INTRODUCTION

TENDERING PROCEDURES AND TENDERING METHODS

Tendering methods covers the various methods that may be used by the client and his
advisers to obtain offers. The offers are made by the firms approached, who do the actual
tendering and have their own procedures. Good selection should be made so as to obtain
a contractor who may enhance good relationship between the client, contractor and
consultants. The contractor so selected should be;

 Financially stable
 Having good business records e.g. Completion, quality, etc.
 Proper contractor for the right size of the job, i.e. the project shouldn’t be too big
nor he too small to him.
 Competent in workmanship and organization.

WHY ADVERTISEMENT TENDER

 Is to create interest among a considerable number of builders in the proposed
work so as to secure the benefit of been competitions.
Extension of time limit for submission of completed tender
 Under the following circumstances the time for receiving tender may be extended

 If the period which the contractor get to prepare the tender is in adequate
 Intending tenders notifies these
 If a sufficient number of block forms (tender documents) are not issued to
intending contractors
 If important changes in the tender are considered necessary since the issuing of
the tender notice.

Types of Tendering Methods

1. Open tendering: The procedure here is to advertise through the press, inviting firm
that wishes to do so to submit a tender; the advertisement will give outline details of
the type of work, its scale, the programme and any other key features. Interested firms
apply for the tender documents and there are usually no formalities other than a
deposit of few shillings, which is returned on submission of a real tender. The deposit
covers the cost of the documents.

Advantages.
(i) It gives the chance of tendering to any firm that wishes to do so and may provide
a room for some relatively unknown but capable firm.
(ii) Since there is no restriction there can be no chance of favoritisms in drawing up
the list of tenderers. (This is a valid point in the case of public accountability)
(iii) Just as there is no restriction on “who should tender”, so there is no obligation to
tender.

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(iv) Presumably no one is going to put a tender in just to oblige/force/request,
and therefore all tenders should be genuine.
(v) The appeal of open tendering is that it should secure maximum competition.
(vi) It effectively prevents firms in an area from forming an exclusive ring and
keeping up prices.

Disadvantages.
(i) It is costly as tender list turns to be very long and hence many tender documents
have to be distributed.
(ii) Much time is taken to prepare and check many documents; Contractors also tend
to waste a lot of time tendering mostly without success.
(iii) The client is tempted to accept lowest offer which may not always be correct.
(iv) The contract can be awarded to a poor contractor
(v) Competent contractors may refuse to compete.

2. Selective tendering: Under this there are two options

(i) Selective Competitive tendering: Where there is limited time before the contract
is to be awarded, the consultant may in consultation with the client draw up a list
of suitable contractors to be invited to tender. This tends to disallow some
contractors some chances as they may all not be familiar to the consultants. For
some reason of past satisfactory performance the employer may only want a
particular list of contractors.

(ii) Pre—qualification: In this method advertisement is done through the press

except that the client in this case asks contractors of certain ability and class to
send their names so that they may be included in a list of tenderers.

The contractors are required to submit a brief or detailed description of their

plants, equipments, manpower, financial stand, past experience, consultants who
supervised those projects and their clients, jobs in hands and their stages, and
sometimes names of directors and their qualifications.

Thereafter a list is minimized to 8 —10 contractors. This case usually the lowest
tendered is the one who is taken although duration of the contract can affect the
selection.

Advantages selective tendering

(i) Only competent contractors of the appropriate class are invited to tender. It is
therefore fair to accept the lowest tender.
(ii) Contractors invited to tender realize that they are competent and thus price in
confidence thereby earning the necessary profit required for stability of
construction industry.
(iii) Tendering costs are reduced since tender documents ale limited.

