured items using the rates given in an agreed schedule of
rates or approximate bill of quantities.
A schedule of rates lists all the items likely to arise, in a similar way to a bill of
quantities, but no quantities are included.
A schedule of rates is also used with drawing and specification contracts to value
additional work.
There are two principal types of schedule.
Cost reimbursement contracts

The basis of this method is for the contractor to be repaid with the prime cost of
complete work as defined in the contract, and a management fee to cover over-heads
and profit.
The fee can be based on a percentage of cost (cost plus percentage contract) or a lump
sum based on the estimated project cost.
The advantages of this method are: the project can start quickly, the contractor can
contribute to the design, competition can be introduced through the size of the fee, and
the contractor is unlikely to cut corners.
The disadvantages may be: the contractor has little incentive to save on time and
resources, the client is unable to predict the total cost accurately, and it can be tedious
to calculate costs during the construction stage.
It should be remembered that most of the work is carried out by package contractors
who tender for work on a traditional bill of quantities.
Provisional sums
Provisional sums for work which will be paid at current prices (e.g. day works, work
carried out by statutory undertakers and other public bodies) are not allocated to work
categories but are separately identified as not subject to adjustment.
Provisional sums for work to be carried out by the general contractor are not allocated
to work categories in the bills, but when the work has been executed, the measured
items set against the provisional sum will then be allocated to appropriate categories
or, if relating to specialist work, will be adjusted using the appropriate formula.
The Contract Documentation relates to all pre-tender and contractual documentation.
Contract Documentation provides builders with sufficient information to be able to

construct required works to meet the service delivery requirements.
Consideration is to be given to the terminology used when translating the Service Plan
into tendering and contractual documentation for building and construction
consultants.

The preparation of the tender documentation can take up to six months or more to
develop, depending on the project complexity and the resources available.
The tender preparation and documentation consists of developing complete and

properly co-ordinate documents, some documents include:
Working drawings and specifications, suitable for tendering and construction
Pre-tender estimate (Cost Plan D)
Bill of quantities
Formal tender documents
Formal invitation
The Code of Procedure for Single Stage Selective Tendering provides an example
letter.
The letter is to tell the contractor which drawings have been sent, arrangements for
site visits, date for return of tender and how the tender should be submitted.
The client should issue the tender documents on an agreed date in order to plan the
contractors estimating workload.
Bill of quantities
The bill of quantities is a vital tender document; a contract document should be an

accurate description and quantification of the project.
There should be a cross-reference to the tender drawing and architects notes or

specifications.
We have to send two copies of the bill of quantities, the general arrangement
drawings, Health and Safety Plan, two copies of the form of tender and to envelope
for the return of the tender to the contractor.

In the bill of quantities the work agreed to be done under the contract are listed as
each item along with the quantity of material needed and quality specified for the
work.
Contractor is usually paid according to the quantities of items completed each month.
One of the advantages of this method is that it induces performance.
It can be effective because the Contractor is paid as soon as possible after incurring
costs and the Client gains by reducing the total cost of the construction.
The disadvantage is that this method is more complex and expensive for all parties
when compared to the basic lump sum contract.
Drawings
The bill of quantities will list the drawings which were used in preparing the
documents.
With standard methods of measurement aimed at producing shorter bills of quantities,

there is a greater reliance on drawings by the tenderers.
The tenderers are great reliance on drawings, aimed at producing shorter bills of
quantities with standard methods of measurement.
Tendering costs could be cut if copy negatives or reduction prints can be produced.
For large projects, drawings are often issued electronically.
This might be on CD-ROM, by e-mail or with tenderers downloading drawings from a

secure website.
Form of tender
The form of Tender is a form where the tenderer can fill in details relating to their
offer, including the lump sum for which they are offering to complete the works.
A form of tender is a pre-printed formal offer, usually in letter form, which ensures
that all tenders are received on the same basis and should be simple to compare.

It may be sent with a collusive tendering certificate and appendices that are used for
declarations about fair wages or basic lists of materials.
Health and safety plan
A pre-tender health and safety plan is a requirement of the Construction (Design and
Management) Regulations 1994.
During its development, the plan can provide a focus at which the health and safety
considerations of design are brought together under the control of the Planning
Supervisor.
The plan plays a vital role in the tender documentation.
Prospective Principal Contractors are made fully aware of the projects health, safety
and welfare requirements, giving a level playing field on which to provide tender
submissions.
The plan provides a template against which different tender submissions can be
measured.
Such information that the planning supervisor has, or can easily obtain, that a
contractor would need in order to meet any of the requirements imposed on them by
the Regulations.
Information that any contractor will need to know about any welfare provisions that
will be required.
Return envelope
Each contractor should be provided with a pre-addressed envelope clearly marked

Tender for .
They are to be marked so that they will be easily recognized and not arrive to the
wrong person.
The Construction Industry Board, (CIB) has published a comprehensive list of tender
enquiry documents in its Code of Practice for the Selection of Main Contractors
1997.

