Tenders contract -arti

 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 news papers,
notice boards etc. according to the cost of works.
OR
 It is an offer in writing to execute some specified works
or to supply some specified works or to supply some
specified articles subject to certain terms and conditions
like rates, time limit etc. between the contractor and the
department or owner party.

1. Open tender–It is invitation of tenders by
open advertisement through the Indian Trade
Journal or through the principal newspapers
in India or Abroad up to 10000/- or over.
2. Limited tender—This is direct invitation only
to a selected no. of contractors to quote rates
for supply of articles. This is ordinarily
adopted in the case of all orders the
estimated value of which is less than
Rs.10,000.

4. Single tender—Invitation is given to only one
firm to render a service by quoting their rates.
If the quoted rates are high, it will be negotiated
to the agreement of the contract.
5. Rate contract—usually adopted for supply of
materials, machine, tools & plant, etc. (items to
the store). It specifies the supply at a fixed rate
during the period of contract. The quantities
are not mentioned in type of contract and the
contractor is bound to accept any order which
would be placed before him.
Classification of tenders

 It is part of tender document. Tender form is printed standard form
of contract giving standard conditions of contract, general rules and
directions for guidance of contract.
 There is also a memorandum for giving
1)General description of work
2)Estimated cost
3)Earnest money
4)Security deposit
5)Time limit in months /years
6)Column for signature of contract before submission of tender,
signature of witness to contractor’s signature and signature of the
officer by whom accepted.
 The price of the tender form is given on the form. This printed form
and other documents are to be purchased on cash payment from the
office inviting tender during office hrs on all working days.

Various condition & terms of contract which are to be
formulated while inviting tender for a civil engineering work
are:
 The Notice Inviting Tenders (N.I.T) is a standard approved
form of a department
 Tender form with standard conditions of contract (printed
form)
 Schedule of quantities of work to be done and materials, tools
and plants to be supplied by the department if any
 Special terms and conditions
 Complete specification of work to be executed

 One set of approved drawings where necessary
 All the documents are signed by the contractor page by page,
forwarding letter head of a contractor with bank draft (or other
form of earnest money) are put in closed cover.
 Then the cover is closed and dropped in the tender box within
the time limit for tender.
 The name of the work and the name of the contractor are
mentioned on the cover.
Tender Documents

Tender for work or supply are invited by issuing tender notice in
prescribed form. Following particulars are given in the tender
notice
1. Name of the authorities(deptt.) inviting tender Exa: Govt. of Tamil Nadu
Water Resources Organisation Public Works Department (PWD),
1. Name of work and its location
2. Estimated cost
3. Last date and time of receipt of tender
4. Period of availability of tender document or validity of tender
5. Cost of tender document
6. Time of completion and type of contract
7. Earnest Money Deposit to be paid & security deposit
9. Date, time and place of opening the tender
10. Designation of the officer opening the tender

1. The notice inviting tender in specified form like PWD 6
2. Layout plan, location of work
3. Division in which location is situated
4. Schedule of quantities of work
5. Nearest road/railway link
6. Set of drawings including working drawings
7. Availability of materials in the vicinity
8. Detailed specifications or reference to standard specifications
for each item of work

10. Complete architectural and structural drawings
11. Schedule of tools & plant and other facilities to be made
available by the owner, indicating the conditions, hire
charges and place of delivery
12. Rate of supply of power and the point of supply
13. Location of water supply point
14. Time for completion and the progress to be made at intervals
of time
15. Conditions regarding employment of technical personnel
16. Weather conditions in the area
17. Amount of EMD and the form in which it is to be paid
Information to be given in a tender
document

18. Insistence on Income tax and sales tax clearance certificate
19. Amount of Security deposit to be paid/ deducted from
running bills of contractors should be notified in the tender
call notice
20. Mode of payment for work done
21. Penalty conditions for slow progress and delay in the
completion of work
22. Designation of arbitration (technique for the resolution of
disputes outside the courts)authority in case of disputes
Information to be given in a tender
document:-

 It is a 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 intention to take up the work accepted in his
favour for execution as per terms and conditions in the tender
 It is the amount of money to be deposited along with the
tender document to the department by the contractors quoting
a tender. In case of refusal, this amount is forfeited.
 EMD of contractors whose tenders are not accepted will be
refunded.
 1% - 2% of the estimated cost of work is the Earnest Money
Deposit (EMD).

