Tender: It is an invitation from owner/client calling for a formal written offer to undertake/execute some specific work or provide services(

at a specified cost and in specified time with a set of requirements or specifications) from prospective tenderers in the specified tender form (RFP). Bid: A bid is a quoted tender either in the specified form of the employer or contractor. Bidding is an offer(often competitive) of setting a price for specific work or service to be provided. Tendering is the process by which bids are invited from interested contractors to carry out specific packages of construction work. Tendering should adopt and observe the key values of fairness, integrity, honesty, clarity, simplicity and accountability keeping in mind the value for money. Three Types of Tendering Methods used in Construction Industry: 1. Open Tendering ( Competitive) 2. Selective Tendering(Competitve) 3. Negotiated Tendering Competitve Tendeirng: Invites contractor to submit the lowest price for which they are willing to carry out a project. Relies on information contained in drawings, specs, and BOQ prepared on behalf of client.

Open Tendering: Allows any contractor to submit a tender to an advertised project Process: o Client advertises openly in the press/ trade publications inviting contractors to apply o Contractor that is able to undertake project would request for a tender document o After receiving the tender, the contractor may be required to give a deposit and to ensure a bona fide tender. This is done to filter out uninterested contractors. Advantages: o Maximum/high level of competition; contractors quote their best prices o Lowest price quote is obtained Disadvantages: o Large waste of efforts because too many contractors are tendering o Contractor submitting lowest tender may not be properly equipped to undertake the contract o Client may be inclined to accept lowest tender irrespective of reputation of contractor o Poor quality building or bankruptcy may occur

Selective Tendering: Consists of drawing up a list of chosen firms and asking them to tender. Contractors of known reputation are selected to submit a tender ; The cheapest among them is selected to deliver the project as all other factors will have been dealt with at the prequalification stage. Most common method of awarding a tender. Process: o Selection List: Advertisement may produce several interested contractors and suitable firms are selected Design team and consultants may prepare and contact a list of contractors who they wish to put Many local/national bodies keep approved list of contractors in certain categories. Other contractors interested to be involved need to provide info about finances and technical performance etc A design team selects a number of contractors ( around 6-7) that are already known to them and invite them to tender for the project o Contractors tenders are usually based on a completed design o Project is awarded to the contractor with the lowest tender. Advantages: As tenderers are known, selection of cheapest bid is not as high a risk as in an open tender Disadvantages: Limiting the number of tenderers may exclude new bidders who may offer more innovative ideas or solutions

Selective Tendering can be either : One Stage or Two Stage Selective Tendering Both involve invitation of tenders from firms on a pre-approved or ad hoc list (min. standards in general criteria such as financial standing, experience, capability and competence) The main difference between the two is that in the two stage process, the contractor becomes involved in the planning of the project at an earlier stage, so the tenders are submitted on the basis of minimal information, and in the second stage the employers team will develop the precise specifications in conjunction with the preferred tenderer. This method is favored in more complex projects, where the contractor may have significant design input.

Single Stage Selective Tendering: Invitation to Tender issued to prospective tenders, following a pre qualification criteria. Invitation to tender will include information describing work required in sufficient detail to enable prospective contractors to prepare an accurate tender. Tenders are prepared and returned by prospective contractors (Q&A, Mid tender interview, clarifications) Submitted tenders are then assessed and compared. The Preferred Tenderer is selected accordingly Advatanges: o Ensures that only capable and approved firms submit tenders o Tends to reduce the aggregate cost of tendering Disadvantages: o Cost level of the tenders received will be higher, owing to lesser competition and also due to the high caliber of the tenderers.

Two Stage Selective Tendering: It is used to allow early appointment of a contractor, prior to the completion of all the information required to enable them to offer a fixed price. Aim to speed up the procurement process by getting the employers team, architect and contractor to start the project ASAP. Also in a design and build project, two stage tendering is utilized. Process: o Contractor chosen through a form of selective competition with a simple BOQ. It will deal with tendering of Preliminary Items and Major items of measured work. o Stage 1 & Stage 2: Stage 1: A limited appointment is agreed following the contractor to begin work. The first stage appointment might be made on the basis of a bespoke agreement/consultancy agreement/pre construction services agreement. Generally Contractors tenders are based on a partially developed consultants design(Stage 1 Tender). Stage 2: A fixed price is negotiated for the contract.The 2nd stage negotiation is a mathematical exercise using the pricing criteria agreed in

the 1st stage. Inreality, however there will be items not previously considered around which negotiations will ensue. The contractor assists with the final development of design and tender documents, against which tenders for the construction works are prepared(Stage 2 Tender) The first stage tenderer has the opportunity to tender or negotiate the 2nd stage. o Specialist items used included as the Prime Cost Sum, upon which Contractors are given the opportunity to include sums for profit and attendance. o Client will also ask the contractor to state their overheads and profits. These prices will determine the price agreement that will be negotiated with the successful contractor. Advantages: o Allows contractor to have input into design and buildability and helps team building and avoidance of any future adversities. o Fast Tendering o Speed of Construction and quick negotiation of costs Disadvantages: o Architect and Contractor may not agree on design o Due to problems between above two, project completion time could suffer.