Example of Formal Invitation Letter

Form of Tender
(Insert Contact Details)

The University of Aberdeen
Kings College
Aberdeen
AB24 3FX
For the attention of (insert name)
Dear Sirs
Tender for: (insert description)
Having carefully examined the subject Invitation to Tender dated (###) and the documents detailed
therein:-
We confirm that we have fully satisfied ourselves as to the nature of the requirements of the
University.
We hereby offer to supply the goods and related services in accordance with your Invitation to Tender
and its enclosures as follows:
Instructions to Tenderers
Form of Tender (including Certificate of Tender)
Specification of Requirements for a (###)
In the event that our Tender is accepted we undertake to execute a formal contract with the University
of Aberdeen embodying all of the terms and conditions contained within this offer.
Unless and until a formal agreement is executed, this Tender together with the Universitys written or
telefaxed acceptance shall constitute a binding Contract between us.
We agree to abide by our Tender for a period of 90 days fixed from the lodgement date of tenders, and
it shall be binding upon us at any time before expiration of that period.
We understand that you are not bound to accept the lowest or any Tender received, nor assign a reason
for the rejection of any Tender.
We accept that any costs incurred in Tender preparation are for our own account.
We understand that this shall be deemed to be our only and final offer, and unsolicited re-tenders shall
not be considered.

We confirm that the person whose signature is appended to this Tender is a duly authorised signatory
of our Company and has full and formal legal authority to sign this Tender on behalf of our Company.
We understand that if our Tender is accepted we shall be reimbursed for the goods and services in
accordance with the terms and conditions of the Contract to be executed between us.
Certificate of Tender
We certify that this is a bona fide Tender, intended to be competitive, and that we have not fixed or
adjusted the amount of the Tender in accordance with any other person, body or association.
Authorisation
Signed: ------------------------------------------------------------------------------
Name (Print): ------------------------------------------------------------------------------
Title: ------------------------------------------------------------------------------
For and on behalf of: ------------------------------------------------------------------------------
Date: ------------------------------------------------------------------------------
Full address, including postal code, to which all communications relating to this Tender should be
despatched:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Telephone Number: -------------------------------------------
Facsimile Number: -------------------------------------------
List of Documents Included with Form of Tender:
Example of Form of Tender

Task 3a (LO3: 3.2)

Determine the critical factors that affect profit margin.
Critical factors that affect profit margin
When work is rare and turnover falls, contractors look for ways to reduce tender
mark-ups.
The invitation is to reduce the amount for overheads at a time when they are rising in
proportion to turnover.
The profit figure is an arrangement of discounts and additional profit required by

management.
In a competitive market all discounts are taken out before a small profit margin is
added, to help in winning the work.
Profit is a flow concept and the profit margin measures the flow of
profits over some period compared with the costs, or sales incurred
over the same period.
One could compute the profit margin on costs, or the profit margin
on sales.
Time
A construction companys proposal for a project takes into

consideration all cost factors, time is a crucial element to
maximizing the profit margin.
A construction company doesnt charge per hour.
It charges a price for the whole project, and that price is determined
by estimating how long it will take, how much supplies cost, how
much labor is involved and so forth.
When the time to complete the project far exceeds the estimated
time, the profit margin for the project falls drastically.

Supply Costs
Supplies needed to complete a project do not come with consistent

price tags.
The cost of supplies changes often, much like the cost of gasoline
will rise and fall numerous times in a month.
If a construction company purchases all its supplies at the same

time, it wont be affected by rising prices.
But if it purchases supplies as the project progresses, it may be

saddled with extra costs that werent figured into the bid, leading to
a thinning profit margin.
Of course, that works both ways. The cost of supplies may drop at
any given time, leading to a larger profit margin.
Unexpected Problems
Problems that arise unexpectedly can cause confusion with a

construction companys profit margin.
Such problems include damaged materials due to a natural disaster

and unexpected foundation problems that require drastic
corrections.
Most of these problems are difficult or impossible to predict.
There are, nevertheless, some important issues which must be considered before a
tender can be completed.
1. The desire to gain the contract or to increase turnover

2. Whether the project will contain contractors finance, cash flow calculations
will show the net finance needed or benefit available.
3. The effect of winning the contract on the present workload
4. Knowledge of the client and his consultants, the attitude and competence of
other parties can have an impact on the smooth running of a project.

