Abstract

Plays a key role in the process of economic transformation and growth. Export of projects and
services indicate a country's progress in technology and export performance. Most of the
companies are versed only with engineering and technology. The decision to bid is a major
financial decision because of two reasons. First, the contractor assumes substantial costs for the
preparations of the estimates and the tender at the risk of not recovering them if he is not
awarded the job. Second, and most importantly, the contractor commits himself to investment in
the construction of the project if he wins the bid.

1. Introduction

Tendering is defined as the The process of preparing and submitting for acceptance a conforming
offer to carry out work for a price, thus converting the estimate to a bid.

The following the aims and procedural nature of tendering;

To select a contractor for a construction project.

To test the current market, especially where existing contracts are of a long-term nature.

To comply with regulations pertaining free and open competition.

Tendering is a means to an end usually a means for a contractor to win the right to deliver a
construction project. However, tendering could also happen between the interface of contractor
and sub-contractor; contractor and supplier, client and consultant, etc. It often, but not always,
involves some form of price competition.

The rapid evolution of e-commerce in the past few years has introduced new ways for
organizations to perform tendering processes and participate in biddings.

The term tendering is used to describe all the actions performed by the awarding authority to
produce, publish and manage tendering documents, while bidding incorporates the effort of
interested organizations to win contracts by responding to tenders.

Most persons, at one time or the other, have to buy or sell goods, Buying goods or services, or
engaging a contractor for civil works like building roads, houses, factories is an important activity.
This activity brings together buyers and sellers who are keen to find common meeting points in
their dealings with one another.

CONTRACTUALARRANGEMENTS

Sincesuchavarietyofworkandwidediversityofclientsexist,
itisnotsurprisingthatachoiceofcontractualarrangementsis
availablethatisdesignedtoprovidethemostsatisfactory
solutiontosuitparticularcircumstances.

1.3.1Typesofcontract
Thethreemaingroupsintowhichbuildingcontractscanbedivided
areasfollows:

LumpSumContracts.Thepricetobepaidisagreedinadvance,butis
subjecttoincreasesordecreasesasaresultofanynecessary
adjustmentforvariations,primecostandprovisionalsunsor
pricefluctuations.

MeasurementContracts.Thepricetobepaidisobtainedbymeasurement
andvaluationasworkproceedsandisrelatedtoacontract
scheduleofprices.

CostReimbursementContracts.Paymentisonthebasisoftheactual
costincurredbythecontractorincarryingoutthework,plusan
agreedamounttoallowforoverheadsandprofit.Therearemany
permutationsoftheabovetypesofcontractualarrangements
dependingonsuchconsiderationsasthetechnicalexpertise
available,bothintheconsultant'sandthecontractor'sarea,and
themarketconditions.Thuswegetcontractsbaseduponbillsof
quantities,ordrawingsandspecifications,andcontractsbeing
negotiatedperhapsonthebasisoftwostagetendering.Themost
appropriatecontractualarrangementsintheclient'

1.3.2Continuitycontracts

Manycasesarisewhereaseriesofcontracts,oranextensionofthescopeand
extentofanexistingcontract,isrequiredandthreesuchcasesarenow
considered.
(a) Serialcontracts

Whereadefiniteprogrammeofrelatedworkcanbeenvisaged,suchasanumberof
schoolsorabuildingtobeconstructedinseveralphasesoveraperiodoftime,
thencontinuityintheuseofresourcescanbeachievedbyemployingone
contractor.Theworkshouldthenbecarriedoutmoreeconomicallythanifitwere
handledbyseveraldifferentcontractors.Thefirstcontractisusuallyletona
competitivetender,andthepreamblestatesthatfurtherworkmaybenegotiated
usingthepricedbillofquantitiesasabasis.Thisfurtherworkisusually
describedgivinganindicationofitsscopeandtiming.Whentheadditionalwork
isdesigned,thetenderdocumentsarepreparedandthecontractisnegotiatedand
signed;thuscontrolisexercisedovereachphaseofworkwhateverthesize.

(b)Continuationcontracts
Thisismoreofanadhocarrangementsinceatthetimeoftenderingforthe
originalcontractfurtherworkmaynotbeenvisagedasmorethanapossibility.
Thecasemayarisethatduringtheconstructionofsayafactoryacombinationof
circumstances,suchasincreaseddemandforthemanufacturedproductsand
availabilityofadjacentlandwithplanningpermission,meansthatanother
factoryunitisrequiredtobestartedassoonaspossible.Thus,perhapsbefore
thefirstfactoryhasbeencompleted,asecondonemaybestarted.Thecontractor
isusuallywillingtonegotiatethesecondcontractinasimilarmannertoa
serialcontract,andagaineconomicsofscaleandcontinuitymaybeachieved.

