PROFESSIONAL

PRACTICE - 1

GROUP B1_UNIT - 3
HARISH BASKARAN
HRUTHVIK K
P SAI RAVATH
SIDDHANTH DEEPAK KALSUR
PALLAVI SHANKAR
MODULE - 03
TENDER
• Tender document and its content.

• Types of tenders, advantages and disadvantages of each type and it's suitability to various projects.

• Tender notices, opening, scrutiny, process of selection and award.

• Architect’s role in tender process.

• Earnest Money Deposit, Security Deposit, Retention Amount, Mobilization Amount and Bonus & Penalty Clauses.

• Issues arising out of tendering process and the role of an architect

 TENDER
Tender means an offer to described or to supply or purchase goods of prefixed specifications at a price to be quoted by the tendered.
Organizations will seek and will select an offer or tender that meets their needs and provides the best value for money.
The offers to carry any work can be :

1. Construction work
2. Demolition work
3. Material work
4. Sale of material such as scarp
5. Cleaning work
6. Painting work
7. Renovation work
8. And many more

METHODS OF CALLING TENDER

• OPEN OR PUBLIC TENDER -A bidding process that is open to all qualified bidders and where the sealed bids are opened in public for
scrutiny and are chosen on the basis of price and quality. Also called competitive tender or public tender

• CLOSED OR INVITED TENDER-A closed tender is when only selected persons or organisations are invited to submit a tender for a property.
This is in contrast with an open tender which is made available to anyone. The term can also be used with regard to residential property where
offers will not be accepted before the tender date

• PRE-REGISTRATION OF CONTRACTS- Most suitable for semi public and public organization.notice will be published in the newspaper,
magazines etc.
 TENDER DOCUMENT

INSTRUCTION TO GENERAL LETTER OF OFFER DRAWINGS

COPY OF ARTICLES
CONTRACTOR CONDITIONS &
OF AGREEMENT &
Type of tender PRELIMINARIES From contractor to
GENERAL
Name of work, address architects office
CONDITIONS OF
&owners name It includes basic rate of Letter is prescribed by
CONTRACT
Price of blank tender building materials and architects office.
form list of approved
Printed papers
Amount of EMD manufacturers of
available with IIA
Time and place of material
tender submission

QUALITIES OF GOOD TENDER

1. Term of work specified in bill of quantity should be clear and specific

2. Working drawing need to be supplied wherever details involved (ex doors ,

windows, grills & handrails)

3. All factory made products trade name to be mentioned

4. Basic price of material can be mentioned in case of certain materials like

marble granite Etc.

5. All tenderers shall be treated equally with same information

like(specifications, drawings & bill of quantities.
TYPES OF TENDERS
Tender means an offer to carry work, that is predescribed or to supply or purchase goods of prefixed specifications at a price to be quoted by the
tendered. It can be construction work, demolition work, Material work, sale of materials, painting work etc.
The Types of Tenders are :

Open Tenders : Open tendering is the main tendering procedures employed by both the government and private sector. Open tendering allows
anyone to submit a tender to supply the goods or services required and offers an equal opportunity to any organisation to submit a tender. This
type of tender is most common for the engineering and construction industry.

Advantages Disadvantages
• It allows any interested contractor to tender. Therefore it gives • The tender list can be long as too many contractors tendering for
opportunity for an unknown contractor to compete for the work. one job.
• Allowing the tender list to be made without bias. No favouritism in • Public accountability may be questioned if the lowest offer is not
selecting contractors. accepted.
• Ensuring good competition amongst the people in the tender list. • Does not attract reputable and established contractor unless they
are forced to, due to lack of work.

Selective Tenders : Selective tendering only allows suppliers to submit tenders by invitation. These suppliers are those who are known by their
track record to be suitable for a contract of that size, nature and complexity required. Selective tendering gives clients greater confidence that
their requirements will be satisfied.

Advantages Disadvantages
• Only the competent contactors were invited to tender, then the • Reduces the availability of work for other contractors especially
lowest can be accepted. new contractors.
• It reduced the cost of tendering. • Tender Price may invariably higher than would have been in open
• Greater chance of collusion. tendering.
• Favoritisms may occur in the short listing.
TYPES OF TENDERS
Negotiated Tenders : Negotiated tenders are extensively used in the engineering and construction industry commencing from tendering till
dispute resolutions. Negotiating with a single supplier may be appropriate for highly specialist contracts, or for extending the scope of an existing
contract. Costs are reduced and allows early contractor involvement. Since the contractor is part of the project team at a very stage of the
project, this results in better communication and information flow.

Advantages Disadvantages
• Only reputable contractor are invited for negotiation. • The cost work is likely higher than competitive tender.
• The Contractor can contribute his expertise during design stage. • Reduces the availability of work for other contractors.
• Reduces risk of failure. • Should the negotiations be deadlock or prove eventually
unsuccessful, this causes wastage of valuable resources on both
sides and loss of time for the employer, thereby delaying the
overall selection of suitable contractor.