5. The local market conditions, consider the strength of competition for the type
of construction in the area.
6. Knowledge is gained of profit margins by an examination of results from
previous tenders.
7. There is a theory that contractors may be influenced by the clients budget.
Re-examine the suppliers and sub-contractors quotations for any evidence that lower
prices may be available after the main contract is awarded.
Consider different profit margins for direct work and that for which sub-contractors
will be responsible.
Finally once the overheads and profit are settled, the amounts can be put on the
summary form.
All that remains is to add day work and undefined provisional sums to arrive at the
overall total, and where applicable add professional fees to produce the tender figure.
Task 3b (LO 3: 3.3)

Demonstrate how the health, safety and welfare plan.
For D1, you must provide the complete plan for safety construction
project, based on synthesis of information and justification through
references.
The key to achieving healthy and safe working conditions is to ensure that health and
safety issues are planned, organized, controlled, monitored and reviewed.
Everyone controlling site work has health and safety responsibilities.
Checking that working conditions are healthy and safe before work begins and
ensuring that the proposed work is not going to put others at risk requires planning
and organization.
Gathering as much health and safety information about the project and the proposed
site before work begins is important.

Information available at tendering should be used so that allowance is made for the
time and resources required to deal with particular problems.
Sources of information include:
- The client
- The design team
- Contract documents
- The main contractors on the site
- Specialist contractors and consultants
- Trade and contractor organizations
- Equipment and material suppliers
The construction industry has a poor health record.
Construction workers are likely to suffer ill health as a result of their work in the
industry after exposure to both harsh working conditions and hazardous substances.
Health can result from:
Asbestos: Exposure to asbestos can cause serious respiratory diseases such as

asbestosis and cancer.
Manual handling: Lifting heavy and awkward loads causes back and other injuries.
Some injuries can result from a single lift, but more commonly, long-term injury
develops as a result of repeated minor injury due to repetitive lifting.
Noise and vibration: High levels of noise can cause hearing loss and repeated use of
vibrating tools can cause hand-arm vibration syndrome (damage to nerves and blood
vessels- most commonly in the hands and fingers).
Chemicals: Exposure to materials such as cement and solvents can cause skin
problems such as dermatitis.
Summary of steps to take before working at height:

Ask yourself whether any of the work can be carried out without working at
height.
Start at the top of the hierarchy to decide what equipment will provide the
safest method of getting to the work area and carrying out the job.
Check that the selected equipment is suitable for the conditions on site.

Make sure that the equipment needed is delivered to site in good time, and that
the site has been prepared for it.
Check that the equipment is in good condition and make sure that whoever puts
the equipment together is competent and knows what they are doing.
Make sure those who use the equipment are supervised so that they use it
properly.
The more specialized the equipment (eg. Boatswains chairs and rope access
equipment), the greater the degree of training and supervision required to
ensure safety.
Check any equipment provided by another company is safe before using it.
Find out who to tell if any defects need to be remedied or modifications need to
be made and keep them informed.
Ensure you have procedures for rescuing an injured person and handling an
emergency situation.
Inspections and reports

All working platforms must be inspected by a competent person:
after installation or assembly in any position
after any event likely to have affected its stability, eg. Following strong winds
or substantial alteration and
at regular intervals if the working platform is below 2m or at intervals not
exceeding seven days if the working platform is at 2m or above.
The person in control must have the inspections carried out by a competent person.
This is someone with the proper training (eg. Attendance at a scaffolding inspection
course) and experience to enable them to identify any risks that are present and decide
upon the measures required to control the risks.
Whoever controls the activities of others who use a scaffold also needs to ensure it is
safe before they use it for the first time.
If the competent person is not satisfied that work can be carried out safely, they should
advise the person the inspection was carried out (eg. A senior manager of the principal
contractor as soon as possible).

Stop work if the inspection shows it is not safe to continue.
Welfare facilities
Everyone who works on any site must have access to adequate toilet and washing
facilities, a place for preparing and consuming refreshments and somewhere for
storing and drying clothing and personal protective equipment.
Principal contractors and others who have control over construction sites are
responsible for proving or making available site welfare facilities.
Employers are also responsible for ensuring that welfare facilities are adequate for
their employees.
The welfare facilities should be sufficient for everybody who is working on the site.
If facilities such as toilets and canteens provided by someone else are to be used,
check that they are suitable and properly maintained.
They should be kept clean, warm and properly ventilated and lit.
Welfare facilities should be easily available to people working on the site.
Toilets need to be easily accessible from where the work is being done.
Washing facilities should be as close as possible to the toilets.
Washing facilities also need to be close to canteens and rest rooms so that people can
wash before eating.
In almost all cases, these facilities will be provided on site.
Where the work is of short duration, arrangements still need to be made for welfare
facilities.
Sanitary conveniences
Men and women may use the same toilet, provided it is in a separate room with a door
that can be locked from the inside.

