Definitions Tender Stage Isa procedure of selecting suitable contractors at an appropriate ie and obtain from hinvher an acceptance tender or offer upon which the contract is awarded. ‘Tender Is a s nvitation to tender, St ibmission made by a prospective contractor in response to an make an offer for services to be undertaken The various methods of tendering include: Open tendering The client or the government advertise proposed project and permits to apply for tender documents. This method is to obtain the objective of equality and inclusion, The award of contract is made to the lowest bidder. Selective tendering invites only a few selected contractors i.. initial screening takes place to decide who is to be invited to bid on the tender offer. A pre-qualification interview is held by the client and consultancy team to get potential tenderers. Negotiated tendering In this method the client enters into a contract with the contractor by negotiating price and method of payment, The client leaves much of negation to his /her professional advisers. Usually used for specialized work or work of unknown nature. Serial tendering This involves preparation of bid proposals based on bill of quantities or schedule of works. The rates submitted can then be used to value work over a series of similar projects e.g. a series of schools. Often for a fixed period of time following which the tender procedure is repeated Term tendering Majorly used on maintenance projects. May be awarded to a contractor to cover a range of different buildings in different locations, in a fixed time scale which may be extended in client demand. many contractors The most common method of tendering used in Kenya is the 2 Stage tendering process where: The contractors are determined if they are able to meet the clients need and 2. Determination of suitable contractor is associated with solution go clients needs by providing value for money.TENDERING 5 for a stated This is a formal written offer to carry out work, supply goods or servis fixed price. As regards construction, a tender is an offer by a party to provide a service or materials to carry out a specific piece of building construction work under specific conditions for a fixed amount of money and within a fixed period of time. Tenders are invited as a means of determining which contractor or supplier will undertake the works for the ‘lowest price’ / reasonable price and with the best quality. Tendering for Building and Civil Engineering Works For a building contract to be entered into, there must be two parties namely the Employer and the Contactor. The employer initiates the whole process by first appointing the design consultants and thereafter playing a vital role in selecting the contractor with whom to center into a contract. Several methods of selecting the contractors exist each being different from the other depending on such factors as the size of the project, the urgency of the completion of the project, the complexity of the project etc. We now examine the various methods used and compare them in the light of their advantages and disadvantages. Tender Documents ‘These refer to all important information concerning the proper contract in relation to rules, conditions etc. supplied to the contractor so as to enable him price the works as accurately as he may taking into agcount all the special peculiarities which every different building project possesses. The documents include: a) Bills of Quantities - a document giving details of estimates of quantities of work, labour and materials to be used under the contract. b) Specifications - a document containing the conditions under which the work is to be executed. It is in two different parts: general and special / particular conditions. General conditions cover those governing the relationship to be set up between the contracting parties and the power or authority given to the architect or engineer. Special conditions on the other hand deal with technical matters as they relate to the works e.g. details of construction e.g. quality of materials and labour.©) Drawings «these are drawings oF plans pertaining to the construction of the job and should depict the work as it is intended to be erected, showing sufficient details and dimensions to enable the contractor gather from them the quantities andthe mode of construction requited 4). Conditions of tendering - this is a document containing the terms under which the contractor must submit his tender in order that it may be considered valid. This document sets out a formal procedure to be followed in the whole of tendering process, ©) Form of surety undertaking - this document is required to be completed by an established bank, insurance company or a fidelity guarantee company who is willing to be bound to the employer or the client organization in an amount equal to generally 10% of the contract sum in the event that the contractor is awarded the contract, 1) Form of tender « this document refers to the main particulars about quality and quantity, the overall program as well as fluctuation rules. On this form the tenderer's name, amount of tender, date for completion, etc. are listed. g) Form of availability of materials ~ certain jobs may require that tenderers complete a form declaring that all or a portion of materials required for the work will be made available by him when required. h) List of approved Subcontractors - this document is included in tenders for large jobs where extensive subcontracting of work is required. To go with this is a Bills, of Quantities giving a schedule of all types of quantities of materials required for work to be subcontracted, summary page of Bills of Quantities giving summary of main elements of work with summary totals of their costs, etc. Contractor Selection (Prequalification of Contractors) ‘The correct choice of the method