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Tendering , Bidding and

Contracting

by
Prof. Prahlad R
Tendering Procedure
 The first step that leads to the formation of a building or
engineering contract is an invitation to tender
 An invitation to tender, is not an offer
 It is an attempt to ascertain if an offer can be received from
interested builders to execute the work within the estimated
limit of time and finance
 The owner or employer of the project sends it to known
agencies by post in the case of private works or
 by public advertisement if the employer happens to be a
public body
 The advertisement is called Tender Notice
• The party to whom the notice is addressed sends its response
to the employer which response is called: 'tender‘
• In engineering practice the word tender usually means an offer by a
contractor to undertake a work in return for a sum of money
Revocation of Tender Notification
• Generally, the owner may at any moment revoke the invitation to
tender without making himself responsible for any expenses
incurred by persons in connection with the preparation of the
tenders
Requirements to be Fulfilled before Inviting
Tenders
[Guidelines contained in Section 17 of the C.P.W.D.Manual]
1. Sanctions obtained for detailed estimate showing the quantities,
rates and amount of various items of work and also the
specifications to be adopted in respect of each item
2. In the case of urgent works, with no time to prepare a detailed
estimate, rough quantities and rates for the main items covering
the major part of the cost should be worked out to facilitate
comparison
3. Splitting of work for the purpose of inviting tenders is to be
discouraged
4. Before tenders are invited the following tender
documents should be ready
a) Notice inviting tenders in appropriate form briefly known as
NIT
b) Standard form of tender to be used along with general and
special conditions, if any
c) The Schedule of Quantities of works
d) A complete set of drawings referred to in the schedule of
quantities
e) A complete set of specifications of the work to be done
Advance Publicity
• Notice should be published sufficiently in advance to enable the
intending tenders to carefully work out their tenders.
• A time less than one month is seldom sufficient
Contents of the Tender Notice
 The contents of the notice should be so drafted as to attract the
attention of the tenderers for whom it is intended
 Also to caution others who may not be interested or not qualified to
tender
 In addition it should give sufficient information about the proposed
work to avoid no of queries
 In the case of public works and government contracts, the notice
should incorporate the words "On behalf of the President of India"
or "On behalf of the Governor of the State“
Other information to be given may include:
 Qualifications of tenderers
 Name of the work, its situation ,brief description and estimated cost of
the project
 Earnest money deposit and its mode of payment
 Security deposit that may have to be paid at the time of signing the
agreement and mode of the payment such as cash, F.D.R or Bank
Guarantee
 Time limit for completion of the work