 Restriction on unnecessary competition: contractor with low
sound financial position may also submit tender with low price
which may late lead to great difficulties in completion of
work. Thus provision of EMD will restrict competition among
sound financial contractors who are capable of completing
work.
 Punishment: Contractors with no intension of work may
quote low rates. They may be punished by forfeiting EMD.
 Compensation: In case if lowest contractor refuses to do
work it may be allotted to second lowest contractor and EMD
will be forfeited from first lowest contractor

 Security deposit is the amount of money which is deposited
by the contractor to the owner before awarding a work, whose
tender has been accepted in order to render himself liable to
the department to pay compensation amounting to the part or
whole of his security deposit if the work is not carried
according to specifications.
 This amounts is generally 5% to 10% of estimated cost of the
project and is inclusive of the EMD already deposited by the
contractor along with the tender.
 This will be refunded after the completion of the project.
 No interest is paid on SD.

The contractor has to fulfill all the terms and conditions laid
down in the contract and maintain quality and speed
satisfactorily. If he fails to do so, a part or whole of the SD is
forfeited by the department.
If there is any fault in the construction and the contractor
refuses to demolish and reconstruct then the department will
carry out that work using the SD.
SECURITY DEPOSIT

 Deposit for loans: It serves as security against the materials or
the plants and machinery supplied by the department to the
contractor as a loan.
 Punishment: on incomplete work in time, use of inferior
quality of material, leaving work incomplete SD if forfeited as
punishment.
 SD is refunded after successful completion of work with in
specified time. It is refunded after the first maintenance is done
which is six months.
Following are the main reasons for security deposit:

Registration of contractors:-
 The contractor must get himself registered in the departments (
or Government - govt. Contractor) for which he is interested to
take up works.
 Government contractors are entitled to do govt. jobs if
awarded.
Contractors are classified according to the registration and
registration fees and depending on this they can undertake
works up to certain amount.
 To get a contractor to be registered under certain class, he has
to apply to the competent authority.

1. Current income tax certificate
2. Work certificates for all the works performed
during the last three years and those in progress
3. Solvency certificate (proof that the person's assets are
more than his liabilities) for an appropriate amount
4. Attested copy of deed of partnership and power
of attorney on stamp paper if needed
5. Undertaking for employment of the Class I & II
staff
6. Application in duplicate with all documents
7. Attested photos of all the partners if any

 All the tenders should be sealed and submitted to the
respective officer, before the time and date as
mentioned in the tender note.
 At the described date, time and place all the received
tenders will be opened in the presence of intending
tenderers or their authorised agents.
 The rates quoted by the various tenders shall be read
out by the officer.

Following points should be observed while opening the tenders:
1.The tender should be opened in public at ….on …..in the office of the
…..and rates will read out in presence of the owner or committee
members and tenderers or their respective representative as are
present.
2. If the owner is not present, the architect along with one assistant
should open the tender. The architect shall scrutinize the same,
prepare the comparative statements and forward them to his client,
with his recommendation as to whom the work should be awarded and
why.
3. A record must be kept for the list of tenderers and the money
deposited by them. The earnest money should preferably be accepted
in the form of bank draft.
4. The lowest tender should be accepted after close investigating the
reputation and standing of that contractor.
6. It is essential to ensure that they have been thoroughly checked
and are without any mistakes.

 List of all tenders received along with the details of
EM received should be prepared.
 It should be checked that every tender should be
duly signed by the contractor.
 The address of contractor should be clear and
complete.
 Verification of contractor conditions should be
done.
 Rates should be mentioned in both figures and
words, both should be same, if there is any
difference lowest should be accepted.

 Calculations done by contractor and the total
cost of the work should be carefully checked.
 After tender have been opened, a comparative
statement is prepared in presence of the
tender opening authority and got signed by
them.
 Then compare the rates of various tenders in
respect of each item rate against the estimated
rate.
Scrutiny of tender cont.…

 Based on the comparative statement, usually the
lowest tender is accepted, while accepting the tender,
the tender accepting authority shall satisfy the
following regarding the tenderers.
1) the financial status of each tenderer.
2) capacity to do the work
3) past record as contractor such as experience,
procurement of labourer etc.

