CONSTRUCTION MATERIALS MANAGEMENT

A
A
Presentation
Presentation
on
on

Tendering, Bidding & Award of

Contracts

NATIONAL INSTITUTE OF CONSTRUCTION

MANAGEMENT & RESEARCH
 REFERENCES
The Winning Bid: a practical guide to
successful bid management by Emma
Jaques-1st edition (2013).
Building and Engineering Contracts by B.
S. Patil -5th Edition (2005).
Bids, Tenders & Proposals (Winning
business through best practice) by Harold
Lewis.
Estimation and Tendering of building
works by R.C. Smith.
TENDERING

CONTENTS
TENDER AS BASIS OF CONTRACT. .

REQUISITES OF A VALID TENDER. .

TENDERING : STEPS INVOLVED.

TENDER DOCUMENTS.
REQUIREMENTS TO BE FULLFILLED
BEFORE INVITING TENDERS.
NOTICE INVITING TENDERS.
MODES OF INVITING TENDERS.
TYPES OF TENDER DOCUMENTS.
 CONTRACT
Contract- A legally enforceable
Agreement.
Agreement-An offer made by one party
and an acceptance of that offer by the
other party.
Tender-Offer by one party to another.
In construction terms it means an offer by
contractor to do a specified work in return of
a sum of money.
 THE TENDER
Offer for product &/or services in return
of a sum.
Generally submitted against specific
requirement from client in form of
NIT/RFT.
Less flexible& bound by clients
requirements.
Immediate obligation for tenderer upon
acceptance by client.
REQUISITES OF A
VALID TENDER
It must be unconditional.
Must be made at the proper place.
Must confirm to the place of obligations.
Must be made at the proper time.
Must be in the proper form.
Tender must be made to the proper
person.
There must be reasonable opportunity
for inspection.
TENDERING : STEPS INVOLVED

1) Finalisation of procurement strategy

2) Preparation of tender documents
3) Inviting Tender and issuing tender documents
4) Study of tender conditions
5) Pre-bid meeting and site survey
6) Bid/No bid analysis
7) Preparation of tender
8) Submission of tender
9) Opening of tender
10)Evaluation of tenders
11)Negotiation
12)Acceptance and award of contract.
 TENDER
DOCUMENTS
INCLUDES
Notice Inviting Tender (NIT)/Invitation for Bids (IFB)

Instruction to tenderers (ITT)/Instruction to Bidders (ITB)

Contract Form and Conditions of contract

Technical specifications

Bills of quantities

Tender drawings

List of additional information required from Bidders

Formats of bank guarantees for advance
payment/performance
Checklist for of tenders submission
 NOTICE INVITING
TENDERS
MULTIPLE TERMS
RFP(REQUEST FOR
PROPOSAL)
RFT(REQUEST FOR
TENDERS)
RFQ(REQUEST FOR
QUOTATION)

NIT INFORMATION TO
BE PROVIDED
1. Name of the Project.
2 . Name & Address of the Company floating the tender.
3. Name of work, materials or services.
4. Place of work location.
5. Approximate estimated cost of work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender Document sale starts.
9. Date and time up to which tender documents can be
obtained.
10. The cost of tender documents.
11. The date and time up to which the tenders to be
submitted and are to be opened.
12. Specification.
13. Eligibility Criterion
MODES OF INVITING TENDERS

Negotiated
Tenders
Limited
Competition
Open
Competition
 NEGOTIATED
TENDERING
In this method, client negotiates with one
contractor &then awards job to him.

Clients comfort level with a particular

contractor/Secrecy/Urgency/Technology may be
the reason.

