Learning 

Objectives: 
At the end of this Chapter , students should be able to:
Explain the bidding procedures for engineering works and 
service contract
Mention the different types of tendering 
List the different types of service and works contract.
Understand the major components of contract document 1
 Standard Bidding Document
The significance of having standard bidding procedure, 
specially for  public funded projects is: 
 To simplify the drafting of a specific bidding document for 
Procurement of Works by procurement staff; 
 To minimise the time required by the Tender Committee to approve 
Bidding Documents prior to release;
 To reduce Bidders’ time and effort in the preparation of Bids; 
 To facilitate and simplify the evaluation and comparison of bids and 
Contract award by the Procuring Entity
To ensure this, for instance,  the Ethiopian 
government established an agency (PPA) that 
supervises procuring entities  and sets procedures of 
public procurement [proclamation no. 430/2005] 2
 Scope and Value of Contract
This SBD is suitable for a standard contract, where the works 
have been fully designed by or for the Procuring Entity 
(Employer), prior to bidding, and the Contractor will be 
responsible for construction only. 
It is suitable for works valued at up to US$10 million. 
This SBD for the Procurement of Works is not suitable for 
the following situations:
 Complex works under US$10 million, such as large water 
treatment plants;
 Works over US$10 million;
 Works designed by the Contractor, including turnkey 
contracts. 
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Types of tender
Things Bidders’ Geographical Procurement Procurement
Bases Procured Coverage Coverage Awareness Steps

Types Goods Competitive International General PN Single

Services Negotiated Regional Specific PN Two Staged
Works National Pre – Qualification
Local Post - Qualification

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 Bid Qualification Procedure

Competitive Bid Negotiative Bid

Financial Proposal

Short-Listed Bid Open Bid

Financial Pr.

One-Stage Procedure Two-Stage Procedure

Financial Proposal

Pre-Qualification Post Qualification

•Technical Proposal
•Financial Proposal
•Financial Proposal 5
•Technical Proposal
Types of Tender
Based of things to be procured tenders can be classified as:
 Consultancy/ Service
o “Services” means the consultancy services to be performed by the 
Supplier as described in the contract. E.g.  Design, Supervision, 
Contract administration
 Works
o The “Works” are what the Contract requires the Contractor to 
construct, install, and turn over to the Employer, as defined in the 
Special Conditions of Contract.
 Goods
o “Goods” means all of the commodities, raw materials, machinery and 
equipment, and/or other materials that the Supplier is required to 
supply to the Procuring Entity under the Contract.
6
 Bidding procedure for Service 
Contract

Selection of Bidders;
Preparation and Issue of RFP Documents; 
Bidding Period and Receipt of proposal; 
Proposal Opening;
Proposal Evaluation; and 
Bid Acceptance, Contract Award and Signing.

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 Selection of Bidder
Under the Request for Proposals method, the Procuring 
Entity will normally publish a notice seeking expressions of 
interest, so that all potential bidders have the opportunity to 
participate.
The notice must be published in a newspaper of wide 
international circulation or in a relevant trade publication or 
technical or professional journal of wide international 
circulation. 
The Procuring Entity will then evaluate the expressions of 
interest received and develop a shortlist of between three and 
seven bidders. 
The RFP document should be accompanied by a letter of 
invitation  8
Preparation and Issuing of RFP 
Documents
The Procuring Entity is responsible for the preparation and 
issue of the RFP
The Procuring Entity must use the standard RFP or other 
appropriate standard document issued by the Public 
Procurement Agency, as this is a mandatory requirement for 
contracts to be funded by the Government of the Federal 
Democratic Republic of Ethiopia.
In deciding the deadline for proposal submission the PE 
should allow Bidders sufficient time for obtaining and 
studying the RFP, preparing complete and responsive 
proposals and submitting the proposals. 

9
Bidding Period and Receipt of 
Proposals
The Bidder is responsible for proposal preparation and the 
submission of its proposal. During the bidding period, the 
Procuring Entity shall:
 Hold any pre bid meeting, if one is required, and issue minutes 
promptly;
 Promptly respond to requests for clarifications from Bidders;
 Issue amendments to the RFP if necessary;
 Receive and record sealed proposals from Bidders or make a Bid 
Box available up to the deadline for proposal submission;
 Close bidding at the precise date and time of the deadline and 
ensure that no late proposals are received;
 Keep all proposals received secure until the time for proposal 
opening.
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 Proposal Opening
The Tender Committee is responsible for the Proposal 
Opening, which is a critical event in the procurement 
process. 
 Conduct the Proposal Opening strictly following the 
procedures specified in the ITB Sub‐Clause 20 for all proposals 
received on or prior to the date and time of the proposal 
submission deadline. 
 Ensure that all proposals that were received on time are 
accounted for, before starting the Proposal Opening, as 
proposals that are not opened and read out at Proposal 
Opening shall not be further considered. 
 Ensure that only technical proposals are opened and that 
financial proposals are kept sealed and removed to a secure 
place after the opening.  11
 …Continued
Agree before the Proposal Opening on the details to be read 
out
Not reject any proposal at Proposal Opening, except for late 
proposals received after the date and time of proposal 
submission deadline.
Examine the proposals at Proposal Opening in accordance 
with the provisions of ITB Sub‐Clause 17 

