‘Tendering and Estimating 1 QTS 314 1.0 Course Outline: ‘Contractor procedure prior to tender submission, Introduction to principal elements of construction contacts; iii, Types of contracts requiring tenders; ‘Tender documents and ther relevance in estimating; Tendering procedures; vi. Factors affecting cost; ii, Cost parameters and sources of cost information; Constituents ofa rate; ix. The allin rates for labour and plan Allein rates analysis and synthesis, Build-up rates for items of excavation and earthworksINTRODUCTION: ‘The selection of a vontractor to carryout a constuction project is an important matter | requiring careful thought, A wrong choice may lead to an unhappy client/contractor ‘elatonship, a dissatisfied client and possibly even an insolvent contractor. Construction work van generally be executed through the direct labour system or through the contracting system, the contracting system consists of competitive tendering which remain the most common means by which eontractors whether large, medium or small obtain their construction work. DEFINITION OF TERMS ‘TENDER: The chartered institute of Building (1979) defined “tender” as “the sum of one, ine ad oer condtion required by the tendesto camyow the speed conanetn was, ( The oxford dictionary describes the word “Tender” as offer made n writing by 2° party nchr oe, at an ining pr ori ate an ods forthe supply = purchases of goods or for the execution of work, the details of which have been ‘submitted by the second party”. But in a boiling contact, a tender is an offer to carryout spite wks of consmatin foe» speife sun of money within » puted tne, Sovetines the tm tring an eiating re oflen used intchangeably bu ts rather oii his, ts essen extinguish Between Esnating and Tendring” required by chartered institut of building (U.K), “TENDERING: This ea be srpl efit 1035 et of offering o execute construction ‘work visdevisthe process uf selecting a suitable contractor to execute such a work.etmg costs wf construc in ESTIMATING: Is a technical finetion and a process of prediclg within the building commercial field and estimator 1s a person eaerying out this fanctwnn ‘na building organization, In other words, estimating is: the process by which computation of cost ofa particular projec is earied out. OBJECT OF TENDERING ‘The main objectives of tendering can be simply summarized as follow: (@_Tosselect suitable contractor at the proper time (i) To obtain from the reslected contractor, a firm offer in price, construction time acceptable asa basis for contract, Gi) To establish the terms and condition ofa contrac! with the chosen centractor. Prior to selecting a suitable tendering method, the following factor should be taken into consideration (Character of projet Gi) Size ot project Ki) Location of project (iv) Level pricing () Period ofvime for construction project ‘Type of firm and type of business cartied out Financial resources of firm Physical resources of firm we d ‘Scanned by CamSeanner/ [/ ( ‘TENDERING METHODS “The methods of tendering, canbe divided into two major parts; (2) Competitive tendering: this include the following variants + Open tendering ‘+ Restrictive open tendering + Selective tendering + Two stage tendering + Serial tendering (B) Noncompetitive tendering. meiod: Negotiated tendering comes under tis eating COMPETITIVE TENDERING METHODS (©) OPEN TENDERING: This mtd Sf often used by loal authority 6 bin lenders for building work. The employer (client) advertises in national and technical ‘Process an open invitation to contractors to apply to the employer or his architect for the necessary documents, and give bref details of the proposed works. One ofthe conditions in the adverisement is sometimes thatthe tendered must pay a deposit which is usually ‘sed to discourage frivolous application, the deposit may or may not be retumed on ‘erp of bonafide tender, reason being tha that itis used to defray the cost of printing P the contact documents Scanned by CamScanner ee YAddwantages {) Very competitive teers are obtained (it) Ony interested firms wil submit tenders (ii) New fies ae able to obtain work an prove themselves (iv) Nochange of favoritism Disadvantage (i) Some finns may not be velhequpped, either matemally or financially, to exceue the work (i) If 2 very low tender is submitted and accepted, it may cause difficulties | thoughout the conte (i) Submining tenders cost, me and expenses, and his cost needs to be | recovered (©) RESTRICTIVE OPEN TENDERING: The method of restrictive open wgich 1 tendering also uses adveisemens which invite applications from fins that Wath 10 be ‘considered for tendering From these applica a selection list in chosen and tenders are invited, Advantages (© Onty interes ams wil apply 4 G)_—Onty suitable fms are asked to submit enders Gil) Les oven expense for tenderer 9) New fms may beable 1 obtain work end prove theses ’ — A Scanned by CamScannerDisadvantages () Less competitive (ii) Can lead to cover pricing being submitted (0) SELECTIVE TENDERING In selective tendering the Architect prepares a ist of suitable tenderers, and they alone are invited to submit tender. The tender list normally contains 6 to 8 firms, according to the size and type of the proposed project. Advantages () Only firms capable of executing the work will be selected (i) Selected firms will probably have already proved themselves a Reduction in the time and overall cost of tendering, Disadvantages (The price may not be as competitive i) Can lead to cover prices being submitted ii) Diffiout