BID AND CONTRACT

DOCUMENTS
An assignment of Construction Management

DECEMBER 25, 2022

DEPARTMENT OF ARCHITECTURE
Thapathali Campus, Thapathali

SUBMITTED BY
Sujan Shrestha
THA075BAR044

SUBMITTED TO
Er. Bhivushan Chalise
Table of Contents
Bid Document ................................................................................................................................. 1
Purpose of bid document ........................................................................................................ 1
Components ............................................................................................................................ 1
a) Invitation for bids ......................................................................................................... 1
b) Instructions to bidders .................................................................................................. 2
c) Sample Forms of Bid, Letter of Acceptance and Agreement ....................................... 2
d) General conditions of contract ...................................................................................... 3
e) Special conditions of contract....................................................................................... 4
f) Technical specifications ................................................................................................... 4
g) Drawings ....................................................................................................................... 4
h) Bill of Quantity ............................................................................................................. 5
Contract Documents........................................................................................................................ 6
Types of Contracts ...................................................................................................................... 6
1. Cost-plus construction contract .................................................................................... 7
2. Lump-Sum Contract ..................................................................................................... 7
3. Time and Materials Contract ........................................................................................ 8
4. Unit Price Contract ....................................................................................................... 8
Conclusion ...................................................................................................................................... 8
Bibliography
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Bid Document
Construction bidding is the process of submitting a tender by the contractor to the client as a
proposal to conduct or manage a particular construction project. The bidding process is an
incredibly important part of a construction project. This enables firms and companies to hire
contractors. (SK, 2022) The procedure of bidding involves putting forward an offer to perform, or
supervise the performance of, a construction job. This process commences with a cost evaluation
based on the plans. (Vijayan, 2020)

Purpose of bid document

The Purpose of bid documents are:
• Instruct bidders on procedure for submission of bids
• Describe goods or works to be produced
• Inform the bidders of criteria for evaluation
• Define conditions of contract (Lucas, 2020)

Components
Following are the components of bid document:
• Invitation for bids
• Instruction to bidders (ITB)
• Sample Forms of Bid, Letter of Acceptance and Agreement
• General conditions of contract (GCC)
• Special conditions of contract
• Technical specifications
• Schedule of requirements
• Bidding and contract forms and attachments (NPC, 2017)

a) Invitation for bids

Its objective is to provide information that will allow potential bidders to determine
whether or not to participate. The Invitation to Bids should include any key bid assessment
criteria in addition to the necessary components stated in the example papers. The
Invitation to Bids may be included or removed from the bidding documents for the record.
In any case, the material in the Invitation to Bids should be consistent with the bidding
papers. (NPC, 2017)
The Invitation for Bids shall be:
a) An advertisement in at least one newspaper of national circulation in Nepal.
b) Placed in the website of the concerned Entity or that of the Public Procurement Monitoring
Office in case of a central level Public Entity and in case of District level Public Entity
such notice may be placed in the website of the concerned entity or that of the Public
Procurement Monitoring Office.

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c) An advertisement displayed on the Notice Board of the office inviting the bids.
(NPC, 2017)

b) Instructions to bidders
This section of the bidding documents should provide the information necessary for
Bidders to prepare responsive bids, in accordance with the requirements of the Employer.
It should also give information on bid submission, opening and evaluation, and award of
Contract. (NPC, 2017) Instructions to bidders may contain following information:
• Eligibility qualification
• Procedure for clarifications
• Bid preparation - form
• Number of copies, addressee
• Language
• Pricing and currencies
• Modification and withdrawal
• Bid securities, sureties, etc.
• Bid evaluation criteria and procedures
• Domestic preferences
• Closing date
• Bid submission procedures
• Corrections
• Bid validity
• Opening of bids (Lucas, 2020)

c) Sample Forms of Bid, Letter of Acceptance and Agreement

The Agreement shall incorporate any corrections or modifications to the bid resulting from
corrections of errors, price adjustment during the evaluation process, acceptable deviations
or any other mutually-agreeable changes allowed for in the General Conditions. The bid
which the contractor has submitted to the Employer becomes part of the contract
documents. All the information with regard to the preparation of bid to meet the Employer's
requirements shall be provided before issuing the bidding documents. The contractor shall
provide the remaining information by completing the form (NPC, 2017)