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Disadvantages of selective tendering
(i) Tender prices are usually higher than they would have been under open tendering.
(ii) In selective tendering by listing few contractors, there may be contractors who are
not willing to tender who may quote very high prices for the sake of filling
documents and maintain good business relationship. These excessively high
prices can be confusing to the client,
(iii) There are some possibilities of favoritism in drawing up the list of prequalified
contractors.
(iv) Consultants or clients maintain a list of good or likely contractors for particular
level of projects, this habit may reduce the chances of new competent contractors
joining the list and old but and incompetent contractors may not be removed from
the list easily.
(v) There are chances of collusion between contractors as contractors may agree
between each other that whoever is selected or awarded a contract, he must make
a super profit

3. Special Selection Tendering

(i) Nominated / single tendering: There may be circumstances in which only one
firm is found to satisfy the criteria for selection. This is more likely in the case of
a specialist Sub –contractor but it may also arise in the case of a main contractor,
if; he did nice job for the client, have peculiar qualifications or is already been
site. However it is likely tender price to be high although negotiation can be done.

(ii) Serial tendering: For large projects, it is useful for a series of closely similar
scheme which are to be carried out over a period of time within the same area and
permitting the phased utilisation of organization and plant available at the site.

Advantages of serial tendering

(i) The contractor can afford to tender with lower profits and expect to do a large
job.
(ii) The other phases of (the project tend to be executed well due to experiences
gained by the same contractor in the first phase.
(iii) Contractors and client have a long period to understand the problem of the
project. The contractor even goes to suggest various alternatives which may
make other phases more economical, such as materials ordering, etc.
(iv) Costs of the preliminaries are used for second and other phases as such costs are
controlled.

Disadvantages of serial tendering

(i) The contracts rely on the integrity of the client for the already known prices of
the contractor and he may insist unfairly to use only low prices.

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 (ii) The amount of work available for open competitive tendering is reduced tending
to diminish the construction industry.

Negotiated Tendering
There are occasions when it would suit the client to dispense with the element of
competition all together and approach only single contractor who is considered to be
capable to execute the work. The client may reach the decision and employ a particular
contractor whose methods and policies are known and which has in the past proved
capable of satisfactory fulfilling the clients’ requirements

The circumstances under which negotiation may be preferable are

(a) A quick start and early completion

(b) Business relationship
(c) Continuation contract
(d) The state of the market
(e) The work to be carried out is within the special scope and experience
of the firm.

The techniques involved in the negotiation process includes

(a) The use of a nominated bill

(b) Assessment of costs based on the information regarding the scope of

Work, the approximate dates of commencement and completion and
The contract procedures.

The use of a nominated bill involves the use of a priced bill of quantities for a similar
project previously carried out under similar conditions which serves as the basis for
determining the price of the new project. The assessment of cost may also involve
preparation of bills of quantities or use of approximate estimates. Rates both unit and
composite to suit the condition are built up from the scratch using suppliers prices for
materials and goods. Other constituents of the negotiated tendering include the items
other than the unit rates;

E.g. (a) Profit and overhead (if included as lump sum)

(b) Plant and equipment (if included as lump sum)
(c) Contingency
(d) Tender adjustment

The disadvantages of this method are

(a) Lack of competition
(b) Higher cost of the work

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Tendering Procedures
The following are the procedures that are followed during the tendering process.

Advertisement for tenders

The purpose of advertisement in tendering procedures is to create interest among the
builders/contractors in the proposed work so as to secure the benefits of keen
competition.
It is advised that the advertisement should come to the notice of the greatest number of
the expected potential bidders. The public newspapers with a substantial large circulation
usually prove the best medium.

The advertisement should appear well in advance in order to afford prospective bidders a
reasonable time for making the necessary inquiries and for collecting any background
information that they may require: a period of 14 days for national projects and 30-45
days for international projects is sufficient as provided in the Tanzanian Public
Procurement Act (2004).

Pre-tender conference
Sometimes for the purpose of obtaining necessary clarifications a pre-tender conference
should be held preferably at a place near the site of the proposed work. The prospective
bidders should be invited to attend the conference at their own cost.