Advantages:
Early involvement of the contractor & his
expertise.
Less cost and time for the client

Disadvantages/Shortcomings:
Cant be used in public sector due to
accountability issues.
 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 also recommends itself when there
are only few recognized firms or companies
capable of executing the work.
Advantages:
Reduces time, effort& cost of tendering.
Less possibility of any firm quoting unrealistic
price, Fair Competition (not as high as open
.
tendering)
Disadvantages:
Few good contractor may not get the chance.
Higher prices due to big contractors & limited
 OPEN COMPETITION

By far 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.
Disadvantages:
Advantages
Resource & time to
Maximum
evaluate(unless
Competition
stringent PQ
No favouritism
conditions)
Useful for new New player may
companies quote too low to get
access.
No idea of
REQUIREMENTS TO BE
FULLFILLED BEFORE
INVITING TENDERS
The person inviting tenders needs to exercise care that all

necessary requirements prior to the invitations are fulfilled
so that the tenderers are not put to unnecessary trouble
and expense, if lack of preparedness requires revoking the
tender invitations.
Sanction to be obtained to a 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.
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 the should be
worked out to facilitate comparison.
Splitting of work for the purpose of inviting tenders is to be
discouraged and where necessary prior approval of the
competent authority must be obtained.
REQUIREMENTS TO BE
FULLFILLED BEFORE INVITING
TENDERS
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.
 TYPES OF TENDER
DOCUMENTS
LUMPSUM TENDER:
In this form, the intending tenderers are required to quote
a lump sum figure or completing the works in accordance
with the given drawings, designs, specifications etc.
ITEM RATE TENDER:

In this form the intending tenderers are supplied detailed

bill of quantities showing various items of work to be
executed, the approximate quantity under each item, and
the unit in which the work done will be measured.
PERCENTAGE RATE TENDER:
This form is similar to an item rate with the modification
that the bill of quantities supplied is filled with rate per unit
and cost of each item including total cost.
 TYPES OF TENDER
DOCUMENTS
COST PLUS: This form is of comparatively
recent origin and provides for the basis of
payments to be made to the contractor for
work done on actual "prime cost" plus fee
to cover his overheads and profit.
Types of Cost Plus:
Cost Plus fixed fee
Cost Plus percentage
Cost Plus Fluctuating Fee Contract
Target Cost
 TYPES OF TENDER
DOCUMENTS
PACKAGE DEAL:In the "package deal" or "industrialized
building" or "turn key" contracts, the necessity on the part of the
owner to employ professional staff is eliminated. By broad outline
specifications, the owner's requirements are made known to the
intending tenderers and it is for the tenderers to produce
designs, drawings, and specifications and quote the price for
completion of the work.
STANDING OFFER:An offer which is submitted in response to an
invitation to tender, unit prices for the supply, as required from
time to time and on order, of goods or materials and/or labour ,
over a fixed period of time is called 'standing offer'.
LABOUR CONTRACT:The special feature of this type of contract
is that the owner agrees to supply all the requisite materials to
the contractor and the latter agrees to supply all the labour and
workmanship necessary to complete the work according to the
drawings and specifications.
 TYPES OF TENDER
DOCUMENTS
SUPPLY OF MATERIALS:
The P.W.D. has a special form for use where the purchase of
materials is involved. The material suppliers are required to quote
rates for supply of the required materials
PIECEWORK:
For small works in which it is necessary to start the work in
anticipation bf formal acceptance or for running contracts such as
laying of pipes for water supply or sewerage, this form is adopted.
In the second case, above, the piecework is cancelled as soon as
regular contract is signed. In this form, the agreement is in respect
of payment at stipulated or agreed rates without specific quantity
or time being agreed upon. When the quantity and time limit are
mentioned, it contains a provision entitling the engineer to put an
end to the agreement at his option at any time.
BIDDING

CONTENTS

BIDDING DEFINED..

METHODS OF BIDDING. .

SIGNIFICANCE OF PRE-BID MEETING.