Negotiated Tendering: Usually used to employ contractors of a specialist nature, or to extend an existing contract, i.e. where a wing is added to a building after the building has been started Under this method normally one contractor is approached and such tender mainly used for specialist work (such as lift system or airport project at big level), in such case there are limited number of contractor who do such work in the market. It is based on one-to-one discussion with contractors to negotiated the terms of contract

SingleTendering/ Nominated Tendering: Special case of selective tendering( The short list contains only one name). This is used when the client has a preference for a particular firm, often because it has dfone satisfactory work for him before. Single/Nominated Tenders lead to high price as competition is eliminated, but the client thinks that it is worth paying more, however, in return for a quicker job of better quality. When a contractor is nominated, the contract sum will be arrived at by a process of negotiation. This may be done using BOQ/Schedules of rate(but instead of the contractor pricing the tender document on his own and submitting his tender to be accepted or rejected), the rates and prices are discussed and agreed until eventually a total price is arrived at which is acceptable to both sides. When agreement on a whole is reached, a contract will be entered into between the client and the contractor.

Serial Tendering: When large projects are to be carried out in successive phases, a combination of selective tendering and nomination is employed. This is called as serial tendering. In this method tenders are invited from a selected list on the basis of a typical (notional) bill of quantities. The contractor chosen normally submits the lowest price who undertakes to enter into a series of contracts to carry out the work using the rates in the notional bill of quantities. Method reduces the tender costs and normally results in contractors quoting low rates in order to obtain a guaranteed programme of work. The contractor is chosen for the first phase by means of selective competitive tendering. The accepted tender forms the basis of payment for the resulting contract in the normal way. The tender is also used for the second and later phases, provision being made for doing so in the initial contract by the inclusion of a formula for updating the prices. Alternatively the contract for the first phase may specify negotiation of new rates, based upon tendered prices, as the means for determining the payment for each successive phase is in series. Purpose of serial tendering is to gain benefits of continuity. The contractor for the first phase will have his site organization set up , his offices/storage units etc. in use, his plants and equipment on site. When second phase commences these facilities are already available, thus allowing a smooth transition with much less additional expense(that if a different contractor were employed) Also the contractors workforce will be familiar with the details of construction after building the first phase, and thus leads to increase in productivity, efficiency and speed of construction.

Tendering Process: Public Procurement procedure usually follows the following steps 1. Preparation of Bid Documents 2. Approval of Bid Documents by Competent Authority 3. Public Invitation for Pre-qualification (where relevant) 3.1. Issue of Instructions and Pre-qualification criteria 3.2. Pre-Application Meeting and Issue of Clarifications to Applicants 3.3. Receipt of PQ applications and scrutiny 3.4. Approval to PQ 4. Invitation for Bids 5. Issue of Bid documents to prospective bidders 6. Pre Bid Meeting and Issue of Minutes, Clarifications and Common Set of Deviations 7. Receipt of Bids 8. Scrutiny 9. Negotiations, where warranted 10. Acceptance of Bids

1. Project Definition & Scoping a. Consultation & Market testing to ensure that procurement strategy and contracting practices are conducive to securing an effective competitive response. b. Project definition and design, including initial drafting of bid specifications c. Determination of contract award criteria, weighting and quantity price ratio d. Appointment of assessment and selection panel e. Review of contractor/tenderer database, registration and pre-qualification information 2. Notification and Pre-Qualification a. Initial advertisement and tender notice, inviting expression of interest(EOI/RFI) Invitation to pre-qualify b. Issue and Submission of pre-qualification documents. c. Analysis of Prequalification documents. d. Selection I: filter EOIs and reduce list. e. Selection II: detailed assessment of prospective tenderers; Interviews f. Definition of Shortlist. 3. Tendering: Tender Invitation Phase a. Finalization of work specification; Preparation of Tender Documents. b. Issue of proposal invitations(RFT/RFQ) and tender documentation c. Decisions on evaluation approach 4. Tendering: Tender Clarification & Addenda Phase: a. Clarifications/Queries/Correspondence b. Site Visits and Briefings if needed. c. Addenda/Amendments of tender doc.(possibility) 5. Tendering: Tender Offer/Submission Phase a. Submission of Tenders b. Receipt of tenders c. Closing of Tender 6. Evaluation & Analysis a. Formal tender opening and checks for compliance b. Tender Evaluation and Scrutiny c. (Possibility for correspondence over clarifications) d. (Arrangement for presentations by lead contenders; Preparation of format and questions for presentations; Assessment of presentations) e. (negotiations if appropriate) f. Selection of most economically advantageous tender 7. Contract Award a. Notification to successful bidder(including any conditions to be discussed at a further contract negotiation stage) b. Notification to unsuccessful bidders( including placing a reserve or hold on the bidder ranked 2nd in case contract negotiations fails for the 1st one.) c. Mandatory Standstill period before entering into contract

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