 From whom and at what cost, if any blank tender forms may be

obtained and up to which date

 To whom the completed tender form should be submitted and

up to what time and date

 Mode of submission of tender, namely one cover, two covers or

three covers

 Date, time and place of opening tenders


Tendering Procedure
 The first step that leads to the formation of a building or
engineering contract is an invitation to tender
 An invitation to tender, is not an offer
 It is an attempt to ascertain if an offer can be received from
interested builders to execute the work within the estimated
limit of time and finance
 The owner or employer of the project sends it to known
agencies by post in the case of private works or
 by public advertisement if the employer happens to be a
public body
 The advertisement is called Tender Notice
• The party to whom the notice is addressed sends its response
to the employer which response is called: 'tender‘
• In engineering practice the word tender usually means an offer by a
contractor to undertake a work in return for a sum of money
Revocation of Tender Notification
• Generally, the owner may at any moment revoke the invitation to
tender without making himself responsible for any expenses
incurred by persons in connection with the preparation of the
tenders
Requirements to be Fulfilled before Inviting
Tenders
[Guidelines contained in Section 17 of the C.P.W.D.Manual]
1. Sanctions obtained for detailed estimate showing the quantities,
rates and amount of various items of work and also the
specifications to be adopted in respect of each item
2. In the case of urgent works, with no time to prepare a detailed
estimate, rough quantities and rates for the main items covering
the major part of the cost should be worked out to facilitate
comparison
3. Splitting of work for the purpose of inviting tenders is to be
discouraged
4. Before tenders are invited the following tender
documents should be ready
a) Notice inviting tenders in appropriate form briefly known as
NIT
b) Standard form of tender to be used along with general and
special conditions, if any
c) The Schedule of Quantities of works
d) A complete set of drawings referred to in the schedule of
quantities
e) A complete set of specifications of the work to be done
Advance Publicity
• Notice should be published sufficiently in advance to enable the
intending tenders to carefully work out their tenders.
• A time less than one month is seldom sufficient
Contents of the Tender Notice
 The contents of the notice should be so drafted as to attract the
attention of the tenderers for whom it is intended
 Also to caution others who may not be interested or not qualified to
tender
 In addition it should give sufficient information about the proposed
work to avoid no of queries
 In the case of public works and government contracts, the notice
should incorporate the words "On behalf of the President of India"
or "On behalf of the Governor of the State“
Other information to be given may include:
 Qualifications of tenderers
 Name of the work, its situation ,brief description and estimated cost of
the project
 Earnest money deposit and its mode of payment
 Security deposit that may have to be paid at the time of signing the
agreement and mode of the payment such as cash, F.D.R or Bank
Guarantee
 Time limit for completion of the work
 From whom and at what cost, if any blank tender forms may be
obtained and up to which date
 To whom the completed tender form should be submitted and
up to what time and date
 Mode of submission of tender, namely one cover, two covers or
three covers
 Date, time and place of opening tenders
MODES OF INVITING TENDERS
There are three possible modes of inviting Tenders
Negotiated Tenders
• The owner may decide to call for discussions and entrust the execution of
the work to a contractor or firm or company with whom he had had an
experience and developed confidence
• The rates and or cost are mutually agreed and agreement entered into.
• This mode is not suitable for public works
Limited Competition
Instead of inviting tenders openly, an employer may invite tenders from few
selected contractors by inviting them to submit the tenders in limited
competition
• This method has an advantage that the owner may not be required to incur
expenses and spend time in public invitation
• Care must be exercised in such a case to keep the names of contractors
competing in the invitation secret
Open Competition
• the most common mode of inviting tenders for major works is by inserting
an advertisement in newspapers, periodicals, or trade journals, inviting all
interested contractors to participate in the invitation
Mode of Publication of Tender Notice for Public Works
• In the case of public works and other related transactions by the public
body, tender notification must be published sufficiently in advance and
given wide publicity in national newspapers having wide circulation in the
cities and places where the major likely participants have offices
Priority of the documents shall be in accordance with the following
sequence
1. the Contract Agreement (if any),
2. the Letter of Acceptance,
3. the Letter of Tender,
4. the Particular Conditions - Part A,
5. the Particular Conditions - Part B,
6. these General Conditions,
7. the Specification,
8. the Drawings, and
9. the Schedules and any other documents forming part of the
Contract.
Instruction to Tenderers
 Instruction to Tenderers should be prepared by the employer/Engineer to
meet the particular requirement of individual contracts.
 Purpose is to convey information and instructions that will govern
preparation, submission and evalution of tenders
 The instruction to tenderers should state that the employer does not bind
himself to award a contract to any of the tenderers
 If remuneration is to be made to tenderers, the sum should be mentioned.
If not , it should be stipulated that all costs and expenses incurred in the
tender preparation shall be borne by Tenderers.
Check list for preparing Instructions to tenderers
• The language of the tender
• Number of copies of the tender that are required
• Which documents have to be filled and returned by the tenderers

• Requirement for each tenderer to provide a power of attorney

• Any special rules regarding treatment of taxes, duties and other fiscal

matters in the tender

• Validity period of the tender

• Procedure for issuing addenda to the tender documents

• Procedure for dealing with queries raised by tenderers

• Procedure to be adopted for tenderers to inspect the site of the works

• Procedure for inspecting any special documents not issued with the

tender documents (ex. Site investigation reports)

• Circumstances under which alternative offers may be submitted

• Confidentiality of tender documents


• Procedure for dealing with requests for extension of time by
tenderers.
• Procedure for dealing with arithmetic errors found in tenders
during evaluation
• Rules relating to disqualification/rejection of tenders (ex. late
arrivals, incomplete etc)
• Information about the evaluation criteria
Conditions of contract

Conditions have been prepared to provide a fair sharing of responsibility and risk

between employer and contractor and contain many independent clauses. Generally

two types of conditions of contract are widely used in projects:

 General conditions of contract

 Special conditions of contract


 The GCC contains standard terms and conditions which are generally applicable for

all contracts irrespective of the nature of work, supplier type and other factors

 Whereas the Special Conditions of Contract or SCC relates to the specific contract.