Soap and towels (either roller-type cloth or paper) or dryers should also be provided.
It is good practice to provide skincare products.
Where the work is particularly dirty or workers are exposed to toxic or corrosive
substances (eg. During demolition or work in contaminated ground), showers should
be provided.
Storing and drying clothing and personal protective equipment
Make sure there are proper arrangements for storing:
Clothing not worn on site (eg. Hats and coats):
Protective clothing needed for site work (eg. Wellington boots, overalls, gloves
etc)
Personally issued equipment (eg. Ear defenders, goggles, harnesses etc).
If electrical heaters are used, ensure that they are either fitted with a high-temperature
cut-out device or are properly ventilated.
Many fires have been caused by placing clothing on electrical heaters to dry, making
the appliance overheat.
Drinking water
Make sure there is a supply of drinking water.
It is best if a tap direct from the mains is available, otherwise bottles or tanks of water
may be used for storage.
If water is stored, it should be protected from possible contamination and changed

often enough to prevent it from becoming stale or contaminated.
The tap should be clearly marked if it is possible to confuse the drinking water supply
with other water supplies or other liquids such as:
Those not fit for consumption (eg. Water from storage tanks used for wheel
washers) or

Certain toxic materials (eg. From taps to pipelines in factories).
Decide how the waste stream will be managed to ensure it is timely and effective.
You might want to consider whether you will require the contractors to be responsible
for collecting their own waste or whether you will provide someone to do this for the
site.
Dont forget that waste materials also need storing safely before their removal from
the site and make sure that you allow sufficient space for waste skips and bins.
If you are collecting waste in skips you will need to decide where the skips can
positioned and how often they will need to be collected.
Consider waste generated inside and whether you need to provide wheeled bins to
enable it to be brought out of the building safely.
First aid
First aid can save lives, reduce pain and help an injured person make a quicker
recovery.
The Health and Safety Regulations 1981 require you to provide adequate and
appropriate equipment, facilities and personnel to enable first aid to be given to your
employees if they are injured or become ill at work.
The minimum provision for all sites is:
- A first aid box with enough equipment to cope with the number of workers on
site
- An appointed person to take charge of first-aid arrangements
- Information telling workers the name of the appointed person or first aider and
where to find them.
- A notice in the site hut is a good way of doing this.
- A first aider is someone who has undergone a training course in administering
first aid at work and holds a current first aid at work certificate.
- A first aider can undertake the duties of an appointed person.
- The number of qualified first aiders needed depends on the risk of injury and ill
health on site. As a guide:

Numbers employed at any location Number of first aid personnel
Fewer than five At least one appointed person
5 to 50 At least one first aider

One additional first aider for every 50
More than 50
employed
The first-aid arrangements should cover shift working, night and weekend working
where this is carried out.
This may mean appointing or training several people to ensure adequate cover.
Employees duties
Employees also have health and safety duties. They should:
follow instructions given to them by their supervisors
co-operate with their employer on health and safety matters
follow the health and safety rules that apply to their particular job and to the
site in general
use the health and safety equipment provided
report defects in equipment to their supervisor
take care of their own health and safety as well as that of their workmates and
others who might be affected by their work
Employees should be trained to know what to do and the work should be supervised
and monitored to make sure that information provided as training is relevant to the
work situation and is applied effectively.
Deciding whether somebody is an employee or is self-employed can be complex in

the construction industry.
It may be important to be sure of the employment status of people working on a site.

It may affect who has responsibility for some aspects of health and safety and the
provision of safety equipment such as boots and hats.
The Construction (Health, Safety and Welfare) Regulations 1996
What do the Regulations cover?
The Regulations cover a wide range of health and safety issues, including:
- Welfare requirements such as toilets, washing facilities and rest areas,
- The support and inspection of excavations,
- Transport routes and pedestrian segregation
- Provisions for higher-risk trades such as demolition and
- Emergency and fire procedures
Task 4a (LO 4: 4.1)
Compare the stages of open and selective tendering.
For M1, you must provide conclusions suitable for the new tender
project at the end of Task 4a.
Open tendering
A tender is a submission made by a prospective supplier in response to an invitation to

tender.
It makes an offer for the supply of goods or services.
In construction, the main tender process is generally the selection by the client, of a
contractor to construct the works.
However, as procurement routes have become more complex, so tenders may now be
sought for a wide range of goods and services.