BIDDING DOCUMENTS.
KEY ASPECTS OF BIDDING
DOCUMENTS.
 BIDDING DEFINED
Construction bidding is a process of submitting a
proposal(tender) to undertake or manage the
undertaking od construction project.
Starts with a cost estimate from a blueprint and
material takeoffs.
Parties competent to each other based on their
past experience and with the aid of BOQ,
specification prepare an estimate of cost for which
they are willing to undertake particular project.
The bidding document (invitation to bid) specifies
the last date and time of submission of respective
to bids
METHODS OF BIDDING
Single-stage Single-envelope
The single-stage single-envelope is the most common
method of procurement.
A purchaser invites bids indicating the kind of goods
required.
The bidders submit bids stating prices, quality and
performance characteristics of goods offered and
commercial terms for the sale of goods.
There is no prequalification, the bidding document spells
out the qualification criteria for bidders.
This method has the advantage of simplicity.
Bids are invited quickly and a decision taken promptly.
This method is normally used for standardised goods,
when specifications and performance characteristics are
known.
 METHODS OF
BIDDING
Single-stage Two-envelope
In the single-stage two-envelope method a purchaser asks the
prospective bidders to submit bids in two envelopes.
One envelope contains the technical specifications and
performance parameters of the goods to be purchased or the
plant or equipment to be installed.
It also spells out the qualification criteria for bidders, and all the
other commercial terms except the price bid.
The second envelope contains the price details.
The bidders submit both the envelopes to the buyer at the same
time.
The purchaser first opens the technical envelopes of all the
bidders.
It critically analyses the technical competence of bidders, their
financial viability, and their track record in fulfilling obligations
under contracts in time. In addition, the goods offered are
evaluated with reference to the bidding documents to see if
these fulfil the purpose of purchase.
 METHODS OF
BIDDING
Two stage single envelope
This type of procedure is adopted in large and complex
contracts where technically unequal proposals are likely
to be encountered or where the purchaser is aware of its
options in the market but, for a given set of performance
requirements, there are two or more equally acceptable
technical solutions available to the purchaser.
At first bidder shall submit only technical proposals
without prices
Technical details are discussed between the bidders and
the technical solution for the work is finally agreed to.
At second stage bidders are given a choice to revise and
submit price proposal to confirm to the standards
agreed along with the revised technical proposal
 METHODS OF
BIDDING
Two-stage Two-envelope
The two-stage two-envelope method first asks the bidders
to send envelopes with the technical specifications of goods
their performance characteristics, evidence of technical
competence and financial soundness of the bidder.
The qualification criteria for the bidders and other
commercial terms of bids except the price.
This is called the first stage.
It is used to qualify the bidders before asking them for price
bids.
This method is followed in the WB and the ADB for the
complex projects and equipment.
In the first stage, the purchaser discusses with the bidders
details of the specifications and the performance data.
The purchaser also satisfies itself about the comparative
consumption of raw materials, power and fuel.
 SIGNIFICANCE OF PRE-
BID MEETING
Pre-bid meetings are usually held, if
previously mentioned in the solicitation
documents, during the bid/proposal
preparation period.
Purpose is to clarify any concerns bidders
may have with the solicitation documents,
scope of work and other details of the
requirement.
some buyers promise to answer questions
from bidders, and also hold a pre-bid
conference to answer questions.
 BIDDING DOCUMENTS
These documents help in obtaining
uniformity of knowledge as both the parties
have the same set of information.
It essentially consists of:-
1.Invitation for bid
2.Instruction to bidders
3.General Conditions of Contract
4.Special Conditions of contract
5.Contract Data
6.COPA
7.Specifications
KEY ASPECTS
OF BIDDING
DOCUMENTS
Bid Form & Price Schedule
Bid Currencies
Language of the bid
Bidder's qualifications
Bid security -
Bid validity period.-
Signature on Bids-
Secrecy of Bids
Deadline for Submission
of Bids
Withdrawal of bids.
Bid opening and
evaluation
CONSTRUCTION
SCHEDULE
BID FORM
 BID CURRENCIES
In international competitive bidding, instructions to
bidders have a clause on bid currencies.
It states how bids in different currencies will be
converted into the domestic currency.
A bidder may choose to ask for bids in its own currency;
in such a case, the prices may be higher as the supplier
will have to accept the risk of exchange rate variations.
For example, if a bid is accepted for, say, US dollars
1000, and the rate of exchange on the date of opening
bids is Rs. 61 to one US dollar, the purchase transaction
is valued at Rs. 61,000.
However, when the buyer pays for the goods, it may
have to buy US dollars for a higher amount of, say, Rs.
64,000 if the US dollar is quoted at Rs. 64 to a dollar
 BID LANGUAGE
In private trade, and for domestic bids, language
may, perhaps, not be a very important clause.