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Figure 1: Sample form of bid

Source 1https://www.npc.gov.np/images/category/Bid_Document_for_Vehicle_Parking_Area_Construction.pdf

d) General conditions of contract

All general terminology and things, such as utilities, vehicles, organizational structure,
mobilization, and demobilization, are defined by general conditions. (Young, 2018)
General conditions of contract may include following points:
a) Rights and obligations of both parties
b) Procedure for shipment, insurance inspection, documentation
c) Procedure for measurement
d) Procedure for alterations
e) Price adjustment procedure

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f) Procedure, terms and currencies of payment
g) Procedure for performance securities
h) Force majeure
i) Procedure for damages, penalties for delay
j) Procedure for termination
k) Mode and form for settling disputes
l) Applicable law (Lucas, 2020)

e) Special conditions of contract

Special conditions specify unique job needs and instructions. They are mostly footnotes to
the general conditions. Details and conditions pertaining to particular jobs, or the entire
project are considered special circumstances (Young, 2018). Following points are included
in special conditions of contract:
• Definition of the purchaser/supplier
• Specific amount of performance security
• Specific procedures for inspection testing
• Special requirements for insurance
• Specific payment terms/currency
• Price adjustment mechanism
• Other deletions/additions to general conditions

f) Technical specifications
Technical specifications are a set of precise and clear specifications which is a prerequisite
for Bidders to respond realistically and competitively to the requirements of the Employer
without qualifying or conditioning their bids. (NPC, 2017)
Technical specifications specify the materials, workmanship, and equipment needed to
complete a task. Because technical specifications often characterize the finished product,
the customer should explicitly specify them prior to the tendering step. Each and every task
should be described, and deviation limitations should be established in technical
specifications. (Young, 2018)

g) Drawings
All contracts should include drawings that are part of the job to be done. Drawings depict
the amounts, locations, dimensions, sizes, shapes, and forms of the elements. These designs
might be architectural, statical, electrical, mechanical, or landscape. They must provide
sufficient information for the full project being contracted. Construction drawings
comprise elevations, sections, and profiles of the building to be built. (Young, 2018)

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Figure 2:A sample of site plan

Source 2https://www.npc.gov.np/images/category/Bid_Document_for_Vehicle_Parking_Area_Construction.pdf

h) Bill of Quantity
A bill of quantities is a tendering document that specifies all work in order for the contractor
to price the job for which he or she is competing. It covers the quantity and price for each
task and will be an attachment to the contract document following the bidding phase.
(Young, 2018)

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Source 3An example of BoQ

Source 4:https://www.npc.gov.np/images/category/Bid_Document_for_Vehicle_Parking_Area_Construction.pdf

Contract Documents
When two or more person have common intention communicated to each other to create same
obligation between them, there is said to be an agreement. An agreement which is enforceable by
law is called contract. (Khurana, 2010)
Types of Contracts
• Cost-plus construction contract
• Lump-sum contract
• Time and materials contract
• Unit price contract (Young, 2018)

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1. Cost-plus construction contract
A cost-plus contract is a type of agreement in which the contractor is compensated for all
their expenses associated with a construction project. This would include direct costs such
as labor, materials, and supplies as well as overhead costs such as insurance, mileage, and
a portion of the office rent. On top of that, a predetermined amount is also included for
profits. This is the "plus" side of the contract. (Ellis, 2022)
Pros
• Contractors tend to see this kind of contract in a positive light as there is no chance
of losing money on materials and one is certain to make a profit.
• It is especially beneficial when one doesn't have enough information to give an
accurate estimation of the job or the scope of the work is not very clear.
• In addition, these contracts emphasize the importance of quality. (Ellis, 2022)
Cons
• It is essential to closely monitor the expenses and be equipped to provide them
when requested. This might involve increased expenditure and use of the manpower
• Additionally, there may be a limit to the amount one is able to spend. Some cost-
plus contracts comprise of clauses specifying the maximum amount to be spent.
(Ellis, 2022)