Two Stage Tenders : Two-stage tendering is used to allow early appointment of a supplier, prior to the completion of all the information required
to enable them to offer a fixed price. In the first stage, a limited appointment is agreed to allow work to begin and in the second stage a fixed
price is negotiated for the contract. With proper preparation and understanding, any business can master its bid management and tender
evaluation approach. Once the project has been evaluated to be a good opportunity for the business, there are various factors one should
consider before entering the tender process

1. Project Requirements - Reading thoroughly and analysing the bid documents in depth and taking time to fully understand the scope of the
project and the services required.

2. Project Costings - Calculating the cost of the project. How much will it cost for the business to fulfil the contract and then decide whether
the profit margin, upon successful completion, justifies being involved in the tender.

3. Manpower Capabilities - Does the business have the capacity available to take on this project and the manpower to effectively manage it?
Would the business need to recruit more manpower to facilitate the project?
TYPES OF TENDERS

4. Fit of Business Capabilities - Does the business have the expertise, qualifications and necessary accreditations (if required) that are being
specified by the buyer?

5. Bid Management Team - They should be equipped with the skillsets and knowledge to write a successful tender. A successful tender can
mean a strong contender in the tendering process.

Advantages Disadvantages
• Benefit of the contractor’s expertise in buildability, specialist • Its application requires a high level of familiarity and commitment
knowledge in proprietry systems, project scheduling, etc resulting on the part of employers and contractors.
in value for money. • Owing to a relatively smaller element of competition, but on the
• Savings of time due to the overlap of the design and tendering other hand higher negotiations content, the tender process is
stage. relatively more expensive and longer than other common
• The procedure utilizes the best aspects of both competition and procedures.
negotiation to arrive at the most favourable arrangement at an • This procedures requires a high level of commitment, integrity and
optimum firm price before work commences. good faith on the part of both sides which sadly is usually lacking,
hence the apparent failures encountered to date.
TENDER NOTICE

• A tender is essentially an official letter that the organizations have to send for the
procurement of the goods and services required on a large scale.

•  For the execution of projects also tender notice is required.

•  Thus, the tenders are filled when an invitation is received for bidding.

• In this, the organizations fill out their quoted prices in exchange of goods and services which
are further subjected to stated conditions.

HOW TO WRITE A TENDER NOTICE

• A complete description of goods and services to be obtained.

• Conditions of tender, stipulating the terms and requirements to meet.

• An outline of the criteria used for evaluating submitted tenders

• Format on how a tender notice letter should be presented once submitted.

• Rules on the process of submitting the tender, such as the deadline, etc.

• The conditions of the contract.

 TENDER SCRUTINY

EMD COVERING LETTER ARITHMETICAL CHECK REBATE COMPARITIVE

• Check whether the • Read carefully • Some mathematical error • Some times contractor STATEMENT
amount is as per covering letter and might come ,so need to offers rebate at certain • Having completed
tender conditions. other enclosures. check all bill of quantities. percent. arithmetical check,
• If the EMD is in the • Cross check the • Some mistakes might be • Rebate offered is correcting totals and
form of cheque, contractors profile purposefully done by without any condition it applying rebate etc, a
deposit immediately. company. contractor to reduce the total can be accepted . statement should be written
• In case of cheque is • Contractor should not amount of tender offer. with the name of contractor
dishonored by bank, suggest any • After the tenders are and their corrected total
contractor will be conditions. opened ,contractor will not be tender offer.
terminated in future • Conditional tender allowed to enter the missing • All should be written in the
also. should not be item rate. ascending order list.
considered and should • Missed item will be carried • Lowest offer in the first
be rejected . out at free of cost to the place and highest offer in
owner . the last place .
• First 3-4 will be considered
and studies further of short
listing tenders.
EARNEST MONEY DEPOSIT

Amount of money that is deposited along with the quotation.

• Earnest Money deposit is the amount a buyer pays to show that

his interest in a said property is genuine.

• The Earnest Money deposit is also known as a binder, token

money or good-faith deposit.

• Earnest money is assurance or guarantee in the form of cash on

the part of the contractor to keep open the offer for consideration
and to confirm his intentions to take up the work accepted in his
favour for execution as per terms and conditions in the tender

• It will be held for one month from the date of receipt of the
tender.

• Amount will be refunded for unsuccessful contractors.

• Amount of selected contractor will be converted as a security

deposit.

• In any circumstances if the selected contractor was unable to

commence the work, EMD will be credited to owners account as
part of compensation.
SECURITY DEPOSIT

• A security deposit is money that is given to a landlord, lender, or seller of a home or apartment as proof of intent to move-in and care for the
domicile.

• Security deposits can be either be refundable or nonrefundable, depending on the terms of the transaction.

• A security deposit is intended as a measure of security for the recipient, and can also be used to pay for damages or lost property.