for new firms to obtain work easily ) TWO-STAGE TENDERING These are occasions, such as those listed below, when selection of the most appropriate ‘contractor is of prime importance, + The client wishes to stat work on site earl y and prior to full ender documenta being prepared. * The contractor can make a technical comibution to the project. ‘Scanned by CamSeannerIf the drawings and other details are not yet finalized them. the chent may mune onlractor to tender for a contract after an initial and careful negotiation with each Contractor about how the proposed project should be undertaken. The selected contractor 's then invited to competitively tender forthe work by pricing one of the following items. (a) Approximate Bill of Quantities (©) Bill of Quantities ofa similar past project (©) A fictitious Bill of Quantities Contractor who submits the most favourable price (tender) is then expected to ‘work closely with the designer to agree on an economic design and programme until a Satisfactory solution to the client's need is realized, A final tender is then submitted by the selected contractor using the Bill prices previously outlined in the successful competitive tender, Advantages (Speedin planing and constustion (i) Use ofcontractor's specialist desig eam and solution (iii) Use ofthe contractor's management and sitesolving solutions. Disadvantages (9) High overheads of unsuccessful first stage contractor Gi) High costs of variations (6) SERIAL TENDERING Serial tendering is a form of standing offer where a contractor \indertaken to enter into @ seties of separate fixed price contracts in accordance with terms and conditions set out in ‘Scanned by CamScannerafter an initial interview: say be based on the general criteria outlined earlier. possibly after wath the Architect when the method of exceution and other factors are discussed. Fender documents are prepared in the normal manner and sent tothe selected contractor who prices the work. When the final tender figure has been prepared itis submitted to the quantity surveyor for examination and a tender repor'. ‘The contractor and the quantity surveyor will meet to settle any queries and adjust details such unreasonable rates. After negotiation, a price that is acceptable to both parties is agreed and a formal contract is signed. Advantages, (Contractor can be selected early in the design stage and can assist in the contract planning (i) Useful fora job of a difficult or usual nature (il) Useful for extension contacts (iv) Useful where there is insufficient time to prepare ful tender documentation (©) Establishes good relationship between client and contractor (vi) Low overall cost of tendering. Disadvantages The prices may be higher than in open competition (i) The design could be influenced by the'selected contractor Gi Difficult for new frms to obtain ‘Scanned by CamScannerFe a ung offer. The offer usually relates 1 a firm programme of projects of sir lt suse within reasonable graphical limits, sucha a programme of building supermarkets weliminary diseusion is eld with a short lit of contractors in order to draw up sonitions ofthe ofr, suchas the numberof projects, the time period and the placing of jabs, A notional bill of quantities is used to help evaluate the offer \When the offer is accepted, Bills of Quantities are prepared for each project which is then priced in accordance with the national bill of quantities and an agreed under negotiation. “The initial offer is merely a statement made in good faith 95 ® basis for negotiation that may be withdrawn at any time, Advantages (i) A-competitive price may be obtained ji) The contractor is able to plan a long tern programme (jit) The experience obtained in earliest projects mey be used to the advantage of both parties for Funure projects. ‘Advantages of Serial tendering. ) If the contractor initially produces unsatisfactory work the client may be committed toa long term programme. NON-COMPETITIVE TENDERING METHOD (a) NEGOTIATED: Tendering by negotiation involves the reflection of single firm for the purpose of discussing the project and eventually agreeing price. The firm selected Scanned by CamScanner f jr a tanding offer. The offe 8 offer. The offer usually relates to a firm programme of projects of simular ture within reasonable graphical limits, such as a programme of building supermarkets. Preliminary discussion is held with a short lit of contractors in order to draw up conditions of the offer, such as the number of projects, the time period and the placing of jobs. A notional bill of quantities is used to help evaluate the offer. When the offer is accepted Bills of Quantities are prepared for each project which is then priced in accordance with the national bill of quantities and an agreed under negotiation, ‘The initial offer is merely a statement made in good fait has a basis for negotiation that may ibe withdrawn at any tie, if Advantages © ‘A compatitive price may be obtained (ji) The contractor is able to plan a long terin programme (ii) The experience obtained in eatlest projects may be used to the advantage of both parties for future projects. Advantages of Serial tendering (i) If the contractor initially produces unsatisfactory work the client may be committed to along term programme. NON-COMPETITIVE TENDERING METHOD (A) NEGOTIATED: Tendering by negotiation involves the reflection of single firm for the purpose of discussing the project and eventually agreeing a price. The firm selected Scanned by CamScannerLECTURE NOTE NO2 TENDER DOCUMENTS AND