2. Lump-Sum Contract
A lump-sum contract involves the contractor delivering a completed project for a
predetermined price. Instead of providing an estimate for each part of the job, a single
amount is agreed upon. This is a straightforward arrangement that works well for projects
with a clearly outlined scope. Such contracts are preferred for jobs that do not involve
complex calculations, and they also make it easier to budget for and manage the expenses.
(Ellis, 2022)
Pros
• Agreements that involve a single payment offer a straightforward, easily
manageable sum to the person in charge.
• These contracts simplify the assessment process and the decision-making.
• They give the worker the opportunity to concentrate on the quality, components,
and results.
• Unlike time and materials agreements, lump-sum agreements don't demand as
much oversight and consent from the owner. (Ellis, 2022)
Cons
• Lump-sum contracts are not typically suitable for complex projects. This is because
they do not take into consideration fluctuations in material costs, on-site conditions,
or requests made by the client. (Ellis, 2022)

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3. Time and Materials Contract
With a time and materials (T&M) contract, the client pays a predetermined cost based on
the time taken to complete the job, the supplies needed, and the profit margin included.
This is as uncomplicated as a fixed-price arrangement, but it allows for more flexibility in
terms of material costs, as it takes into consideration labor charges. Additionally, it may
include an additional fee for materials bought at discounted prices. (Ellis, 2022)
Pros
• With a time and material contract, the owner can plan their budget without taking
the chance of fluctuating material and labor expenses.
• The arrangements also stop the builder from using cost-saving techniques since
they will gain a benefit. (Ellis, 2022)
Cons
• Homeowners do not always have a clear understanding of the final cost, which can
cause disagreements if the price increases.
• If the estimations are not precise, this could have an impact on the profits of the
contractor. (Ellis, 2022)

4. Unit Price Contract

A unit price contract outlines the cost per unit, including any materials, labor, expenses,
and revenue. The customer pays the contractor based on the number of units at the
predetermined rates. The contract might not always tell the quantity of units required to
conclude the project, but it will normally include a minimum estimate. (Ellis, 2022)

Pros
• When a project can be divided into separate components, a unit price contract can
be advantageous.
• If the cost of each unit is a determining factor, and the work involves a great deal
of repetition, a unit price contract can be beneficial for both the contractor and the
client.
• The invoicing is straightforward, and the risks are shared between the involved
parties. (Ellis, 2022)
Cons
• Complex projects involving intricate operations and a variety of materials may not
be appropriate for them.
• Contractors may not be adequately motivated and losses may be incurred if initial
estimates are not accurate. (Ellis, 2022)

Conclusion
A contract is an essential document for every construction project. The contract specifies all of the
parties' rights and duties. As a result, additional documentation must be included in a building
contract. These common sorts of contract papers come in a variety of formats, including written

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specifications, drawings, and charts. Basic contract agreements must be produced and handled
efficiently for successful construction project management. Depending on the trade specification,
other papers such as the Master Format Outline might be attached to the primary contract
document. The goal of these papers is to provide a framework for resolving claims and potential
difficulties in the event of a legal action.

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Bibliography
Ellis, G. (2022, September 1). 8 Main Types of Construction Contracts. Retrieved from Autodesk:
https://constructionblog.autodesk.com/construction-contracts-types/
Khurana, G. S. (2010, May 6). CONTRACTS AND TENDERS. Retrieved from ArchiStudent:
https://archistudent.net/contracts-and-tenders/
Lucas, E. M. (2020). BIDDING DOCUMENTS AND MAIN FEATURES. Retrieved from
https://slideplayer.com/slide/15517578/: https://slideplayer.com/slide/15517578/
NPC, G. (2017). Standard Bidding Document. Kathmandu: Government of Nepal, National
Planning Commission Secretariat, Singh Durbar.
Pease, J. (2018, January 11). What Is Integrated Project Delivery: The Contract (Part 1 of 3).
Retrieved from Lean IPD: https://leanipd.com/blog/what-is-integrated-project-delivery-
the-contract/
SK, N. (2022). What is construction bidding? Retrieved from The Constructor:
https://theconstructor.org/construction/construction-bidding-process-decisions/35666/
Vijayan, V. (2020, March 25). Bidding-Tender-Contract. Retrieved from SlideShare:
https://www.slideshare.net/vishnuvijayanss/biddingtendercontract
Young, V. J. (2018, February 14). Basic Contract Documents Every Construction Contract Must
Include. Retrieved from Project Cubicle: https://www.projectcubicle.com/contract-
documents/