• Security deposits are paid before moving in or taking possession of the property and these deposits are typically the same amount as the monthly
rent.

• A security deposit might be used toward any repairs or replacement of appliances in a rental unit if the damages resulted from the actions of the
renter.

• However, in big projects the security is taken in the form of bank guarantees.

• The bank guarantee costs the contractor a small percentage, seldom exceeding two percent per annum of the amount guaranteed with small
margin money.

• The relevant clause should specify the time limit within which the payment has to be made and the mode of payment should be specified.

• Security deposits serve as an intangible measure of security, or as a means of tangible security in the event of damages or lost property.
PENALTY CLAUSES
• Owner shall reserve the right to impose cash penalty on the contractor and deduct such amount from his bills or Security Deposit in case
owner is put to any financial loss of any nature whatsoever, directly or indirectly by any of the contractor's personnel or by the contractor

MOBILIZATION

What is construction mobilization?

• Mobilization refers to the effort it takes to get a job off the ground.

• A lot of different activities might be considered mobilization.

• Sometimes mobilization might be purely administrative, other times they might relate to transportation, or they could refer to actual costs of
job site preparation.

What are construction mobilization costs?

• Construction mobilization costs are the costs required to get a job rolling before the progress payments start flowing.

• The problem often faced with mobilization costs is that these costs might not be explicitly reimbursable unless the contract expressly
accounted for these costs.

• Even if they are, the initial hit to cash flow for floating mobilization costs could spell trouble down the line.
MOBILIZATION

Types of mobilization costs

Administrative mobilization
• What we’ll call “administrative” mobilization costs are things that take time and money, but might not be tied directly to the actual
performance of work.
• These costs include things like licensing, obtaining payment bonds, and securing permits; which all have real costs and take up a lot of time.
• Even back office and project planning activities such as overhead costs, creating a project schedule, trade sequencing, and even
finalizing plans or having them reviewed – they all require time and funds, too.

Construction-related mobilization
• All of the activities described above relate to the construction industry, but there are mobilization activities that more closely relate to the actual
work that will be performed.
• Things like transportation, fuel, equipment rental, initial materials, tools – they aren’t free, and they don’t happen instantaneously.
• Also, some site prep activities, setting up site office trailers, etc. will take place before the first progress payment rolls in.

Remobilization
• Remobilization occurs when a construction business must undertake additional mobilization activities after initial mobilization has already
taken place.
• In a situation where a contractor or sub must return to the job for some reason (like poor scheduling), they might be undertaking additional
costs to pick up where they left off.
• In situations where remobilization costs are incurred, it might be possible to recover them.
• Of course, if a construction business must remobilize due to their own actions (or inaction) – like with defective work – those costs may not be
recoverable.
ISSUES ARISING OUT OF TENDERING PROCESS

The preliminary findings for the barriers, challenges and concerns of the tenderers are grouped in the following 4 categories:
●Security challenges
●User acceptance and staff resistance
●Legal barriers.
●Accessibility issues

Security challenges
●Document tampering i.e. when a person makes unauthorized and unfair modifications to the tender.
●Problems with data integrity after reassembly - possibility of inaccurate, incomplete, corrupted data after reassembly.
●Confidential documents getting leaked to competitors.

User Acceptance and Staff Resistance

●High investment costs to adopt and maintain E-Tendering with no substantial benefits realized.
●Unethical investors and corrupted officials will fight to continue with the traditional paper-based tendering which is full of leaks.
●Reluctance/Resistance to change i.e. general attitude that old ways of doing things have worked well throughout the years and changes are
unnecessary.
●E-tendering is an additional workload without compensation/reward.
ISSUES ARISING OUT OF TENDERING PROCESS

Legal Barriers
●These tenders are complex, time consuming and have an onerous regulatory procedures.
●Problems with proof of intent of the tenderer.

Accessibility Issues

●Fear of using non-compatible software with the client/consultant system hence tender submission could get rejected "noncompliance".
●Irregular electric power supply will affect the E-Tender processes especially the tender submission.
●A fear that a technical malfunctioning of the portal could cause disturbance to the electronic submission of the tenders.
●Poor telecommunications infrastructure will affect the E-Tendering processes.
●E-Tendering requires-high speed internet services.
QUESTIONS FOR MODULE - 03

1. What are the objectives of tendering ? (QP - 2019 ) 8 marks

2. Explain the following : Earnest Money deposit , Penalty Clause , Mobilization Costs (QP - 2019) 12 marks

• What are the different methods of inviting tenders ? (QP - 2018) 20 marks

• Describe the essential characteristics of Tender Notice. (QP - 2018) 10 marks

• Write short notes on :

1. Process of selection of tender and award of contract.
2. Architect's role in Tender process. (QP - 2018) 10 marks
THANK YOU

GROUP B1_UNIT - 2
HARISH BASKARAN
HRUTHVIK K
P SAI RAVATH
SIDDHANTH DEEPAK KALSUR
PALLAVI SHANKAR