LECTURE 2:

TENDER PROCESS
AND
DOCUMENTATION

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WHAT IS TENDER?

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 Tender is an offer which incorporates
the sum of money, time and other
conditions required to carry out the
contract obligations in order to complete
a project or a part of it consisting of
specified works.

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 WHAT IS
TENDERING ?

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 Stages of a project
 Stage 1: inception & feasibility – identifying
project objectives / set up project brief

 Stage 2: design – develop further project brief /

develop concept & schematic design / Undertake
detailed design & detailing / prepare cost plan &
budget

 Stage 3: tendering – issue tender documents /

prepare & submit tender / evaluation of tender /
award tenders / prepare contract documents

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 Stages of a project

 Stage 4: construction – site possession &

mobilization / undertake procurement fabrication,
installation, construction / carry out contract
admin
 Stage 5: handover & maintenance –
undertake all testing, commissioning & training /
obtain CF / handover project to owner /carry out
necessary maintenance / Defect rectification / etc

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 Tendering
Will be started after the design complete and
project budget must be approved
The process that is used to obtain offers
leading to a contract between:

client contractor

client consultant
main contractor sub-contractor

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Purpose of tendering process

 To select a suitable contractor at a

time appropriate to the situation of
the project.

 To obtain from the contractor

selected at the proper time, an
acceptable tender or offer upon which
a contract can be let.

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Difference between a contract and
a tender

 A tender formally means an invitation

to trade under the terms of offer.

 A contract is the term used for when

the parties have reached agreement.

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 General
TENDERING
PROCESS

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Tendering process –
PRINCIPAL ACTIVITIES

1. Selection of the most preferable or

appropriate contract procurement
method.
2. Development of tender list
3. Preparation of tender documentation
4. Invitation / calling off tender
5. Preparation and submission of
tenders

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Tendering process –
PRINCIPAL ACTIVITIES (cont’d)

6. Receipt and opening of tenders

7. Evaluation of tenders
8. Acceptance of tender award or award
of contract

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Stage 1: Selection of the most preferable or
appropriate contract procurement
method.

 Traditional contract procurement

route
 Longer time – lead to critical work
scheduling
 Less errors – more precise
 Fast-track contract procurement
route
 Shorter time
 Consequences – may be lead to critical
error, variation.
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Stage 2: Development of tender list

 Potential tenderers can directly apply to

the employer for future works.
 Employer generate list based on previous
dealings
 The professional team generate their own
list and recommend to the employer.

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Stage 3: Preparation of tender
documentation – typical contents
 Letter of invitation
 Checklist for submission of tender
 Articles of agreement
 Conditions of contract
 Form of tender
 Tender specifications
 Bills of quantities
 Tender drawings
 Sample copy of letter of acceptance
 Sample copy of bang guarantee for performance
bond
 Schedule of day work rates
 Sample copy bank guarantee for advance payment
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 Tendering process

Stage 1: Stage 2: Stage 3:

PREPARATION APPROVAL TO DOCUMENTATION
TENDER

Stage 6: Stage 5: Stage 4:

AWARD PROCESSING INVITATION
CONTRACT

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Stage 1: Preparation

 Final completion of drawings,

specification, measurement / take-off
process.
 Choose conditions of contract.
 Parties involved: architect, engineers,
QS, client, project manager

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Stage 2: Approval to tender

 Discussion and decision on type of

tender to be used.
 Selection of tender:
 Open
 Selective Shortlist the selected contractor
 Negotiate
 Parties involved: CLIENT,
CONSULTANT, PROJECT MANAGER

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 Stage 3: Documentation
Contract based on quantities Contract based on tender & specs
 Compilation of:
 Compilation of:
 Letter of invitation to tenderers
 Letter of invitation to tenderers
 Articles of agreement / conditions
 Articles of agreement /
of contract
conditions of contract  Form of tender
 Form of tender  Form of tenderer’s details. i.e:
 Form of tenderer’s details. i.e: contractor’s registration,
contractor’s registration, organization background, track
organization background, track record (past and present projects)
record (past and present  Letter of acceptance
projects)  Bank and insurance guarantee
 Letter of acceptance forms (performance bond)
 Bank and insurance guarantee  Bank and insurance guarantee

forms (performance bond) forms (advance payments)