It includes terms and conditions which are applicable for that particular contract

only and will vary for each contract depending upon the nature of work, supplier

type and other factors


• It would not be advisable to change or adjust GCC as these terms and
conditions might have a long term legal implication and therefore need to
be veted by the legal team
• It is more of strategic in nature.
• Special Conditions of Contract will mostly consist of clauses which are
applicable only to the particular job or contract
• Although it is important to get the SCC veted by legal team, but since it is
generally specific to one contract and more of tactical (operational)
nature, it's implications may not be as deep as the GCC
ex: To change the look of your home for a particular event or function, you
generally do not tamper with the foundation of the building but may
change the interior decoration for different events
Prequalification
• For large and complex works or highly specialized jobs, prequalification of
tenderers is carried out
• In this procedure the invitation in the first instance is only for
prequalification
• The advertisement should give full particulars of the works to be carried
out, the expected qualifications of those desirous of applying and also if
joint ventures will be allowed and if allowed the particulars to be
furnished by the applicants
• The applicants furnish the information in the prescribed format along with
certificates and supporting details
• The employer scrutinizes the information received and applicants fulfilling
the selection criteria are qualified and intimated accordingly
PREPARATION AND SUBMISSION OF TENDER
1. Purchase of blank tender form.
2. Study of tender drawings
3. Visit to the site of the work to ascertain:
a) Nature of site, access to it, foundation conditions, extent of site available for
site office, labour camp, material dumps, stores, storage of machinery,
equipment or work shop shade and movement of men and machinery in
general.
b) Nearest railway station, bus station, petrol depots, banks, etc.
c) Sources and prices of raw material, suppliers with their addresses,
transportation facilities and cost involved.
d) Availability of local labour, skilled and unskilled, prevailing wages, piece rate
workers and their addresses.
e) Nearest sources of power, water, etc.
4. Rough verification of estimated quantities as per given drawings to
ascertain if any item has been overestimated or underestimated or
omitted from the Bill of Quantities. Preparing a detailed estimate
from the drawings in the case of lump sum contracts
5. Analysis of rates or cost to ascertain the prime cost which includes:
cost of materials, labour, machinery and equipment.
6. Deciding the percentage of the basic or the prime cost worked out in
step (5) above to be added to it to cover overheads and profit
expected.
7. Working out the lump sum or item rates or percentage rate to be
tendered.
8. Checking of the rates so worked out for omissions, errors and units of
measurement in particular.
Documentation
 The tenderer shall submit, with his Tender, a tender security in the
form annexed in the Instructions
 The tenderer shall price the whole of the Works, and submit a
Tender, in accordance with the Tender Documents. A Tender which
excludes part of the works may be rejected as unresponsive
 Each of the Schedules shall be completed as appropriate to the
particular Schedule.
 The Bill of Quantities shall be fully priced, with a rate entered for
each item. and a letter from such entity acknowledging having
received the Annexes to the Particular
 Each amount shall be carried forward to the Summary, the total of
which shall be carried forward to the Letter of Tender
 If any item is not priced, there shall be no payment for the work
described in the item, which shall be deemed covered by other rates
and/or prices.
 The tenderer shall also submit the following supplementary
information accompanying, but not forming part of, his Tender:
Name and address of the bank or other entity which will provide the
Performance Security
Conditions of Contract and undertaking to provide these security
documents in accordance with the exact wording of these Annexes
 Name and address of the insurers and their principal terms for the
insurances
 Details of the arrangements and methods which the tenderer
proposes to adopt for the execution of the Works, in sufficient
detail to demonstrate their adequacy to achieve the requirements
of the Contract including completion within the Time for
Completion;
 Any proposals for subcontracting the execution of parts of the
Works
 The names, qualifications and experience of key personnel
proposed for the management of the contract and the execution
of the Works, both on and off site, including curriculum vitae of
the senior personnel
 Copies of documents required to be attached such as registration in a
particular class, list of works executed, works in hand, list of machinery
and equipment available/proposed to be acquired etc. are generally
kept ready and are crosschecked with the notice requirements of the
tender notice.
 A Tender which is not accompanied by this information may be
rejected as unresponsive.
 The completed Tender shall not have any alterations or erasures, except
any which may be specified in an Addendum to Tender Documents
 Only one Tender may be submitted by each tenderer, except for any
alternative offers
 Each alternative Tender shall include all information necessary for its
complete evaluation by the Employer, including any relevant calculations,
specifications, construction methods, timing implications, breakdowns of
prices, and other relevant details
Submission of the Tender

• The Tenderer shall prepare one original set and three

photocopy sets of the documents comprising the Tender and

supplementary information

• Each such set shall be submitted in an inner envelope within

an outer envelope, with each document and each envelope

being clearly marked "ORIGINAL" or "COPY" as appropriate

• The original and copies of the Tender shall be signed by a

person or persons duly authorised to bind the tenderer.


• Proof of authorisation, in the form of a written power of attorney,
shall be annexed to the Letter of Tender
• The inner envelopes shall indicate the name and address of the
tenderer to enable the Tender to be returned unopened if it is
declared "late“
• The Tender shall remain valid and open for acceptance for the
period of 140 days from the Tender submission date
• The tenderer shall calculate the date on which validity expires and
insert this expiry date in the Letter of Tender.
• Prior to this expiry date, the Employer may by written notice
request the tenderer to extend the validity period.

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