Irrespective of the nature of the goods or services that are being sought, securing
tenders generally follows one of a number of basic procedures:
Open tendering
Selective tendering
Negotiated tendering
Serial tendering
Framework tendering
Open tendering allows anyone to submit a tender to supply the goods or services that
are required.
Generally an advert will be placed giving notice that the contract is being tendered,
offering an equal opportunity to any organization to submit a tender.
On larger projects, there may then be a pre-qualification process that produces a short-
list of suitable suppliers from the respondents expressing interest in the contract.
This short list will then be invited to prepare tenders.
The selection of a short list can include pre-qualification questionnaires and

interviews.
This sort of pre-qualification process is not the same as selective tendering.
Selective tendering only allows suppliers invited from a pre-selected list to take part in
the tender process.
Open tendering has been criticized for being a slow and costly process, attracting
tenders or expressions of interest from large numbers of suppliers, some of whom may
be entirely unsuitable for the contract and as a result it can waste a great deal of time,
effort and money.
However, open tendering offers the greatest competition and has the advantage of
allowing new or emerging suppliers to try to secure work and so can facilitates greater
innovation.

The number of firms tendering can be reduced by a pre-qualification process, and it

this uses a standard pre-qualification questionnaire, then the time wasted by
unsuccessful applicants can be minimized.
Whilst often seen to be more efficient, selective tendering can exclude potential
suppliers, it can be seen to introduce bias into the process, and it can result in
prospective suppliers continually contacting clients and consultants to check that they
are on the appropriate lists.
On public projects, or projects that include an element of public funding, it may be

necessary to advertise contracts as a requirement of the Public Contracts Regulations.
This is intended to open up public procurement within the European Union and to
ensure the free movement of supplies, services and works.
Open tendering can be either single stage or two stages.
Two-stage tendering us used to allow early appointment of a supplier, prior to the

completion of all the information required to enable them to offer a fixed price.
In the first stage, a limited appointment is agreed allowing them to begin work and in
the second stage a fixed price is negotiated for the contract.
Selective tendering
Selective tendering only allows suppliers to submit tenders by invitation.
A pre-selected list of possible suppliers is prepared that are known by their track
record to be suitable for a contract of the size, nature and complexity required.
They might then be asked if they would be interested in tendering for the contract, and
then based on the responses received, a number of them invited to tender.
From the tenders received, a preferred tenderer is selected based on criteria such as
price and quality and negotiations entered into.

Consultants or experienced clients may maintain approved lists of prospective

suppliers appropriate for particular types of contract and then regularly review
performance to assess whether they should remain on the list.
Selective tendering may be particularly appropriate for specialist or complex

contracts, or contracts where there are only a few suitable firms.
Selective tendering will tend to be faster than open tendering and can be seen as less
wasteful, as there is no pre-qualification process as part of the tender procedure itself,
and only suppliers that are known to be appropriate for the proposed contract are
invited to prepare tenders.
It can also give clients greater confidence that their requirements will be satisfied.
However, it can exclude smaller suppliers or those trying to establish themselves in a

new market, it can reduce the potential for innovation, and it can be seen to introduce
bias into tendering as firms may be excluded from approved lists for unknown
reasons, because of a lack of awareness or because of personal preferences.
It can also result in prospective suppliers continually contacting clients and

consultants to check that they are on the appropriate lists.
On public projects, or projects that include a publicly-funded element it may be

necessary to advertise contracts.
This is a requirement of the Public Contracts Regulations, intended to open up public

procurement within the European Union and to ensure the free movement of supplies,
services and works.
Selective tendering can be either single stage or two stages.
Two-stage tendering is used to allow early appointment of a supplier, prior to the

completion of all the information required to enable them to offer a fixed price.
In the first stage, a limited appointment is agreed allowing them to begin work and in
the second stage a fixed price is negotiated for the contract.

In conclusion, maximum competition and lowest price obtained are advantages of

open tendering. But there are also many disadvantages such as :
a. Large waste of effort because too many contractors are tendering
b. Contractor submitting lowest tender may not be properly equipped to undertake
the contract
c. Client may be inclined to accept lowest tender irrespective of reputation of
contractor
d. Poor quality building or bankruptcy may occur
Another one is selective tendering. There are advantages and disadvantages of
selective tendering.
Advantage is that selection of cheapest submission is not as high a risk as in an open
tender as tenderers are known.
Disadvantages are that limiting the number of tenderers may exclude new bidders who
may offer more innovative ideas or solutions.
Task 4b (LO 4: 4.2)
Analyze the factors that are used to create select lists of contractors.
The contractor needs to consider the criteria the client will use for selection.
These can be:
1. Price; will the lowest price alone be the basis for selection?
2. Time; will a programme show the client that the contractor has thought about
how the job can be finished on time, or ahead of time?
3. Allocation of money; will the way in which money is distributed in the priced
bills help or irritate the client?
4. Method statement; would the client wish to know the methods to be adopted
before accepting the offer?
5. Safety and quality; does the client expect a statement of safety or quality
showing how the contractor will manage this particular contract?