THEIR RELEVANCE IN ESTIMATING ‘The tenderers are usually provided with the tender docurnents. There documents, contain all relevant information about proposed contract, rules, condition, ete to assist the contractor n pricing the work as accurately as possible. The more detailed information which can be provided to the contractor at the tendering stage the better since any ambiguity or confusion can lead to problems and disputes later or during the contract period. The num! snd nature of the tender documents will vary with the type of contract, They will clude some or all of the following (A) Condition of the contract: this document sets out the obligation and rights of the parties and the detailed conditions under which a subsequent contract will operate, If @ standard form is used, such as the JCT from, it will not be sent out with the invitation to optus tender, it being assumed that the tenderers will have a copy or can readily obain one. The clause headings will however, be listed in the first section (preliminaries) of the bill of quantities and/or specification (8) Bill of Quainities: - These are normally used for lump sum contracts Tenderers should be sent two copies of the bills one for return to the architect or professional quantity survey or (PQS) withthe tender, the other, forthe contractor to keep as a copy of his submitted prices, If the tenderers are not required to submit priced bills with their tenders, oly one copy nced be sent to them intially, A second copy will then be sent st the time of requesting submission of the priced bills. Scanned by CamScanner rlpout bills of quanuittes. (C) Specification: = In the case of lump sum contracts yetimes ecification will be ietailed specification will be supplied to tenderers. Sometimes # SEPT -xceptional supplied in addition to bills of quantities where they are used, but this 15 ex°eP nowadays. . te (D) Drawings: - Normally general arrangement drawings will be provided, showing site location, position of building(s) on and means of access to the site and floor plan and elevations. Tenderers are not normally given working drawings as they are not considered to be necessary for pricing purposes, full descriptions of the work being incorporated in the bills or specification. Tenderers are informed, however, that they can inspect drawings not supplied to them, atthe architect's office. (©) Form of Tender; - this isa pre-printed formal statement, often in the form of a‘letter, in which a tenderer fills in, in the blank spaces, his name and address and the sum of money for which he offers to carry out the work shown on the drawings and describe in the bills of quantities or specification. “An example of atypical form of tender could be provided if students so required: (F) Retum Envelope: Each tenderer should be supplied with a pre-addressed envelope clearly marked “Tender for (name of project): This will ensure that tenders are recognized as such when received and will not be prematurely opened. Tenderers should be asked to acknowledge in writing receipt ofthe tender documents Scanned by CamSeannerLECTURE NOTE NO. 3 CONTRACTOR PROCEDURE PRIOR TO TENDER SUBMISSION On receipt of tender documents, the task tobe performed by the estimator can be divided into jo she ain areas as follows: (@) The decision o tender ©) The collection of information (©) The preparation of estimate (@) The tender adjudication i, conversion ofthe estimate into a tender (6) The submission ofthe tenders The decison to tender On receipt of invitation to tender the contractor will normally decide whether or not to tender. ‘The decison to tender is not automatic asthe contrehas to consider many factors. Some of these factors ar: (Current work local ~ commitment on contract progress (3) Future commitment (iit) Availability of resources in terms of both staff and labour (©) © Capital available to finance the project () Availability of estimating statt (vi) Tine avaitable co prepare tender (it) Availabilty of suitable materials/market condition atthe time of tender submission, (vii) Avaitability of plant ete u Scanned by CamScannerIhe decision to tender is always made by the same person who should be a senior member of the staff and aware of the financial commitment of the company. Where a contractor is not interested, igetee tender documents should be retumed to the architecUclient with an accompanying letter declining to tender. However, as soon as contractor decides to tender, steps should be taken to collect the necessary information for the preparation of tender. The Collectiog, of information ‘The contractor needs ta prepare the estimate programme within the time limit allowed for the preparation and submission ofthe tender ‘Activities at information collection stage involves: + Enquiries to suppliers + Enquiries to subcontractor + Visit tothe site and consultant's office + Preliminary meetings “The job specific details should be provided on standard format for materials enquiry” and sub- contract enquiries” to allow purchase and supply department to distribute enquires. It is recommended that limited numbers of suppliers and sub-contractors are asked to quote for each item or selection of work. Many factors are taken into consideration before taken decision on {inal ender The Preparation of the Tender Afterall the necessary information has been collected, the next stage is the preparation of the estimate, which includes: (6) The establishment of all-in rates for key items i. labour, gany cost, plant cost ee. n Scanned by CamScanner Me em