TENDERING PROCCESS

Specialized topics 2020

2020
ABD AL RAHMAN QASAYMEH
8191007
Table of Contents
Chapter 1: Introduction
Chapter2: Definitions
2.1 Tender definition
2.2 Tendering process definition

Chapter 3: Tendering process

3.1 Tender preparation

3.2 Approval to tender
3.2.1 types of tenders
3.3 Tender documentation
3.4 Invitation
3.4.1 tender notice
3.5 Receiving bids and evaluate them
3.5.1 Bidding process and sealed bids
3.6 Award contract
3.7 Tender process potential problem areas

Chapter 4: Discussion

Chapter 5: Case study

References
Chapter 1: Introduction
For projects or procurements, most institutions have a well-defined tender process, as well as
processes to govern the opening, evaluation, and final selection of the contractors. This ensures
that the selection process is fair and transparent. When it comes to tender offers for takeover
attempts, the conditions of the offer are clearly listed and include the purchase price, the
number of shares requested, and a deadline for a response.

The tendering process should adopt and observe the key values of fairness, clarity, simplicity
and accountability, as well as establish the concept of apportionment of risk to the party best
placed to assess and manage it. The principle of tendering is to ensure that true competition is
achieved, and tenders received are evaluated by applying certain criteria. These criteria may be
expressed in terms of financial matters, comprising a simple assessment relating to tender
sums, or more complex financial evaluation, including consideration of projected costs over the
life cycle of the completed project. It can also address other non-financial factors such as time,
proposed methods, levels of capability; or sometimes a mixture of all these criteria. All
tenderers should be able to bid on an equal basis, meaning that they must receive the same
information and, most importantly, this information should be sufficient in content and
accuracy to allow them to properly assess the implications of the project and bid accordingly.

The tendering process is not always easy, and every activity in the tendering process has a time
and cost implication. Therefore, it makes economic sense not to overburden the tenderers with
unnecessary information requirements, and to concentrate on those which are relevant to the
work which is to be undertaken. Faced with competing financial pressures most construction
contractors will carry out their own assessment of the projects for which they wish to tender,
and will be less inclined to bid for those where the procedures involved are perceived as overly
complicated or onerous. Also, since preparation costs are included in their overheads, these will
ultimately be passed on in the form of higher prices.
Chapter2: Definition
2.1 What is tender?
It is an invitation from the owner to the contractor to execute some work at specified cost in
specified time. It is published in the form of tender notice in newspapers, notice boards,
gussets, etc. according to the cost of works.

2.2 What is tendering process?

Tendering is the process of making an offer, bid or proposal, or expressing interest in response
to an invitation or request for tender. organizations will seek other businesses to respond to a
particular need, such as the supply of goods and services, and will select an offer or tender that
meets their needs and provides the best value for money.

2.approval to
1.preperation 3.documentation
tendering

6. Award 4.invitation
5.processing
contract
Chapter 3: Tendering process
3.1 Preparation:
Good preparation and planning are key elements of conducting an effective
and efficient tender process and project delivery, In the preparation
process the owner need to determine the following:
- What is required
- The contractual requirement
- Description of the work
- Conditions of the tender
- Evaluation criteria
- Submission content
- Process rules
- Conditions of contract

in this stage the involved parties (architect, engineers, QS, client, project
manager) will provide Final completion of drawings, specification,
measurement, take-off process and will determine conditions of contract.

Drawings:
Provide graphic representation of all work to be completed.
- Measurements and dimensions
- Footprint configuration
- Siting (location in site)
- Detail of materials and methods
- Schedule of information
- Building system
Specifications:
- Technical information about materials indicated in drawings
- Written requirements for project
(material, equipment, construction system and workmanship)
- Specs represent the quality of project
3.2 approval to tender
Discussion between the involved parties (PM, Consultant, …etc.) and
decision on type of tender to be used.

3.2.1 Types of tenders:

- open tenders:
open tendering allows anyone to submit a bid to supply goods or
services required and offer an equal opportunity to any organization
to submit a bid, this type of tenders provides the greatest
competition among suppliers.
One disadvantage of this type that it allows any interested contractor
to tender therefore an unknown contractor may compete for the
work and the tender list will be long as too many contractors
tendering for the work.
- Selective tenders:
In selective tendering an invitation will be sent to suppliers who are
known by their track record to be suitable for the contract. Usually,
this type of tenders used in complex contracts and in projects where
there only a few suitable firms. Selective tenders give clients greater
confidence that their requirements will be satisfied.
Only selected contractors will compete for the work that will prevent
other contractors especially new ones to submit their offers.
- Negotiation tenders:
Negotiated tenders usually used in engineering and construction
contracts, it used with highly specialist projects were a single supplier
(sometimes up to three suppliers) will be negotiated in order to
satisfy the customer requirements.
Only reputable contractors are invited to the negotiation that will
reduce the availability of other contractors and the cost will be
higher than more competitive tenders