 For valid reason, a tender other than the lowest can be
accepted . The fact is to be recorded with full reasons. A
report on this to be submitted to the next higher authority. A
suitable reason is also mentioned in the comparative
statement. The tender accepting authority himself has to sign
the comparative statement and record his remarks.
 Two tenders have quoted the same lowest rates
 When all the tenderers have quoted abnormally high rates
 Sometimes only one tenderer may respond to the tender call
 Chief engineer(FP),Superintending engineering(FP),
Executive engineer up up to 5,00,000/-, District engineer up
to 50,000/-, Assistant engineer up to 20,000/-
Acceptance of tender

A. General conditions:
1. Regarding drawings
2. Reg IS specifications
3. Reg Bill of quantities and schedule of prices
4. Reg notice and arbitration(form of alternative dispute resolution)
B. Labour and personnel conditions
1. Regarding accidents to workmen at sight.
2. Reg presence of contractor representative at the sight supervision
of work
3. Reg removal of employees from the contract
4. Reg rate of wages of the labour
5. Reg labour amenities

C. Execution of work conditions
1. Reg defects in work and its removal
2. Reg quality of materials and workmanship
3. Reg additions, alterations, omissions during progress of
work
4. Reg damages to the work, to the dept, to the contractor
5. Reg precautions during blasting, showing , undepinning etc.
6. Reg doing of work on holidays and night etc
D. Measurement and payment conditions
1. Reg measurement of completion of work
2. Reg mode of payment
3. Reg extension of time limit of the contract

4. Reg non-completion of work in time
5. Reg bankruptcy ( is a legal status of a person or other entity that cannot
repay the debts it owes to creditors)of the contractor.
6. Reg right of owner to suspend work
7. Reg getting the work done by another contractor in case of
failure of the contractor etc.
F. General Obligations of contractor, conditions
1. Reg Act, Bye-Laws and regulations
2. Reg fencing, watching and lighting the sight
3. Reg insurance of workers, works etc
4. Reg access to work

G. Special Conditions
1. Reg use of special tools and plant
2. Reg use of intoxicants
3. Reg pollution of natural water courses
4. Reg names of approved suppliers of materials
5. Reg royalties(sum paid by one party to the owner
for on use of as asset), taxes etc

Contract may be terminated in the following conditions
 Completion of work: When work is completed according to
contract agreement and the owner is satisfied
 By Agreement: During unavoidable conditions like expiry of
contractor or owner if there is nobody to further complete the
contract, payment is made till that day to the legal successor
and the remaining work will carried by another contractor or a
fresh agreement is made
 By breach (an act of breaking or failing to observe a law,
agreement, ) of conditions: If any of the party do not follow
the conditions of contract then the other party has the rights to
terminate the contract. And the sufferer can claim for damage
in court of law or arbitration.

 Impossibility to complete the work: In case of land not
belonging to so called owner, land acquired by government for
other purpose, flooded in water. Damage done to the
contractor shall be paid by owner himself.
 By bankrupt (declared in law as unable to pay their debts): If
either party becomes bankrupt and cannot complete the
contract.

 "An agreement enforceable by law is a contract.”
OR
 For a CONTRACT to be valid, there must be an offer
from the owner in the form of tender notice to get
some specified work to be executed and there must
be an acceptance from the contractor to execute the
work, both the offer and the acceptance must be
definite and legal.

 When the tender of a contractor is
accepted, an agreement between the
contractor and the owner takes place and
the documents defining the rights and
obligations of he owner and the contractor
are attached to the agreement bond and
this is called a contract document.
 Each page of the contract document bears
the signature of the contractor and the
accepting authority and any correction in
it is initialed.

1. Title page – name of work, name of owner, name of
contractor, contract agreement no., estimated amount put to
tender, etc.
2. Index page – contents of the agreement with page
references
3. Tender notice – brief description of work, estimated cost of
work, date and time of receiving tender, amount of EMD
and security deposit, time of completion, etc.
4. Letter acceptance of tender & written order to
commence work: In order to avoid complication, it is
imp.to mention date of acceptance of tender & date of
written order to commence work but date on which the
agreement is finalized shall not be considered at all.