12
 Proposal Evaluation 
For Consultancy services, proposal evaluation will be 
conducted in two stages and Tender Committee approval of 
the technical evaluation report must be obtained before 
opening financial proposals and conducting the financial 
evaluation.
The Tender Committee shall:
 Maintain the evaluation process strictly confidential
 Reject any attempts or pressures to distort the outcome of the 
evaluation, including fraud and corruption

13
 …Continued
 Strictly apply only and all of the evaluation criteria specified in 
the RFP to determine the proposals which proceed to the 
financial evaluation and subsequently to make a 
recommendation for award of contract to the Tender 
Committee.
For consultancy services, negotiations are often held with the 
recommended Bidder, to finalise all technical details, prior to 
placing the contract. 

14
 Bid Acceptance and Contract Award 
The following procedure is required for bid acceptance and 
award of the contract
 The head of the Procuring Entity makes a contract award 
decision.
 The Procuring Entity notifies all Bidders of the results of the 
evaluation.
 After a period of five working days, if no complaint has been 
received by the Procuring Entity, the PE awards the contract by 
either issuing a Letter of Acceptance to the successful bidder or 
signing a contract (which is often done following the successful 
conclusion of any negotiations). 
 Where a Letter of Acceptance is issued, the contract will be 
confirmed by issue of a full conformed Contract Document. 

15
 Summary of BP for Service Contract
Preparation of Terms of Reference (TOR)
Preparation of Cost Estimate
Advertize for expression of interest
Prepare short list
Prepare and issue Request for Proposal (RFP)
Evaluate Technical proposal
Notify Unsuccessful Bidder
Notify bidders (passing technical Requirements) about the 
date of financial opening
Open financial opening in public
Evaluate financial proposal
Negotiate price and sign contract 
16
 …continued
The TOR normally consist of 
 Background of the project; 

 Objectives of the Assignment; 

 Scope of work; 

 Transfer of knowledge; 

 List of reports, schedule of deliveries, period of 
performance; 
 Data, local services, personnel, and facilities to 
be provided by the borrower; and 
 Institutional arrangements. 
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Types of  Service Contracts based on method of evaluation of proposal
1. Competitive Selection Process Quality v Cost based (QCBS):
 Financial proposal and Technical proposal is evaluated(Sf = 100 x Fm/F
 Two envelope system used (S = (St x T%) + (Sf x P%)
 Financial proposal opened in public, Example 100,000.00 Birr project.
2. Competition on quality (QBS)
 Technical Evaluation Only
 Negotiations on Price
3. Selection under fixed budget (SFB)
 Technical and financial proposals in two separate envelopes
 Financial proposals to be within specified fixed budget
 Technical evaluation (quality) first
 Public opening of financial proposals
 Rejection of proposals exceeding fixed budget
 Highest rated technical proposal (within fixed budget) selected
4. Least Cost Selection (LCS)
 Financial Proposal will be ranked
 The lowest priced proposal will be recommended for contract award, subject18 to
satisfactory negotiations.
Types of  Service Contracts based on mode of payment
I. lump-sum
 planning and feasibility studies, environmental studies, Design etc.
 Contents, duration, and output clearly defined. payments linked to outputs
only.
II. Time-based
 Quality Control, supervision, Contract administration, technical assistance.
 payments linked to inputs, agreed staff rates and reimbursable items.
Example: AAHDPO
III. Percentage contracts
 The consultant will paid based on a percentage of the works being
executed (Cost plus %) or % of the project cost
IV. Indefinite delivery contracts
 specialized services “on call”

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 Bidding procedure for works
The relevant parts of the bidding process are summarised 
here as follows: 
 Selection of Bidders;
 Preparation and Issue of Bidding Documents; 
 Bidding Period and Bid Receipt; 
 Bid Opening;
 Bid Evaluation; and 
 Bid Acceptance, Contract Award and Signing.

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 Selection of Bidders
a. Open tendering without pre‐Qualification
 The PE must publish an Invitation to Bid notice, so that 
bidding is open to all interested bidders
 The notice must be published in at least one national 
newspaper of general circulation
 Where tendering is international, the notice must also be 
published, in a newspaper using the same language as the 
notice and of sufficient circulation to attract foreign 
competition
 Notices should also be published on the internet, wherever 
possible. 
 PEs should also ensure that bidding documents are finalised 
and approved before publishing the Invitation to Bid notice, 
to avoid any delays in the process. 
21
 ….Continued
b.  Restricted Tendering
 the bidders invited will be those included on the shortlist, who 
should be selected from among contractors registered in the 
contractors list.
 There is no need to publish an Invitation to Bid notice, but the 
bidding document should be accompanied by an invitation to 
bid letter
 the Procuring Entity may advertise the opportunity, to invite 
companies to express interest in being invited to bid.