The clarifications in this conference include;

(a) The special features of the project (Nature scope and conditions under which
to be executed)

(b) Unusual or peculiar conditions and specification

(c) Bidders doubts

This conference restricts the seeking of clarifications at the post-tender stage.

The tender Notice

The notice should contain adequate information on the nature and scope of the proposed
work and all other essential details.

The following information’s are suggested for a good advertisement

(a) Mode of submitting tender

(b) Format in which tender has to be submitted
(c) Name of the inviting authority
(d) Nature of the work and location
(e) Estimated cost of the work
(f) Times limit

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 (g) Availability of data forms of tender and other tender documents, and other
relevant information, e.g. where, from whom, and at what cost the documents
will be collected.
(h) Earnest money required along with the tender
(i) Security deposit
(j) The last date the place and the time of receipt of sealed bids
(k) The date, time, place and procedure of opening the tender
(1) Reservation of the right to reject bids

Extension of time of submission for tenders

Usually under certain circumstances the time of receiving the tender forms complete in
all the respect from the bidders may be extended

The circumstances under which the extension may be granted are:

(a) The period which the contractors got to prepare the tenders is inadequate. This
should be done by the inviting authority in the event that a fact has been
brought to him/her by the intending bidder/bidders
(b) A sufficient number of blank tender forms are not issued to the intending
bidders

(c) Important changes in the tender are considered necessary after the issuing of
the tender notice.
In such circumstances, the extended date and time of issuing and accepting the
tenders must be brought to the notice of all concerned. The usual way is to issue
a notice in an advertisement on those newspapers and/or journals that carried
the original tender notice. The extension notice carries the heading of
CORRIGENDUM TO TENDER NOTICE

METHOD OF PREPARING A TENDER

1. Carefully study of the contract documents

e. g. Drawings, condition of contract, specification and BOQ from this special
attention during pricing will be taken

2. Visit to the site

Having very careful examined the contract document the contractor arranges to
visit the proposed site, where some classification can be achieved.
e.g. - Difficulty in reaching the site of work
- Limited space on the site for the movement of vehicle
- Type of soil and depth of water table
- Material availability
- Labor/skilled and unskilled
- Water and energy availability.

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3. Un remunerative work required – work needed before the commencement of the
construction job e.g. access roads, offices, water and energy connection as well as
store sheds preparation

4. Time for completion – It helps the contractor in calculating time for the work
On – cost - Over heads
Estimation - Payment schedule

5. Final estimates for tendering (Lump sum BOQ contracts)

The contractor estimates the quantities of materials, compute their probable cost.
Cost of labor, plants for performing the work
Amount of profit without losing the job to other competitions

The unit price for each item is worked out separately by distributing on cost and
profit without losing the job.
The contractors have to be careful in estimating the quantities

OPENING OF TENDERS
In the case of public bodies the tenders are usually read at stated hour day as notified
in tender notice. The representatives of each bidder are allowed to attend.

COMPARING TENDERS
The consultant recommend to the client which contractors offer should be accepted

ACCEPTANCE OF THE TENDER

Before accepting a tender (the consultant or Engineer) should write the following
- The successful contract tender is in order and the offer is attractive
- The resources, equipment, experience and sureties are genuine and
satisfactory
- Finally the consultant or engineer recommends to the client which
tender has to be accepted

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 RESECTING THE TENDER AT SUBMISSION TIME
The tender may be rejected right at the submission due to the following:-
 The tender proposes in the tender any alterations in the work specified or in the
time allowed for carrying out the work or any other conditions which are not
acceptable to the owner
 Any of the pages in the tender are removed/ replaced
 No sign or signature of partnership of the company
 Any erasures are made by the tenders in the tender