5. Any letter given by contractor with the tender
6. Tender form – general description of work, the bill of
quantities, estimated cost, contractor's rate, time of
completion, amount of security deposit, columns for
signature of contractor and witness to contractor's
signature and officer by whom accepted, etc.
7. Schedule of issue of materials – list of materials to be
issued by the owner/department to the contractor with the
rates and place of issue.
8. Drawings – complete set of drawings including plan,
elevation, sections, detailed drawings, etc.
Specifications – (a) General Specifications which specify
the class and type of work, quality of materials, etc. (b)
Detailed specifications – detailed description of each item
of work including material and method to be used along
with the quality of workmanship required.

a) Rates of each item of work inclusive of materials, labour, transport,
plant/equipment and other arrangements required for completion of work
b) Amount and form of earnest money and security deposit
c) Mode of payment to contractor including running payment, final
payment and refund of security money, etc.
d) Time of completion of work
e) Extension of time for completion of work
f) Engagement of sub contractor and other agencies at contractor’s cost and
risk
g) Penalty for poor quality and unsatisfactory work progress
h) Termination of contract
i) Arbitration for settlement of disputes
j) Work on Sunday
k) Supervision by higher authority
l) Alteration of designs and specifications etc.
9.Conditions of contract

10. Special conditions – depending upon the nature of work
taxes and royalties included in the rates, labour camp, labour
amenities, compensation to labour in case of accidents, etc.
11. Labour regulations and safety code must be followed .

1. Lump-sum contract
2. Cost plus percentage contract
3. Cost plus a fixed fee contract
4. Percentage rate contract
5. Item rate contract
6. Turn-key contract
7. Cost plus sliding scale of fees
8. Negotiated contracts

 Contractor undertakes work on item rate
basis
 Payment is done on the basis of quantities
of items done and their respective rates
 Quantities are calculated by detailed
measurements and shown in tender form.
Also called as unit price contract
 Total cost is arrived by summing up of each
items rate.

 As the contractor gets payment against the
actual quantities of item done by him the
methods economical because no excess
payment can be made
 As rates are item wise, contractor is not
worried about the uncertainty in the plan
and specification
 Work can be started after accepting the
tender without waiting for the detailed
drawings and specifications

Owner shall be interested in getting the works of such items
whose rates are lower but contractor will be interested in
works with higher prices.
There may be difficulty in classifying the work such as
ordinary sol, soil mixed with kankar or loose rock because
contractor will charge according to the classification whose
price is higher.
It becomes difficult to calculate to exactly the final cost of
construction resulting in difficulty for arrangement of funds.
Work is started before getting the final drawings and
specifications which result in demolishing of some work
which increases the construction cost.

 In this system the contractors are required to quote
single percentage either higher or lower at which he
wants to execute the job.
 Here scrutiny of the tenders become easier and as
cement and steel is usually supplied by the
department, chances of manipulation is less.
 This is the most commonly adopted system of
contract in the different departments of our state.

 Owner knows the cost before hand.
 Detailed measurement of work is not
recorded unless there is some addition and
alteration.
 Complete picture of work from detailed
drawings and total cost is known before
hand, excellent planning efficient
management of work can be done.
 Contractor tries to complete work quickly for
the sake of payment.

 In this it is essential that the work should be checked
accurately and completely shown on the drawings in
the specifications and the full information about the
site condition should be available other wise it will
leads to disputes.
 Contractor is free to use the lowest cost of material
equipment, methods.
 Difficulty arises in making any intermediate payment.
 There is uncertainty about the quality ,smooth
progress, and completion of work

 In this type actual cost plus an agreed percentage in
addition is added to allow profit
 This type is adopted when conditions like rates of
labor and materials are liable to fluctuate
 Bill of quantities has to be framed but owner should
carefully define the cost and record exactly what is
permissible in the cost of work

Advantages
 Suitable for urgent works
 It is suitable when work can not be executed by other type of
contract & if rates of labour and materials are fluctuating.
Disadvantages
 Close supervision and checking of delivery notes and invoice are
required .
 This is unsuitable where the necessary staff is not available.
 It is contractors advantage to make cost high by wasting material,
employing inefficient workmen, as he takes little risk and his profit
is assured.