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Preparation and Issue of Bidding Documents

The Procuring Entity is responsible for the preparation and 
issue of the Bidding Document and must use the appropriate 
SBD, as this is a mandatory requirement for contracts to be 
funded by the Government.
A record must be kept of the Bidders to whom Bidding 
Documents have been issued. Receipts must be issued for all 
fees paid

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 Bidding Period and Bid Receipt
During the bidding period, the Procuring Entity shall:
 Hold any pre bid meeting or site visit and issue minutes
promptly;
 Promptly respond to requests for clarifications from Bidders;
 Issue amendments to the Bidding Documents if necessary;
 Receive and record sealed bids from Bidders or make a Bid Box
available up to the deadline for bid submission;
 Close bidding at the precise date and time of the deadline and
ensure that no late bids are received; and
 Keep all bids received secure until the time for bid opening.

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 Bid Opening
Best Bid‐Opening Practices to Observe
 Conduct the Bid Opening strictly following the procedures
specified in the ITB Sub‐Clause 23 for all bids received on or
prior to the date and time of the bid submission deadline.
 Ensure that all bids that were received on time are accounted
for, before starting the Bid Opening,
 Examine the bids at Bid Opening in accordance with the
provisions of ITB Sub‐Clause 19.

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 Bid Evaluation
The Tender Committee shall:
 Maintain the bid evaluation process strictly
confidential
 Reject any attempts or pressures to distort the
outcome of the evaluation, including fraud and
corruption
 Strictly apply only and all of the evaluation and
qualification criteria specified in the Bidding
Documents to determine the lowest evaluated bid and
to make a recommendation for award of contract to
the Tender Committee.
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 Types of Works Contract
 Type of contracts:
1. lump sum contract
 Such a contract might be used for the supply of a 
particular unit of process plant or material, or for a 
package deal in which the Contractor is responsible for 
both
o Detailed design and 
o Construction.

2. Cost ‐ reimbursable contract
 Cost‐ reimbursable contracts are used when the requirements of 
the promoter are vague or 
 when it is desirable for design to proceed concurrently with 
construction. 
 Such contracts are also used when the promoter wishes to be 
directly involved in the management of the contract or to reduce 
the financial risk to the contractor  27
 Types of Works Contract
3. Cost ‐ plus contract 
 A cost‐plus contract is the extreme form of the cost reimbursable type 
and is so called because 
 The contractor is reimbursed for all costs incurred during the
fulfillment of the contract,
 Plus an agreed fee to cover overheads and profit.
 The fee may be defined as a percentage of the agreed actual cost
or as a fixed amount
4. Admeasurements Contracts
 The most common types of construction contract which facilitate 
competitive tendering but 
 Which incorporate some mechanism for the introduction and
evaluation of changes in the work content of the contract.

28
 Types of Works Contract
a) Bill of quantities :Bidders  are required to enter unit prices against the 
estimated quantities of many items of completed work 
b) Activity Schedule :
This types of contract is similar to the bill of quantities, but the estimated 
quantities of work items which are expected to be less accurate than those 
given in the bill of quantities.

5. Target Contracts:
 A promoter may introduce additional incentives into a contract by 
offering the contractor a bonus payment for the achievement of 
some previously defined target in terms of 
 Time, 
 Cost, or 
 Performance 
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 Delivery System
Assignment number 01.
Explain various types of delivery systems, where do 
we apply each delivery system, their advantages 
and disadvantages.

 Force Account

 Design Bid Build (DBB)

 Design Build (DB) / Turnkey

 Finance / Build Operate Transfer (BOT)

 Construction / Facility Management Consultancy

 others
30
 Provisions of Contract/Contract  Document
For works contract include:
a. Invitation to Bid;
b. Construction Agreement and its Appendices; 
c. Letter of Acceptance;
d. Signed form of Bid of the Contractor, Appendices and Annexes ;
e. Particular Conditions of Contract 
f. General Condition of Contract;
g. Priced Bill of Quantities;
h. Drawings; 
i. Technical Specifications and Methods of Measurement; 
j. The Standard Instructions and Information to Bidders for Building 
k. Construction Works and the Particular Project Information and    
Instruction thereto;
l. Any other documents required to form part of the Contract.  

31
 Commencement of site Supervision
As per sub clause 41.1 of the GCC of FIDIC 1987 edition, the 
Contractor shall commence the Works as soon as is 
reasonably possible after the receipt by him of a notice to this 
effect from the Engineer, which notice shall be issued within 
the time stated in the Appendix to tender  after the date of 
the Letter of Acceptance

Hence, the supervision service of the Engineer will 
commence  in parallel

32