Professional Practice

Tenders

Ar. Kalpeshkumar Patel

 Definitions
Tender means an offer to carry out work, that is pre – described to supply or
purchase goods of prefixed specification at the price to be quoted by the tenderer.

Tender is nothing but an offer made by one party to another for execution of
specified work at a specified cost in keeping with all the terms and conditions set
there in the tender document including the extent of work shown on the plans
 TYPES OF CLIENTS

1. Private or Individual owner

2. Semi Public Organisation such as Trusts, Educational societies, Co-operative

societies

3. Public Bodies such as Government Departments, Zilla Parishad, Municipalities,

City Corporations, Nationalised Banks etc.

 NATURE OR TYPES OF TENDERS

1. a) Item Rate Tender

b) Schedule of rates with percentage Up or Down

2. a) Lump sum Tender

b) Lump sum Tender plus Percentage ( Target Tender)

3. a) Cost plus Percentage Tender or Cost Plus Fee Method

b) Cost Plus Fixed Fee Tender

c) Cost Plus Fixed Fee Tender with Bonus and Penalty

4. Labour Tender

5. Demolition Tender
 NATURE OR TYPES OF TENDERS
1. a) Item Rate Tender
• It is a offer to execute the work based on the rates of different items of work
• The tender form usually contains the Bill of Quantities wherein all the items of
work are fully described with their quantities. The Quantities given are always
approximate.
• The contractor is paid on the measurement of the work executed at the rates
quoted by him in the tender
• This is a balanced method of execution and the chances for extra works are
minimize. It is not risky for the contractor and hence quality of workmanship is
assured.
• Reasonable variations can be made in the plans and also the quantities during the
execution of work.
• It is suitable for all works like buildings, roads, brides and culverts
 NATURE OR TYPES OF TENDERS

1. a) Schedule of Rates with Percentage Up or Down

• It is also known as basic rates with rise and fall clauses. Bill of Quantities ( BOQ)
duly priced is given to each of the contractor and asked to Quote by percentage
above or below the prices schedule of rates at which they prepared to executes
the work
 NATURE OR TYPES OF TENDERS

2. a) Lump Sum Tender

• In a Lump Sum tender the contractor undertakes to carry out the work as shown
on the plans and described in the specifications till completion, supplying all the
materials and labours for a fixed lump sum or a fixed rate per square metre.
• The contractor will be paid from time to time if specified in the contract and if not
specified then he has to recover the full amount on completion of work.
Advantages
• Total cost of construction is known in advance and as such the owner can make
the necessary arrangements for the finance
• The contractor will try to complete the work as early as possible so as to have good
margin of profit.
• Workload on architect is reduced, as no detail measurement as required to be
taken
 NATURE OR TYPES OF TENDERS

2. a) Lump Sum Tender

Disadvantages
• More and more of extra works
• No scope for enhancement of design
• Quality of work not guaranteed
 NATURE OR TYPES OF TENDERS

2. b) Lump Sum Tender Plus Percentage ( Target ) Tender

It is the same as Lump Sum Tender except if the contractor completes the work before

the specified date, he is usually granted certain bonus in terms of percentage of the

cost of the project.

 NATURE OR TYPES OF TENDERS

3. a) Cost plus Percentage Tender or Cost Plus Fee Tender

• The expenditure incurred by the contractor is paid by the owner as agreed and
over the above he is paid certain percentage of profit for his professional services.
• At times such tenders are invited from a few contractors asking them to quote the
price at which they will execute the work and fees that they expect for the same.
• The fees usually fixed at a certain percentage of the cost of work.
 NATURE OR TYPES OF TENDERS

3. b) Cost Plus Fixed Fee Tender

• The contractor is given a fixed fee irrespective of the cost of the work.
• All the cost of the materials and labour are directly paid by the owner and thus the
contractor’s financial liability is nil.
• As such, he is paid, a higher percentage for works done by him and lower
percentage for those works which are given on sub-contract.
• The fees charged by him include his professional services as well as the rentals for
all his implements, plants etc. including cost of repairs if required.
• His fees should be paid in four to five instalments and the last instalment should
be paid after completion of the work.
 NATURE OR TYPES OF TENDERS