REJECTED THE LOWEST TENDER

The lowest tender may be rejected due to the following:
1. Improper offer – Not preparing as per specification - This proper cause for its
rejection
2. In adequate finance
Can be rejected even if the contractor has no sufficient finance to execute the work
3. Lack of experience in a particular work
4. Unsatisfactory reputation
Careless, uncoorpertion and always, trying to win through unscrupulous mean/ wrong
way of earning cash.
5. Adequate staff and Equipment
If the lowest bidder has a poor type of equipment and untrained staff is a good
warrant to be rejected

REJECTING ALL TENDERS

All tenders received may be rejected
1. If there exist a grounded suspicion of collusion between tenderes or some form of
chiting has been detected
2. Radical changes in design are found necessary during the interval proceeding the
opening of the tenders
3. The lowest tender has quoted a figure which is higher than the fund available
4. Financial reverse or unforeseen happening has occurred which becomes
impossible for the overs to continue with his project.
5. The minimum number of tender assured the competition to be poor.

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TENDER DOCUMENT
The following are important to be included in a tender document:

1. Conditions of Contract: Contract conditions nowadays are almost invariably one or

other of the standard documents, which are readily obtainable by any tenderer.
Therefore, the quantity surveyor need not include these conditions in the issue
documents. Any proposed amendments to the standard wording, however, must be set
out in full in the preliminaries, along with a list of clause headings, as must be the
date to be filled into any appendices or schedules. There are various types conditions
of contract e.g. East African Institute of Architects Conditions of Contract (with or
without quantities), ministry of works Conditions of Contract, etc.

2. Bills of Quantities: These are used for large projects. The traditional approach has
been to send one copy to each tenderer and then to ask the tender whose tender is
initially under consideration to copy his price into further copy for examination.

To avoid delays in traditional approach it has sometimes become the practice to send
each tenderer two copies of the bill and to ask for one to be returned priced at the
same time as the form of tender but sealed in a separate or the same envelope.

3. Specifications: The specification is not recognized as a separate contract document

and it meant usually included in the preambles to the bill. A very lengthy and
involved specification, particularly of the type produced by a consultant, may best be
dealt with physically as a document bound separately from the bills and then
incorporated into the bills by cross reference.

4. The form of tender: The form of tender is a letter accepting the offer made on the
form will be evidence of a binding contract until the formalities have been completed.

The tenderer should sign and date on the form, giving his tender amount in figures
and words and also giving the contract period if this is not already included.

5. Drawings: It is good policy to issue some drawings to tenderers with the other
documents. These drawings will mainly be the general arrangements drawings and
any other drawings needed for tenderes to assess the constructional apprnahu1at the
project will demand. In addition there will be the site layout drawing and any
drawings governing phasing and other special conditions.
Drawings that simply show detail need not be issued but should he on display at the
various professional offices for tenderers to insect if they wish. All drawings meant
for tendering should he stamped to ensure that all contractors receive the same
revision of drawings.

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6. Return envelope: A ready addressed envelope should have been provide for the
return of the tender, stating when it is to be received, title of the project but giving no
indication of the sender.

Tenderers should acknowledge the receival of tender documents and inform the
client/architect thereafter.

OTHER ASPECT OF TENDERING

1. Comparing tendering
When Comparing tendering the following aspect should be used.

(i) Total sum (Total offered by contractor

(ii) Time for completion
(iii) Pricing for main items

2. Performance bond:
In most large contracts it is necessary that the contract it is necessary that the
contractor produce a security bond e.g. bank or insurance company with
guarantees that the contractor will finish the work as stipulated in the contract
documents.

In use of failure to perform the job the bank or insurance bank or company will
refund some amount to the client

3. Handling owner the site to the contractor

A handling owner (Letter) is prepared by the consultant and issued to the
contractors stating day, time can a contractor start the job, mobilization

Conclusion / remarks
The process of tendering, evaluating, selecting and awarding the contract is a trick
one. It requires a good understanding and knowledge of the construction industry
in project management, materials, Labour, and equipment management.

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