(c)Termcontracts
Thesecontractsaremostlyusedwhereextensiverepairandmaintenanceworkis
requiredoverafixedperiodoftimeor,`term.Sincetheextentofsuchworkis
difficulttoenvisage,thetenderingdocumentisusuallyascheduleofratesa
measurementcontract.ThePropertyServicesAgency'sscheduleofratesisthe
mostcomprehensivedocumentofitskind.Termcontractsmaybemadewith
specialistsubcontractorsaswellaswithgeneralbuilders,theordersand
supervisionbeingcarriedoutbytheclient'stechnicalstaff,suchasbuilding
surveyorsormaintenancesupervisors.

(d)Feedback
Onserial,andtoalesserextentoncontinuationcontracts,feedbackcanbe
providedfromthecontractortothearchitectsandconsultingengineerstomake
formoreefficientconstruction.Thisfeedbackcanrangefromadviceonthe
practicalityofthemethodsofconstruction,tospecificdesigndetailssuchas
dampproofing.

1.3.3Designandbuildcontracts

Designandbuildcontracts(oftenknownaspackagedealcontracts)involvethe
highestdegreeofcontractorinvolvement,andthusthefeedbackfromconstruction
problemsmetonsiteenablesthebestpossibleusetobemadeofthecontractor's
knowledgeofconstructionandorganization.Theclientisusuallybestadvisedto
employacharteredquantitysurveyor,independentofthecontractor,whosesole
purposeistolookaftertheclient'sinterestsandtoensure`valueformoney
spent'!Initiallyseveralcontractorsmaybeaskedtosubmitadraftdesignand
budgetbaseduponperformancecriteriaforaparticularsite.Theclient's
quantitysurveyor,orotherconsultants,playsamostimportantroleatthistime
inassessingnotonlythepracticalityofeachschemebutthebestsolutionsin
respectoftheclient'sdesignandeconomiccriteria.Detaileddesignsarethen
finalizedandthepricenegotiated.
Thedesignmaybecarriedoutbythecontractor'sowndesignstafforoutside
architectsmaybecommissionedbythecontractor.
Themostsuitableprojectsforthistypeofcontractseemtobethosewherespeed
isimportantfrominceptiontocompletionandwherethereareadvantagestobe
gainedfromthecontractorusinghisexpertisetoadvisethedesignteamon
specializedtypesofconstruction.

1.3.4Managementcontracts

Managementcontractsareanotherrelativelynewformofcontracting,designedto
achievecompletionofaprojecttotherequiredperformancemanagesallthe
resourcesemployedontheprojectand,usually,doesnotexecute
anyworkdirectly,exceptfortheprovisionofthoseitemsofcost
usuallyspecifiedinthepreliminaries,suchaswelfare
facilities,temporaryservicesandgeneralhoistingfacilities.
Tobemosteffectivethemanagementcontractorshouldbebrought
inatthedesignstagetogiveprogramming,constructionand
costingadviceandassistance.
Abudget,orestimatedprimecost,shouldbeestablishedinitially
toenablefinancialcontroltobeexercisedovertheproject.Such
abudgetisessentialinorderthattheclientmaymeet
constructioncostswhentheybecomedueandtoplanfiscallyfor
thefinaloutcome.

1.4TENDERDOCUMENTS
Thetenderdocumentswilldependonthecontractualarrangements,
andinthemostcommonsituation,i.e.alumpsumcontractbased
uponbillsofquantities,willconsistofthefollowing:

Billsofquantitiesincludingparticularsoftheconditionsof
contract.

Locationdrawingsthesebeingselectedfromthecontractdrawings
withalistbeinggiveninthepreamblesofthedrawingsfrom
whichthebillsofquantitieshavebeenpreparedandwhichwillbe
availableforinspection.

Twocopiesoftheformoftender.
Wherethelumpsumisrequiredforworksofaminornature,orfor
civilengineeringcontractsthatmaybequitelarge,thenbillsof
quantitiesmaybedispensedwithandthetenderdocumentswill
consistof:
Thespecification,includingparticularsoftheconditionsof
contract.

Drawingsidenticaltothecontractdrawingstodefinethefull
extentofthework.

Twocopiesoftheformoftender.