 Specifications
 Bank and insurance guarantee
 Summary of tender
forms (advance payments)
 Specifications  Schedule of rates
 Relevant drawings
 Bills of quantities
 Relevant drawings

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Stage 4: Invitation

 Based on selection of tendering

methods
 Open / competitive / bid tender –
produce tender notice
 Selective – shot listed contractors will
be invited to tender if they wish
 Negotiated – only one contractor is
approached- direct entry to project

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 TENDER NOTICE
OR NOTICE
INVITING TENDER

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 The Tender Notice is a brief
description of the job being tendered
which is to be published in Newspapers
and on the Internet.
 The Internet is a very cost effective
way of publishing the tenders.

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 Format of an ideal Tender
Notice
a. Name of the Project. i. Date on which the Tender
b. Name & Address of the Document sale commences.
Company floating the j. Date and time up to which
tender. tender documents can be
c. Name of work, materials obtained.
or services. k. The cost of tender
d. Place of work location. documents.
e. Approximate estimated l. The date and time up to
cost of work. which the tenders to be
f. Earnest Money. submitted and are to be
g. Period of completion. opened.
h. Date on which the Tender m. Specification.
Document sale commences. n. Eligibility Criterion.

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Stage 5: Processing
 Received tender submitted by contractor
 Tender assessment / evaluation
 Completed tenders are received
 Arithmetical check
 Reasonable tender sum
 Reasonable completion time
 Capabilities of tenderers under considerations
 Tender recommendation / report – tender
board

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 Guidelines to fulfill in the
Tender System
 The capacity, past credentials and financial
status of the tendered is thoroughly
investigated before awarding the contract.
These aspects should be commented in detail
along with the tender documents.
 The rates should be quoted in the numbers
and words without any corrections. To take
advantage of any possible increase in
statutory taxes & duties, the tax component
such as excise duty, Sales Tax, Works
Contract Tax, etc. should be clearly
indicated.

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 Tenderers should not quote many
special conditions as some of them may
have financial implications, did this can
be added to your quoted cost. Also it
creates confusion and creates room
for manipulative forces.
 The rates quoted for individual items
should be realistic and should not be
abnormal and unworkable.

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Stage 6: Award contract
 Pre-award meeting with contractors –
validation of lowest complying bid
 Validate lowest bid - Pre-contract meeting
with contractor for contract signing
 Approval by tender board / treasury (tender
exceeds RM10 mill.) – an acceptance of
tender form is issued to tenderer , signed by
the authorised officer

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TENDER PROCESS
FOR CONTRACTOR

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 Tendering process

Stage 1: Stage 2: Stage 3:

Decision to Determine Preparation of
tender basis of cost estimates
tender

Stage 6: Stage 5:
Stage 4:
Submissio Conversion
n of Commercial
of estimate
tender appreciation
to tender

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Stage 1: Decision to tender
 Receipt of tender documents
 Pre-tender data sheet
 Decision to tender
 Consider implications of:
 Bonds
 Warranties
 Parent company
 Guarantees
 Funding
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Stage 2: Determine basis of
tender
 Abstract materials and subcons
 Sent out enquiries
 Consider construction methods / prepare method
statement
 Design temporary works / consider alternatives
 Prepare outline programme
 Check major quantities
 Identify restrictions
 Visit site and compile site report
 Campaigning meeting (designating areas
responsibilities)

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Stage 3: Preparation of cost
estimate
 Calculate recurrent rates using:
 Operational
 Unit rates

 Man-hours estimating

 Analyse and check subcontractors’ quotations

 Price prelims / general items (in association
with members of the team
 Prepare summary sheets

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Stage 4: Commercial
appreciation
 Tender committee meeting part 1-
 Review:
 Method
 Programme
 Technical and commercial risks
 Cash flow and finance
 Use of own plant
 Competition
 Commercial opportunities
 Economic climate
 Check prelims against historical cost data
LOC1/AC2 33
Stage 5: Conversion of tender
estimate to tender bid

 Tender committee meeting – part 2

 Calculate ‘spread’ and add to estimate

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Stage 6: Submission of tender

 Submit in format required

 Organize delivery

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