 In this system a fixed fee is given as contractor’s
profit irrespective of the total cost of work.
 This is to control the tendency of the contractor to
increase the cost of the project unnecessarily as in
Cost plus % rate.
 Smaller the completion time more is the profit and
hence the contractors hurry to complete the work and
the quality of workmanship is not maintained.
 This system is not generally used.

Advantage
 Since fixed fee covers all the overhead charges and
profit. contractor tries to complete the work speedily
to earn fee.
Disadvantage
• Contractor shall try to complete work quickly by
purchasing material with high rate and engage labor
at high cost due to which owner will be in loss.

 In this type of contract the contractor is paid by the owner
the actual cost of construction plus an amount of fee
inversely variable according to the increase or decrease of
the estimated cost agreed first by both parties. thus the
higher the actual cost, lower will be the value of fee and
vice versa.
 Advantages: In this case the contractor shall not try to
increase the actual cost. The actual cost is lower and
lower, so both the owner and the contractor will be
benefited.
 Disadvantages: estimated cost should be accurate. Other
wise the contractor get more profit if the actual cost is
much higher than the estimated cost.

 When the work is awarded on contract by
mutual negotiation between the parties with
out call of tenders, it is said to be negotiated
contract.
 In PWD, the contract are negotiated on special
conditions like to obtain reasonable rates
and also helpful in case of emergency.
 Basic advantage by this system is that it
brings economy in expenditure, parties will
be reliable and less chance of disputes

 It sometimes happens that the owner contemplating a
construction project desires to deal with only one party for all
services, both engineering and constructions, in connection
with the work. This is so called “turn-key or package job”
 A turnkey contract is a business arrangement in which a
project is delivered in a completed state. Rather than
contracting with an owner to develop a project in stages, the
developer is hired to finish the entire project without owner
input.
 In effect, the developer is finishing the project and “turning the
key” over to the new owner. Once the project is completed it is
handed over to the owner.
 The owner has to complete the transaction works and occupy
the structure by simply turning the key, ie. opening the door.

 In a turnkey contract, the owner is generally left out
of the building process entirely,as the developer
handles all decisions and problems related to
construction.
 A contract of this kind may also be used in the
residential home building industry
 With a turnkey agreement, a builder or developer
completes both the construction and the finishes in
the home before turning it over to the homeowner.
 The homeowner is often offered a chance to select
finishes, including curtains, paint colours and
carpeting.

 A turnkey contract also provides more time for an
owner to seek financing and investors before he is
required to pay for a completed project
 builder will construct a retail establishment for an
owner, and the builder will receive a percentage of
the gross receipts for a specific period of time.
 construction decisions are based on the long-term
needs of the project, rather than just the short-term
decisions needed to get the job done.

• Transparent' procurement method in which
bids from competing contractors, suppliers,
or vendors are invited by openly advertising
the scope, specifications, and terms and
conditions of the proposed contract as well as
the criteria by which the bids will be
evaluated.
• Competitive bidding aims at obtaining goods
and services at the lowest prices by
stimulating competition, and by preventing
favouritism.

• ensures transparency in the selection and award of
project
• results in competitive costs/pricing (setting the price
of a product or service based on what the competition
is charging)
• provides a market mechanism for selecting the best
proposal
• stimulates interest among a broader range of
investors

• The project is fairly standard
• The technical parameters can be defined with
reasonable certainty in the bidding documents
• limited scope for innovation and creativity on the part
of an operator

Local Competitive Bidding is one of several forms of
procurement made with World Bank financing. LCB is
generally used for contracts involving:
(a) labour intensive activities;
(b) small value;
(c) locally procurable services or goods priced below
the world market;
(d) intermittent work; or
(e) activities to be performed at numerous sites

 Global bidding has one of the largest database of
international and national tenders / competitive bids,
procurement news, project information from all over the
world.
 A specialized system for global recruitment, bidding, and
assignments, to build a pool of qualified staff, ready to serve
in long-term positions overseas.
 Global Tenders is a premier opportunity platform that
provides Global Tender Notices/International Competitive
Bids/Trade Leads, procurement news, project information
from all over the world. An international marketplace designed
to help small to large-sized companies do business both
domestically and globally.

Tenders contract -arti

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