6. Construction team; is the contractor proposing to supervise the job with

experienced staff who will work as an effective team with the consultants?
7. Presentation; how important is an accurate, well-presented offer?
Completion of priced bills
The Tender Summary form produces a tender sum which must be transferred to the
bills of quantities for submission.
If a priced bill of quantities has to be submitted with the tender, then the way in which
money is spread in the bill should be decided at the final review meeting.
The contractor often changes the actual break down of prices in a priced bill of
quantities to:
1. Produce a reasonable cash flow from interim valuations.
2. Apportion duty in a way which the client will find acceptable.
3. Increase the money set against under measured items and decrease the price of
over measured items.
The example tender analysis forms given earlier show the first bill total was 664 705
before the project overheads were added and any adjustments were made.
The tender sum arrived at after final review was 698 437.
If the bill was inked in using the first pricing level, the amount remaining for project
overheads would be:
698 437 664 705 = 33 732
This is not the true project overheads sum but is the amount needed to bring the bill
total up to the tender sum.
An unpriced bill of quantities (sometimes referred to as the tender pricing document)

is issued to tenderers, who will estimate their price for each item.
This priced bill of quantities constitutes the tenderers complete offer.

It is the unpriced bill of quantities, but the tenderers rates, costs and totals added.
The preparation, by the clients consultants, of an unpriced bill of quantities assists

tenderers in the calculation of construction costs for their tender, and as it means all
tendering contractors will be pricing the same quantities, it provides a fair and
accurate system for tendering.
The priced bill of quantities will also:
Assist with the agreement of the contract sum with the successful tenderer.
Provide a schedule of rates assisting with the valuation of variations.
Provide a basis for the valuation of interim payments.
Provide a basis for the preparation of the final account.
Taking the example a stage further, if the estimator had the use of a computer and had
made the tender adjustments before inking in the bill for the client, the breakdown
would be in line with the tender summary below.

Measured work and
provisional sums:
529 398
(including 620
fluctuations on labour)
Project overheads
Labour 12960
Plant 37890
Materials 5780
Sub-contracts 3300
Staff 37619
Fluctuations 1675
Water 650
Insurances 5000
Risk/opportunity 10 000
Bond 1050

Overheads and profit 18000 133 924

Provisional sums and day
45100
works
Tender total 708 422
The client should not be surprised to see this large sum (133 924) for project
overheads because it is based on the true allowance.
If the contractor anticipates a problem with this breakdown, he can move some
money, either:
1. Into safe items in the measured work portion of the bill, looking for work
which will be carried out early in the contract (safe items are those which
appear to be measured correctly or are judged to be under measured at tender
stage), or
2. By using a computer system to add a percentage to all the rates in a bill of
quantities.
Contractor A priced both items at 18.00/m3 and Contractor B priced the rock in open
excavations as nil and in drains at 36.00.
The overall effect on the tender sum was the same but contractor B had discovered a
serious and under measurement in the drainage bill, he was hoping the drainage bill
would be remeasured and valued at the higher rate.
This might appear to make sense but, as many contractors have learned to their cost,
plans can go wrong.
If the quantity of rock in open excavation increased substantially, the contractor would
suffer a serious financial loss.
Task 4c (LO 4:4.2)

Evaluate the different forms of contract used in the construction
process.

Forms of contract
Clients have a wide choice of standard contracts for construction work, in particular
the forms used for building, which cover most of the common procurement systems.
Essentials of a valid construction contract
Construction contracts are the same as any other contract, and in the end, will depend
on general principles of law.
A short definition of a contract is an agreement between two or more parties which

is intended to have legal consequences.
In construction, the contract is generally for producing a building or part of the built
environment, and can be entered in one of four ways:
1. Implied by conduct of the parties, a contractor may submit an offer and later
have access to the site.
2. By word of mouth, typically where an offer is accepted by telephone.
3. By exchange of letters, common for small domestic works of extension,
alteration or repair.
4. Using a written contract, the contract documents often include the enquiry
documents, the written offer, and minutes of meetings, tender-stage
correspondence, a programme, a method statement and a formal contract with
the agreed terms.
A main contractor, awarded a contract, could lose a large sum of money it a sub-
contractors tenders taking into account the requirements of the main contract and
possible delay in placing contracts.
Standard forms of contract
The standard printed forms of contract have been developed over many years.
This contract accounts many events which could occur during and after a construction
project.
Contract law will deal with many problems but there are many matters peculiar to
construction which needs clarification.