3. c) Cost Plus Fixed Fee With Bonus and Penalty Tender

• In order to keep a check over the cost of work, this form of tender is slightly
modified and is known as Cost Plus Fixed Fee With Bonus and Penalty Tender.
• If the cost of the work is executed remains the same as has been estimated in
advance, the contractor receives his agreed fees with no profit and penalty
deduction.
• If the cost of the work as executed turns out to be less than the estimated cost,
the contractor to receive certain percentage of savings as Bonus.
• If the cost of the work as executed turns out to be more the estimated cost,
certain percentage of increased cost will be deducted from agreed fees.
 NATURE OR TYPES OF TENDERS
4. Labour Tender
• In this case the contractor agrees to carry out the complete labour work of all the
items of the work at the rates quoted by him.
• The contractor has to supply all the tool, scaffolding, centring materials , coirs and
nails etc. and the owner supplies only the materials required for the construction
work.
• The owner has to keep a close watch over the materials used by the contractor as
he is least concerned with their wastages.
• This method of execution of work is very popular as the materials used nd the
workmanship will be of standard quality.
• The points of dispute are minimized and the payments for extra works are
restricted to labour charges only.
• The labour are invited on the basis of rate per square metre of the construction
work.
 NATURE OR TYPES OF TENDERS
5. Demolition Tender
• These tenders are usually called for the demolition of the existing building up to
ground level or road level and removal of all the materials of the same including
carting away of the debris.
• The tenderer usually takes away all the materials that are there in the old building
and in turn he pays a specified amount to the owner.
• The highest and not the lowest bidder should be approved
• The tender should be accompanied with a specified deposit, so that works can be
carried out as per the terms of the contract.
• The whole of the tender amount should be taken in advance, before the
possession of the building is given for demolition
• Contracts to take insurance for accidents workmen’s compensation
• Make necessary arrangements for cutting of existing water supply, drainage
connection and electrical supply
 OTHER MODES OF EXECUTION OF WORK
1. DAILY WORK

2. PIECE WORK

3. DAILY LABOUR
 INVITATION TO TENDER
1. BY PRIVATE INVITATION – ( SELECTED OR LIMITED INVITATION)
• Architects maintain a panel of contractors and from the panel a few are invited to
quote for a particular job.
• Architect knows the contractor and his intelligence, integrity and financial standing
and he is sure of the type of work that he will get from him.

2. BY PUBLIC NOTICE
• All public works are required to be advertised in the newspapers for the purpose of
tenders and any contractor can quote the same.
• Lowest bidder gets the tender
• The architect may come in contact with new and intelligent contractors and this
opens the field for new entrants in the contracting line.
• There are chances of getting the work at a cheaper rate and these tenders are not
free from collusion
• At times the tenders are so low that it will not possible to imagine whether the
contractor will be able to complete the work. Such tenders usually end in dispute.
• Poor quality of work
 INVITATION TO TENDER
3. BY NEGOTIATION
• Architect possess some base or data for negotiation like the work of a building cost
more than Rs. 20,000 Sqm
• Negotiation is done based on this data, with one or two contractors

4. BY PRE-REGISTRATION OF CONTRACTOR
Two Stages
First Stage
Inviting contractors to give information of their construction company
List of similar works done
Construction equipment possessed
Income Tax Clearance Certificate
Solvency Certificate

Second Stage
On receiving the application on the data given
Scrutiny is made and a short list of five or seven contractors is drawn out and they are
invited to bid
E – Procurement –
A method adopted by government of online entry of tenders

Two Cover Bidding

Technical Bid
Capability of Contract

Financial Bid
Contractor’s quote
 TENDER DOCUMENT
1. Instructions to the Contractor
a. Type of Tender
b. Location and brief description of work and name of owner or company
c. EMD to paid to whom and how
d. Price of blank Tender
e. Bank Guarantee
f. IT returns for 3 years
g. Time and place of submitting filled in tender
h. Note – The company or owner reserves the right to reject any or all tenders
without giving reasons
 TENDER DOCUMENT
2. General Conditions and Preliminaries

Standard Specifications
Basic rates of major building materials and a list of approved manufacturers of
materials.

3. Articles of Agreement and General Conditions of Contract

4. Bill of Quantities – In case of Item Rate Tender

5. Letter of Offer – From Contractor to the project owner

6. Tender Drawings –
Location and overall sizes, types of building construction etc for an item rate tender
Or
In case of Lump sum tender, a complete set of working drawings including RCC
schedule or structural steel details etc.
Thank You