ZSR Part 3 Study Group

CONTRACT PROCUREMENT PROCESS

The flow chart below intends to show overall contract procurement process in general. Actual implementation may varies
depending on the nature of the project, clients preference or standard practice, type of contract etc.

Pre$
Qualica,on/
of/Tenderers//

Invita,on/to/
Tender/

Site/Visit//

Tender/
Collec,on//

Award/of/
Tender//

Tender/
Nego,a,on//

Tender/
Evalua,on//

Tender/
Submission//

PROCESS

NOTES

1. Pre-Qualification of
Tenderers

i)

Tenderers are selected, shortlisted based on certain preset condition

(eg : registered contractors, class of contractors etc)
ii) Open tender may involve this process.

2. Invitation to Tender

i)

Qualified tenderers are invited via public notices

(eg : news paper, website etc), invitation letter etc.
ii) Tenderers were informed of among others: the project title, general scope of works,
tender collection date and place site visit (if any) and tender documentation fee.

3. Site Visit

i)

Some projects may require site visits attendance as a condition to participate.

4. Tender Collection

i)
ii)
iii)
iv)
v)

Date and place to collect.

Components of Tender Document.
Tender documentation fee / Tender deposit
Table tender drawings & Tender drawing.
Tender period.

5. Tender Submission

i)
ii)
iii)
iv)

Date & Venue of submission.

Earnest money.
Tender validity period.
Return of tender deposit.

6. Tender Evaluation

i) Prepare by Architect / Quantity Surveyor / M&E Consultant.

ii) Aspects to evaluate : Technical, Financial proposal tenderers background.
iii) Recommendation to client.

7. Tender Negotiation

i) Tender interview & clarification.

ii) Price negotiation.
iii) Recommendation to award.

8. Award of Tender

i)
ii)
iii)
iv)
v)

Written confirmation by client.

Draft letter of award.
Letter of award on behalf of client.
Return of Earnest money.
Deliverables performance bond, work programme, CIDB etc.

ZSR Part 3 Study Group

TYPE OF CONTRACTS

FORM OF CONTRACTS

PRECUREMENT METHODS

1. With Quantities

1. PAM Form of Contract

1. Quotation

2. Without Quantities

2. JKR Form of Contract

2. Open Tender

3. Nominated Sub-contractor

3. CIDB Form of Contract

3. Selective Tender

4. Nominated Supplier

4. KLCC Form

4. Direct Negotiation

5. Design & Build

5. FIDEC (International)

6. Turnkey

6. JCT Form (UK)

7. Design, Build & Operate

7. AIA Form of Contract (US)

8. Build, Operate & Transfer

9. Design, Lease & Transfer
10. Lump Sum Contract
11. Fixed Priced Contract
12. Cost Plus Contract

Factors in selecting contract types.

There are many factors that the contracting officer should consider in selecting and negotiating the contract type. They include the
following:
(a) Price competition. Normally, effective price competition results in realistic pricing, and a fixed-price contract is ordinarily in the
Clients interest.
(b) Price analysis. Price analysis, with or without competition, may provide a basis for selecting the contract type. The degree to which

price analysis can provide a realistic pricing standard should be carefully considered.
(c) Cost analysis. In the absence of effective price competition and if price analysis is not sufficient, the cost estimates of the offeror
and the Client provide the bases for negotiating contract pricing arrangements. It is essential that the uncertainties involved in
performance and their possible impact upon costs be identified and evaluated, so that a contract type that places a reasonable
degree of cost responsibility upon the contractor can be negotiated.
(d) Type and complexity of the requirement. Complex requirements, particularly those unique to the Client, usually result in greater risk
assumption by the Client. This is especially true for complex design and building works, when performance uncertainties or the
likelihood of changes makes it difficult to estimate performance costs in advance. As a requirement recurs or as quantity production
begins, the cost risk should shift to the contractor, and a fixed-price contract should be considered.
(e) Urgency of the requirement. If urgency is a primary factor, the Client may choose to assume a greater proportion of risk or it may
offer incentives to ensure timely contract performance.
(f) Period of performance or length of production run. In times of economic uncertainty, contracts extending over a relatively long
period may require economic price adjustment terms.
(g) Contractors technical capability and financial responsibility.
(h) Adequacy of the contractors accounting system. Before agreeing on a contract type other than firm-fixed-price, the contracting
officer shall ensure that the contractors accounting system will permit timely development of all necessary cost data in the form
required by the proposed contract type. This factor may be critical when the contract type requires price revision while performance
is in progress, or when a cost-reimbursement contract is being considered and all current or past experience with the contractor has
been on a fixed-price basis.
(i) Concurrent contracts. If performance under the proposed contract involves concurrent operations under other contracts, the impact
of those contracts, including their pricing arrangements, should be considered.
(j) Extent and nature of proposed subcontracting. If the contractor proposes extensive subcontracting, a contract type reflecting the
actual risks to the prime contractor should be selected.
(k) Acquisition history. Contractor risk usually decreases as the requirement is repetitively acquired. Also, product descriptions or
descriptions of services to be performed can be defined more clearly