Some clients require a contract to be achieved under seal; the standard forms have
provision for this after the Articles of Agreement.
However, all contracts take effect by agreement and so standard contracts can be
amended.
The standard form contracts currently in use between client and contractor are:
1. Standard Form of Building Contract - with or without quantities (JCT 98)

2. JCT Standard Form with Contractors Design (WCD 98)
3. ACA Project Partnering Contract (PPC 2000)
4. JCT Major Project Form (MPF 2003)
New editions of most standard forms have been published in the late 1990s.
This was in response to the Latham Report 1994 and many changes brought about
by the Housing Grants, Construction and Regeneration Act 1996.
1. Electronic Data Interchange, EDI

2. CDM Regulations
3. Third party rights
1. Sum of money for liquidated damages and insurances

2. Periods of time for carrying out the work and making payments
3. Percentages for retaining parts of the interim payments
4. Statements giving the options which apply to the contract, an important
example would be to show which clause has been selected for dealing with
price fluctuations.
This information must be given to tenderers; otherwise they will make their own
assumptions.
Sub-contract forms
There are three main types of sub-contractor:
Nominated sub-contractors; are persons whose final selection and approval, for
supplying and fixing materials or goods has been reserved to the architect (clause 35
JCT98).
A sub-contractor selected by the client to carry out an element of the works.

The client negotiates a price with the nominated sub-contractor and then instructs the
main contractor to appoint them for those works.
The main contractor will include the sub-contractors price as a prime cost sum in the
contract sum for the main contract, to which they add overheads, profit and
attendance.
Some forms of contract such as (Joint Contracts Tribunal (JCT) contracts) no longer
include provision for the nomination of sub-contractors.
Named sub-contractor: A sub-contractor for a particular package selected from a list

of acceptable sub-contractors provided by the client.
Named sub-contractors are allowed for in the tender documents for the main contract
in the form of a provisional sum for which the main contractor makes allowances for
mark up, attendance and programme within its tender offer.
Once appointed, the main contractor seeks tenders for the package from the named
sub-contractors, places a sub-contract with the successful tenderer and the provisional
sum is replaced with the tendered figure.
Domestic sub-contractor: Sub-contractors are appointed by main contractors to carry

out part of the works on their behalf.
As construction has become more complicated and more specialist construction

techniques have been developed, it has become increasingly common for contractors
to sub-contractor others rather than employing a large workforce themselves.
The use of sub-contractors enables the main contractor to undertake more complex
projects whilst not unacceptably increasing their risk, however, concerns have been
expressed about the prevalence of sub-contractors because of a perception that the
main contractor has less control over the skills and training of sub-contractor
employees and so there may be a negative impact on quality and health and safety on
site.

Domestic sub-contractors are engaged where a contractor elects to sub-let part of the
work with the written consent of the architect (clause 19 JCT98).
Contract for professional services EMPLOYER NSC/W warranty
ARCHITECT/CONTRACT ADMINISTRATOR
JCT98
control
CONTRACTOR
NOMINATED SUB-CONTRACTOR
NSC/A & NSC/C sub-contract
DOMESTIC SUB-CONTRACTOR
DSC/A & C sub-contract
Figure: Contractual relationships between
Parties using JCT98
Contract for professional services EMPLOYER
ENGINEER ICE7
control CONTRACTOR
CECA sub-contract
NOMINATED SUB-CONTRACTOR
DOMESTIC SUB-CONTRACTOR
CECA sub-contract
Figure: Contractual relationships between
Parties using ICE 7th Edition

Named sub-contractor is the term used in IFC98 and ACA84 where the contractor
is required to enter a (domestic) sub-contract with a firm named by the architect.
Under clause 19 of JCT98, there are two arrangements for sub-letting work to
domestic sub-contractors:
1. The architect approves the sub-letting of the works to a firm of the contractors
choosing.
2. The contractor must choose a sub-contractor from a list of at least three names
which have been included in the specification, schedules of work or contract
bills.
The standard form of contract does not allow the architect to choose a specialist who
is to become a domestic sub-contractor.
Most sub-contract forms are printed in two parts: the articles of agreement and
conditions.
This could be to save money since only the articles of agreement are needed each time
contracts are signed.
Non-standard forms of sub-contract are sometimes used by main land management

contractors to impose extra obligations and ensure the sub-contractor is bound by the
same conditions found in the main contract.
The practice of nominating sub-contractors has declined to the point of extinction

because although the main contractor is contractually responsible for all the works
there is a reduced liability for the work sub-let under the nomination system.
The JCT98 Form of Contract makes the following provisions:
1. Delay by a nominated sub-contractor is a relevant event that can lead to an

extension of time under clause 25.
2. Breach by the nominated sub-contractor imposes a duty on the architect to

nominate a new sub-contractor if the first is incapable of performance.