Inthiscasethecontractorhastoprepareabillofquantities
sufficientforthepreparationofhistender.
Itshouldbenotedthatinthefirstcasewherethebillsof
quantitiesareatenderdocumentandeventuallyacontract
document,anyerrorshavetobecorrectedandthecontractsum
amended.Individualratesandpercentagesenteredbythe
contractoralsoplayasignificantpartinthevaluationofthe
worksinprogressandtheagreementofthefinalaccount.
Inthesecondcasewherethebillsofquantitiesarepreparedfor
thecontractor'sownuse,anyerrorsarcnotcorrectedanddonot
alterthecontractsum.Further,thevaluationsandfinalaccount
calculationsmaybemoredifficultparticularlyifthereare
significantvariations.Thisproblemmaybeonlypartlysolvedby
theprovisionofascheduleofrates,orbylumpsunsbeing
insertedagainstitemsinthespecification.

1.5THECLIENT'SADMINISTRATIVEPROCEDURE
Thissectionmightbecalled,`Howtendersareobtainedbythe
clientandthecontractawarded.'Singlestageselectivetendering
isthemostusualandsuitablemethodofobtainingcompetitive
tendersforthemajorityofbuildingworks.

1.5.1Singlestageselectivetendering

TheCodeofProcedureforSingleStageSelectiveTendering1977preparedby
theNationalJointConsultativeCommitteeforBuildingand
approvedbytheDepartmentoftheEnvironmentsetsouta
recommendedprocedureandfourofthemostimportant
recommendationsarenowdescribed.
(a)Thenumberoftendersshouldberestrictedandthefollowing
isgivenasaguide:
SizeofcontractMaximumnumberoftenders
Upto500005
950000toS.2500006
250000toImillion8
1million+6

(b)Thecontractperiodshouldbegivensothatvariablethe
tendersum.

(c)Thetimeallowedfortenderingshouldbefixedinrelationto
thesizeandcomplexityofthejob.Aminimumoffourweeksshould
beallowed,butmajorworksandsmallerworksbasedondrawings
andspecifications,withoutquantities,mayrequirealonger
period.Anytendersthatarereceivedlateshouldbereturned
unopenedandnotconsidered.

(d)Notificationofresultsshouldbemadeassoonasthecontract
hasbeenlet.Alistofthefirmsinalphabeticalorderandthe
tenderfiguresinascendingordershouldbegiven.Thisassists
contractorsinforminganintelligentviewoftheirfuture
tenderingstrategyandthusenablesthemtomaketheirtenders
morecompetitive.

1.5.2ADJUDICATIONANDSELECTIONOFTHECONTRACTOR

Assumingthatthecodeofprocedureforsinglestageselective
tenderingisfollowedthepricedbillofthelowestbythequantity
surveyor.Ifanyerrorsarefoundthenthesearereportedtothe
architect,whoinconjunctionwiththeclient(employer)determineswhat
actionistobetaken.Thisactionshouldfollowoneoftwooptionsthat
shouldbestatedinthepreamblesofthebillsofquantitiesandtheform
oftender.

Option1
Thetendererisgivendetailsoftheerrorsandaskedifhewishesto
confirmorwithdrawhisoffer.Ifthetendererwithdraws,thesame
procedureisfollowedwiththesecondlowesttenderer.Ifthetenderer
confirmshisofferthenanendorsementisaddedtothepricedbillsto
theeffectthatallpricesaretobeconsideredasreducedorincreased
inthesameproportionasthecorrectedtotalofpriceditemsexceedsor
fallsshortofsuchitems.Thisadjustmentexcludespreliminaryitems,
contingencies,primecostandprovisionalsums.

Option2
Thetendererisgivenanopportunitytoconfirmhisofferoramenditto
correctgenuineerrors.Iftheofferwhenamendedisnolongerthe
lowest,thenextlowesttenderershouldbeconsidered.Ifthetenderer
confirmshisofferanendorsementwillberequiredasinoption1.

Negotiatedreductionoftender
Itmaybethatthelowesttenderunderconsiderationexceedsthe
employer'sbudget,inwhichcasenegotiationsusuallytakeplaceto
secureareductionbyamendingthespecificationorquantities.

1.6THEOPPORTUNITYTOTENDER
Withacomprehensiveknowledgeoftheavailablemarket,contractual
arrangementsandtenderingprocedures,themanagementofabuilding
companycanendeavortodirectitseffortstowardsthemostfavorable
opportunitiestoobtainwork.Informationrelatingtotheprofitability
andresourcesemployedonpreviouscontractsispatentlynecessaryto
helpdecidewhichwillbethemostadvantageouscontracts,sincenotonly
mustworkbeobtainedbutitmustbecapableofbeingcarriedoutwith
theresourcesavailableandcreateaprofit.