However, in international trade, it is important to

specify the language of bids as the bids may be
from several countries with different languages.

If bids are received in many languages, the buyer

may find it difficult to get them translated properly.

Moreover, as the contract will be governed by the

language of the offer, the buyer's unfamiliarity with
it may give use to difficulties and disputes.
 SECRECY OF BIDS
Opening any bid before the
deadline for opening bids violates
the sanctity of the bid process.
The need for secrecy arises
because it is essential that the
bidders should not come to know
the bid price of their competitors.
Suppliers, when they come to
know of it, may decline to bid for
buyers who violate this principle-
Therefore, a buyer instructs
bidders to seal their bids
carefully; and offers the
assurance that the bids will be
opened publicly, only at a given
time and place
 DEADLINE FOR
SUBMISSION OF BIDS
A buyer cannot keep the
date of receiving bids
uncertain.
The last date of receiving
bids is also linked to the bid
validity period.
A good practice is to refuse
to consider bids that are
received late, whatever the
reasons.
If a buyer thinks that the
time allowed for preparing
bids is not sufficient, it may
extend the deadline for bid
submission, instead of
considering late bids.
WITHDRAW
AL OF BIDS
The law of contract
allows a bidder to
withdraw its bid
before acceptance.
In competitive
bidding, a bidder
may withdraw or
modify its bid
before bid opening;
this action does
not result in the
loss of bid security.
If a bidder
withdraws its bid
after the bid
opening, then the
buyer may forfeit
the bid security
Writing a
successful
tender response:
Keep it simple, yet
professional
Address exactly what
the Buyer asks for, and
ONLY what the Buyer
asks for!
Writing Style
Format and Presentation
Approach/Solution
Pricing
Other Information
 BID SECURITY
A buyer does not wish to receive bids from firms who
have no intention to meet their obligations.
A supplier/contractor may make a bid with the idea of
seeing the market trend; it may refuse to accept the
contract.
Such frivolous or speculative bids do arise when there
is no bid security, particularly for large value
contracts.
Therefore, buyers insist on a suitable amount from
bidders as bid security
Bid security gets forfeited if a bidder refuses to honour
the contract when its bid gets accepted. A very high
bid security amount may discourage bidders as their
money gets blocked and a poor response will mean not
receiving competitive bids.
 BID VALIDITY PERIOD
A buyer assures suppliers about the
period within which it will decide
on the bids.
After all, a supplier invests money
in bid security on the chance of
getting its bid accepted.
The investment can be made only
for a reasonable period, Moreover,
a supplier takes into account the
likely increase in prices by the time
a contract is awarded and the goods
are delivered.
In an inflationary economy, the risk
of inflation is built into the price.
If the bid validity period is not
indicated, suppliers may not bid at
all.
SIGNATURES ON BIDS
The law of contract recognises a
contract between legally
competent parties only.
A minor is not competent to
enter into a valid contract.
Many suppliers may be firms in
the nature of partnerships, joint
ventures, or incorporated
companies.
The laws of partnership, joint
ventures, or companies have a
legal framework as to who is
competent to bind them.
Only persons having this
authority can bind their firms.
A buyer has to check the
authority letters, on the basis of
which bids are signed, Therefore,
a buyer instructs bidders to seal
their bids carefully; and offers
the assurance that the bids will
be opened publicly, only at a
given time and place.
BID OPENING
Opening of bids. Bidders or
their representatives are
invited to be present at the
bid opening ceremony.
At the bid opening, a buyer
announces the major
details of bids, like bid
price, discounts offered,
whether bid security is
there, etc.
The public opening of bids
in stills confidence in the
bidding process; otherwise,
some suppliers may decline
to bid.
 BID EVALUATION
Preliminary Examination: The
preliminary examination of bids
means checking that the bids
are complete, there is bid
security, and that the bids meet
all the essential conditions of
eligibility laid down in the
Instructions to Bidders.