3. Failure of design by nominated sub-contractor under clause 35.
4. Delay caused by a nominated sub-contractor who gives late information.
The main documents for nomination introduced by the JCT80 contract are:
1. NSC/1: JCT Standard Form of Nominated Sub-contract Tender and Agreement

is used to invite tenders from potential nominated sub-contractors which gives
the sub-contractor information about the contract, allows the sub-contractor to
submit his tender and later agree programme and attendance details with the
main contractor.
2. NSC/2: JCT Standard Form of Employer/Nominated Sub-contractor

Agreement which sets out the obligations of the sub-contractor to exercise
reasonable skill and care in the design of the works and perform satisfactorily
when under contract to the main contractor.
3. NSC/3: JCT Standard Form of Nomination is an instruction from the architect

for the contractor to enter a sub-contract.
4. NSC/4: JCT Standard Form of Nominated Sub-contract that should be read in

conjunction with clause 35 of the main contract form.
For example, there is no longer a discount retained by the contractor from PC sums for
nominated sub-contractors.
Valuations made monthly by reference to a pre-determined stage payment chart would

undervalue the work at the beginning of a contract.
Comparison of forms
Contract documents all include the various parts of the standard forms plus:
JCT98 Contract drawings, contract bills
WCD98 Employers requirements, contractors proposals (including contract

sum analysis)

MW98 Contract drawings, contract specification, priced specification or

schedule of rates
IFC98 Contract drawings, contract specification, schedules of work or bill of

quantities
MC98 Project drawings, the project specification, Contract cost plan and the
schedules
GC/Works/1 Drawings, specification, bills of quantities or schedule of rates
ICE Drawings, specification, bill of quantities, tender and the written

acceptance.
Selection of contract forms
Contract Selection Checklist
Procurement method Lump sum

Measurement
Cost reimbursement
Design Employer
Part by contractor
Contractor
Cost control document Bills of quantities

Schedule of rates
Priced specification
Contract sum analysis

Payment Stage
Time-related
Turnkey
Roles and relationships Client

Contractor
Design team
Specialists
Time Open
Fixed
Acceleration
Damages
Fig. Simplified checklist for the selection of a contract
A contractor offering his services to design and build a factory until will suggest the
Standard Form with Contractors Design WCD98. In particular he must decide
whether to commission a bill of quantities or ask for tenders on a lump sum.
Reference Book:
ESTIMATING and TENDERING for CONSTRUCTION WORK

Task1 A LO 1 1.1 Explain The Clients Inv

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MA AYE CHAN MOE, SECTION-B, YEAR-2 SEMESTER-I

Task1 a: (LO 1:1.1)

Explain the clients involvement in the tender process.

There are two client organizations as private and public sectors.

The private sector consists of industrial, commercial, social, charitable and

And the public sector means government departments, nationalized industries,

Clients will usually identify their involvements in terms of commercial or social

a. Space requirements: to improve production levels and production capacity, to

a. The time, money and other resources available for projects

41 Estimating and Tendering

a. The design: by designing to a budget

Clients are not required or expected to plan or manage projects themselves.

Clients take on additional responsibilities.

41 Estimating and Tendering

When deciding whether management arrangements are suitable and maintained

Many clients are prepared to pay for a good service.

Task 1b: (LO1: 1.2)

41 Estimating and Tendering

Two of the objectives of SMM7 (Standard Method of Measurement of Building

Works: Seventh Edition, 1988) were:

(1) to simplify bills of quantities and

(2) to develop a method which could help with computer applications.

shortened by the amount envisaged when SMM7 was published.

aware that estimators need more than an abbreviated description.

doubt whether SMM7 has helped.

in computer-aided bill production and pricing.

Unfortunately there have been some problems:

1. Many specifications have no page numbers.

Specification (NBS) codes to find the relevant clauses.

and distributing pages to sub-contractors.

41 Estimating and Tendering

specification, with SMM6 (Standard Method of Measurement of Building

price the work.

are more complex.

the specification clause includes references to other clauses.

scope of work, and any limitations.

culvert or additional dry-rot treatment.

the quantity surveyor doing less work.

41 Estimating and Tendering

new methods of measurement for bills of quantities.

information for the estimator to price.

41 Estimating and Tendering

41 Estimating and Tendering

Task 1c (LO 1: 1.3)

Documents used as the basis of a tender

41 Estimating and Tendering

The contractors proposals include a contract sum analysis.

The purposes of the contract sum analysis are:

1. To value changes in the employers requirements;

There are two principal types of schedule.

Cost reimbursement contracts

41 Estimating and Tendering

The Contract Documentation relates to all pre-tender and contractual documentation.

Contract Documentation provides builders with sufficient information to be able to

41 Estimating and Tendering

The tender preparation and documentation consists of developing complete and

Working drawings and specifications, suitable for tendering and construction

Pre-tender estimate (Cost Plan D)

Formal tender documents

The bill of quantities is a vital tender document; a contract document should be an

There should be a cross-reference to the tender drawing and architects notes or

41 Estimating and Tendering

One of the advantages of this method is that it induces performance.