Construction Tender Process

Tender steps between Client, Contractor and Subcontractor

Dr A Kimmance

Planning and Design Stages in the Construction Process – Contractor

Contractor

PlanningPhase

Contractor

DesignPhase

Construction

Projects

Tendering

Bidding Phase

Start-UpMobilizati

on

LessonsLearned

Hand Over

Closure

Each stage has a systematic set of interfaced proceedings, events, activities and processes.

Clients Tender Invite – ProcessInstruction/Invitation to Tender sent to contractor (need to identify which tender approach as they are different) Contractor receives the request for bids (open or selective)Tender Assessment by Contractor (strategic board review, dependant on size of project and tender type) De-briefing of tenderers (scrutinise)Client issue Letter of Intent (may be optional, depending on tender type, selective or open)Award Construction ContractProject, Goods and/or Services delivered (depending on contract to be used; (lump sum, cost reimbursement, etc)Project Payment and statutory document realized Project Closure

Invites contractors (open or select contractor) to submit the price for which they are willing to carry out a project (e.g., business, technical, economical, management)

Typically depends on type of competitive, open or selective tender; contractor relies on level of information contained in tender, pre-lim drawings, specifications , bills of quantities prepared on behalf of the client (e.g., architects, consultants).

Tender type (dictates the level of design, cost and construction) Open (anyone, may include 2 stage pre-

qualification ) Selective (usually have worked with the client)

One or two stages, closed (combination)

Client Tender - Invite Contractor

Client advertises openly in press or trade publications inviting contractors to apply for the project Contractor that is able to under take the project would request a tender document (depending of type of tender)After receiving the tender (open or selective) from the client (e.g., clients architect, design team, procurement department), contractor may need to give deposit to ensure a bona fide tender. Filter out the contractors who are not interested in submitting a tender.Open tender is sent to contractor, treated as offer to do work for assured sum of money, generally preceded by a prequalification document and statement of works, lists, requests, etc.

Clients Process - Approach

1) Introduction to Tender (purpose reviewed at board level to attain decision)

2) Project background (scope , location, size), quantity Survey3) Legal issues (type of contract), Tender scrutiny 4) Maintaining issues (acceptance criteria)5) Contractor / Supplier response required (contract period;

topically 90 days)6) Timetable for choosing contractor / supplier (program,

planning & scheduling)7) Requirements (standards, specifications, IT, resources)8) Preliminary Designs (basic schematics for taking off)9) Bill of Quantities (high level quantities and measurements) 10)Miscellaneous: Other Issues (risk, quality H&S,

performance, control, etc)

Typical Tender Process - Contractor

It is assumed that the contractor possesses the in-house capacity to carry out for example; all designs, bills of quantities, topological, geographical and site surveys , sewerage and drainage (utilities).

The contracting company possesses the equipment necessary to carry out basic tasks with its own specialized equipment such as haulage, cranes, JCB’s and scaffolding.

Making Assumptions

Contractors Process – High-Level

Typically starts with contractor reviewing / planning tender (systematic scrutiny of tender documents)Typically involves site survey to establish project scope, type, location, geotecs, cost estimate and quantity take offsPlanning Tender & Building Site Survey (contractor)

Bill of Quantity:materials, resources (technical abilities)Equipment (plant – tools)Labour

Construction Tender - Road Example

Contractor / trade contractor collects information needed to work out the tender bid, and then complete the bid. Completion of the bid takes place primarily by filling in bid schedules and drawing up a covering letter to the client.  Information in the covering letter should included:

The basis for tender bid Invitation to tender Minutes from clarification meetings Cancellation letters related to tender documents Relevant legislation

Assumptions constituting the basis for the tender bid 

Reservations – if any and Submit

Relationship Between PartiesConstruction Procurement

Strategy

Contractual

AgreementBidding Strategy

Client

Construction Road Sector

Supply Side

Demand Side

Market Mechanism

Contractor Tender Documents

Contract Forms and Tender StagesLegislation (legal department)

Governmental order typically on Fixed Price and Time or target cost and CE

Clients Act (government) on Tender Procedures

UK / KSA / ASCE Directives Governmental order on Quality Assurance

Insurances All risks Contractor’s insurance

Building site insurance (CDM & commercial)

Contractor Tender Documents

Building project specifications Deviations from standard contract terms. Are reservations accepted?

Time schedule (planning) In compliance with Contract Codes Realistic & Achievable

Bid schedules Realistic quantities

Is the tender deadline realistic? Is the bid acceptance period acceptable? Are contract conditions acceptable? Sufficient geotechnical analysis?   Tender selection criteria: Lowest price or competition on

quality?