The bids, which meet all these

criteria, are then taken up for
further examination. These bids
are called 'substantive
responsive bids.
AWARD OF
CONTRACT

CONTENTS

AWARD OF CONTRACT DEFINED. .

STAGES OF CONTRACT..

METHODS.
WEIGHTED RATING SYSTEM.
RANKING SYSTEM.
AWARD OF CONTARCT.
 DEFINITION
Contract awarding is the method used

during a procurement in order to evaluate the

proposals (tender offers) taking part and

award the relevant contract.

 STAGES OF CONTRACT
Preparation of contract documents

Advertising the tender, tender notice

Pre-bid meetings

Submitting tender by contractor

Study of the tender by owner

Clarification regarding conditions or
specifications
Preparing comparative list

Awarding of contract
 METHODS
1. Least price

This method is the simplest and oldest of all.

Under this the procurement contract is awarded to the best

price.

2. Most economically advantageous

This is applicable to proposals of different quality within the

limits set.

Under this the proposals are graded according to their

price for value and the contract is awarded to the one with
the best grade.
 METHODS
3.Mean value

The contract is awarded to a bid closer to the

mean value of the proposals.

4.Exclusion of the extremes

Under this method the proposals that are

deviating the most from the mass of the
proposals are excluded and then the procedure
continues with one of the above methods.
 WEIGHTED RATING
SYSTEM
PRESE SIMLA TUR
COMP NT R N
EXP PROF STA
ANY PROJE PROJE OVE
IT FF
CTS CTS R

20 250 5
ABC 10% 4 25
YEARS

25 11.33
XYZ 200 4 4 15
YEARS %

25
BCA 9% 180 2 3 20
YEARS
 WEIGHTED RATING
SYSTEM
PRES SIMIL
PROF TURN STAF ENT AR
COMP EXP
IT OVER F PROJ PROJ
ANY =0.16
=0.16 =0.16 =0.16 ECT ECT
=0.16 =0.16

ABC=
0.32 0.16 0.16 0.16 0.16 0.32
1.28

XYZ=
0.16 0.48 0.32 0.32 0.16 0.16
1.60

BCA=
0.16 0.32 0.48 0.48 0.32 0.16
1.92
 RANKING SYSTEM
SIMIL PRES
COMPA PROFI TURN AR ENT
NY T EXP OVER PROJE PROJE STAFF
CTS CTS
ABC 20YE
25 4
10% ARS 5 250
(1) (1)
TOTAL= (2) (1) (1)
8 (2)
XYZ 25YE 4
11.3% 15 4 200
TOTAL= ARS (1)
(3) (3) (2) (2)
12 (1)
25
BCA YEAR
9% 20 2 3 180
TOTAL= S
(1) (2) (3) (2) (3)
12
(1)
 AWARD OF
CONTRACT
I nstructions to Bidders
make it known that a
buyer has the right to
accept or reject any bid.
The bidders cannot
force a buyer to accept
a particular bid.
A buyer awards a
contract after the
evaluation of bids.
He or she also has a
right to increase or
decrease the quantity of
items to be purchased
within the range given
in the Instructions to
Bidder.
The bidder, whose bid is
accepted, is asked to
sign a contract to
formalise the
acceptance of the offer.
 Thank You !!!
Presented By:-
Shiva Prasad (AP16017)
Utkarsh Kumar Singh (AP16018)
Saylee Patil (AP16019)
Sachin Amane (AP16020)
Nikhil Kulkarni (AP16021)
Muneesh Methwani (AP16022)
Manoj I.(AP16023)
Karan Pawar (AP16025)