- There are other types of tenders exist, prequalification tenders,

extension of an existing contract and others.
3.3 Documentation
After the selection of the appropriate type of tender, the documentation
of the tender will be prepared. Tender documentation may include:
- Invitation letter: This letter is a formal invitation that allows the
contractors to submit their offers, invitation letter will include a
sufficient detail about what to be done.
- General conditions and particular conditions
- Form of tender: The form of tender is a covering document prepared
by the institution and signed by the tenderer to indicate that it
understands the tender and accepts the various terms and conditions
and other requirements of participating in the exercise.
- preliminaries: the purpose of preliminaries is to describe the works
as a whole, and to specify general conditions and requirements for
their execution, including such things as subcontracting, approvals,
testing and completion.
- The form of contract and contract conditions: this may indicate the
general or standard terms and conditions of the contract, with
additions or alterations made when a winning tender is announced.
- Bank and insurance guarantee forms
- Bill of Quantities: a document used in tendering in which materials,
parts, and labor (and their costs) are itemized.
- Specifications
- Relevant drawings
3.4 invitation
a brief description of the job being tendered will be published in
newspaper and internet in order to invite contractors to provide their
offers, this brief description is called tender notice.
There are many benefits of tender notices but the most important thing
is that this way, the company that is publishing the notice, gets more
suppliers and with the competition between more than one supplier, it
also gets very good rates for the products or service
The way to invite contractors to tender is Based on type of tendering, in
open tenders a tender notice may published while in selective tenders
only shortlisted contractors will receive the invitation and in negotiated
tenders only one contractor will be negotiated.

Elements of a Tender Notice: It depends on each company that what

kind of tender notice is publishes and what elements added in the notice
are. Usually it includes;

- Name of the company publishing the tender notice

- Name of the project
- Type of tender (open or closed)
- Criteria for qualifying to apply to the tender notice
- Details of the project
- Information to send the price quotations
- Date when the tender will be issued to one company
Example of tender notice:
3.5 Receiving bids and evaluate them
3.5.1 The bidding processes and sealed bid submission
Bids are prepared confidentially be each bidder and are sealed and submitted to
the owner to be examined and compared in competition with one another
In the sealed bidding process, bid or tender responses remain sealed until after
the deadline for submitting bids has passed. This ensures that no one can view
the bid responses until they are officially opened at a pre-determined time.
Sealed bidding has many benefits; it facilitates fair and transparent procurement,
prevents collusion, and levels the playing field for suppliers. It also significantly
reduces the complexity of the bidding process by ruling out bid shopping. Sealed
bidding removes the risk of bid shopping, because it ensures that price
information is kept confidential until after the due date.
- receiving the invitation from the owner side
- contractor obtain documents (drawing, specifications and project
manual)
- review docs and send request for information for any unclear point
- determine quantity of materials
- gather unit prices from suppliers
- choose subcontractors and ask them for their bids
- calculate the sum of all costs with including all additional costs and
taxes
- result is total bid to owner
the bid is sent to the owner and will be evaluated and compared with other bids,
then the owner will select the best bid and will send a letter of intent to the
selected contractor.
3.6 award contract
After the tender is evaluated according to the relevant criteria
provided.  any negotiations are satisfactorily completed, the award
decision is made by the relevant authority, usually based on the
recommendation made by the evaluation team.

3.7 Tendering process potential problem areas

There are several problems and mistakes can be done in tendering
process which can negatively affect the process.
3.7.1 Tender preparation problems:
- wrong estimations in time, cost and quality.
- Tender documentation problems: Poor specification writing,
disparities between bill of quantities and drawings and specifications,
and poorly prepared tender documents are common problems
associated with tender documents.
- Choosing the wrong tender strategy
3.7.2 Bidding problems and mistakes:
When tendering there are common mistakes that tenderers need to
be aware of and avoid. Some of these may seem minor and harmless
but they might actually cost you the bid.  These include:

Unsigned Bids: Ensure that your bid documents are signed. Unsigned
documents are eliminated from the evaluation process.
Incorrect Cost Schedules:  You normally have to complete a pricing
template; this makes it easier for the buyers to compare the various
submissions. If you get it wrong, your prices may not be accepted or
marked properly
Incorrect Formatting: if you do not follow the prescribed format, you
can get marked down as you will possibly miss out certain
requirements that you would comply with if you had used prescribed
format.
 Missing Information: Simply put, if something is missing it cannot get
marked! Sometimes you may get a second chance to provide
whatever is missing but it is unlikely.
Late Submissions: This will almost certainly get your bid disqualified!
Bid closing date and time should be strictly adhered to as no
proposals are accepted after the specified closing time. Submit your
proposal well in time to avoid last minute rush, give allowance for
traffic jams and locating the tender box. 
Wrong Company Name: If you plagiarise ie cut and paste, make sure
you edit to change the name of your customer. It does not look good
if you are bidding for someone' s business but show another
organization' s name!
Completing a Tender Document in Pencil: Tender document should
be completed in non-erasable ink. A tenderer must not use
correction fluid; instead, you may cross through any errors and sign
3.7.3 Contractor subcontractor relationship
problems:
- Sometimes main Contractors select subcontractors on the basis of
lowest price and not on the best value, and they squeeze them tight
on price leaving them struggling to survive.
- Contractors tendency to use harsh contract terms and conditions in
subcontract agreement. And their tendency to transfer enormous
project risks to subcontractors, who are typically small and medium
size enterprises with little or no capacity to bear such risks
- The tendency of subcontractors to bring inadequate workmen to site,
which hampers the works and fuel conflicts
- Poor information sharing between main contractor and
subcontractors.
3.7.4 Corruption and Bribery
Chapter 4: Discussion
tendering process is the process of going to the external market with your
need specification with the intent to collect, analyze and nominate bids.
The deference between tendering process and procurement process is that
procurement defined as the entire process from need identification to
invoice payment while tendering is specifically the invitation of another
organization to do specific work.
Tendering process begins with planning and preparation, the amount of
preparation depends on the project complexity. Good planning and
preparation resulting in clear objectives and will help in the selection of the
appropriate type of tender. Selection of tender type depends on project
complexity, time, quality, cost and resources available.
Owner will publish a tender notice to invite contractors to buy a tender
document copies in order to take their decision to bid or not to bid, clear
tender documents will help contractors understand owner needs and will
reduce misunderstanding and claims from contractor side while poor
quality tender documents can lead to inaccurate estimates, higher margins
in bids, claims and disputes.
In order to award the contract, contractors should prepare their bids
carefully without any mistake, some mistakes will let them out of
competition.
Chapter 5: Case study, poor tender documents

A case study of poor-quality tender documents was discussed in a paper

published in 2011. The case study discussing a project valued 6.5 million
euro, the project was for a public client. The project was awarded as a
guaranteed maximum fixed price contract.
tender documents received as bellow:
instructions tenderers (seven volumes),
form of tender,
form of agreement,
form of bond,
conditions of contract,
special requirements,
information to be supplied by the tenderer,
information supplied to the tenderer,
collateral warranty by contractor,
collateral warranty by subcontractor,
collateral warranty by designer,
parent company guarantee,
technical work specifications (358 pages),
project drawings (213 pages)
and bill of quantities (1053 bill items).

The bid team of Gamma identified areas in the documentation

where there were missing information, incomplete drawings,
conflicting information, inadequate specifications and general
areas requiring clarification of information.

the bid team of Gamma raised 20 tender queries (TQs) that they
submitted to the client’s consultants for additional information.
There were another 3 bidders arise their tender queries and the total
tender queries was 90 as shown in the table bellow

This result in delay in the submission date for one week and the bidders
(exclude Gamma team) were not able to provide their bids because their
concerns about cost, time and quality of the work.
 References:

(1) S. Rowlinson and P. McDermott, Procurement Systems: A Guide to Best practice in

Construction, E & EN Spon, London, UK, 1999
(2) Obafemi A. Akintan and Roy Morledge, Improving the Collaboration between Main Contractors and
Subcontractors within Traditional Construction Procurement, School of Architecture, Design and the
Built Environment, Nottingham Trent University, Nottingham NG1 4BU, UK

(3) https://www.cohenseglias.com/contracting-database/contracting-by-negotiation/

(4) https://www.hhs.gov/grants/contracts/contract-policies-regulations/hhsar/part-314-sealed-
bidding/index.html
(5) Eryana Indah Kusumarukmi1 and Tri Joko Wahyu Adi2, Public tendering process for
construction projects: problem identifications, analysis, and proposed solutions
(6) visit www.procureware.com.
(7) https://www.designingbuildings.co.uk/wiki/Tender_evaluation
(8) https://www.tenderconsultants.co.uk/tendering-process/