employed in selecting a suitable contract and the subsequent contractual arrangements to be adopted is of paramount importance if the employer is to obtain the best value for his money in the light of the particular circumstances surrounding the project, Some of the principal matters to consider while doing the selection include:a) The firm's financial standing and record - i.e. checking on the financial stability of the contractor. This may be ascertained from his banks who should give a written opinion as to the financial status of the contractor. b) Whether the firm has had recent experience of building at the required rate completion over a comparable contract period, ©) The firm's general experience and reputation in a comparable area of work. 4) Whether the management structure of the firm is adequate for the type of contract envisaged (Cases of industrial unrest come under this). ©) Whether the firm will have adequate capacity at the relevant time, NB: Category of registration of contractors NCA 1, NCA 2, NCA 3, etc. is based on labour force equipment, amount of work handled ete, hence it is a good criteria to use. These considerations are necessary if the employer or the organization is to prepare and Keep for use a list of ‘approved contractors’. However the list should be adjusted periodically to kick out those firms that are deviating from the expectation of these considerations and admitting new firms who qualify to be shortlisted in the light of the laid down considerations. Methods of Tendering 1. Open Tendering is is whereby prices are obtained from as many contractors as possible as long as they qualify for the specific category of works.lt is also known as competitive tendering as it gives the best value for money since the lowest possible price is considered hence savings to the client. It is suitable for government projects since majority of large infrastructure projects are usually undertaken by the government.Most of these projects are undertaken at the lowest possible price since cost is the all important factor. Open tendering is favoured by many large public bodies where transparency is the key factor for these entities.These projects are advertised in the press whereby a brief description of the project is done stating the date and value of the project. Advantages i, Faimess — especially where the project is owned by the government or public bodies because everybody is given a chance to try his luck 3tionunlike in other ii, Provides an opportunity for a suitable contractor fo submit his quo methods where such a contractor would have been excluded from tendering due to being not short-listed of nominated, iii, Ieean give maximum benefit of competition: i.e due to competition every contractor is keen on winning with results that have low tender sum, Disadvantages i. It is a very costly considering the advertising costs and costs of producing many contract documents. These costs are offset by deposit fees for tender documents. ii, Danger of giving work to inexperienced contractors. ii. Works may stall if given to contractors without capacity. i. Longer completion period Poor qualityof work by inexperienced contractors. Waste of resourcesby produced too many tender documents which might be collected by few tenderers. vi.Court cases if lowest contractor is considered incapable. 2, Selective Tendering The challenges of open tendering are overcome by selective tendering whereby there are restricted applicants and reduced competition. Afew contractors with a reputation of good workmanship or with a history with the client are invited to tender for the works, hence eliminating unsuitable builders. The Architect prepares a list of firms in consultation with the QS and the Client, The Client may insist on inclusion of some firms. Advantages i. Only capable contractors submit their tenders ii, Tendering costs are reduced due to the small number of tenders iii. Time for tender analysis is also reduced iv. Good standard of workmanship v.Work is finished on time vi.Contractor is well selected hence extra cost will be outweighed by benefitsDisadvantages i, Works may be carried out at a higher cost due to higher overheads.Tender sums are generally higher than it would be in open tendering. Collusion is also possible especially when the number of tenders is much reduced and they happen to know each other. ii, Restricting applicants reduces competition.{t erodes the level of competition and its associated benefits, Circumstances under which S« ive Tendering is used 1, Quick Start Urgency of the work may create a need for an early start hence cost is not an issue e.g construction of the Nyayo National Stadium. 2, Business Relationship ‘A business relationship between two companies of long standing may result to reciprocal trading benefits e.g a contractor buys all his company cars from a particular car distributor on agreement that if dealer requires further office space, maintenance and repair, these services will be provided by the other partner. 3, Continuation Contract. If a client has a new project very similar in size and design to a recently completed building and a good relationship exists between the client and the contractor, it will be prudent for the same contractor to be given the works hence saving on tendering time and related costs, The contractor will also be familiar with the design and the construction process, aware of difficulties encountered,will use knowledge of the work to improve efficiency on the new job and might re-use formwork and materials that remained from the other project. 4. State of the Market ‘When most contractors are busy, the client through the Architect may choose a contractor who is less busy and negotiate with him rather than paying heavily to contractors who are busy and don’t have the spare capacity and may compromise the works. 5Choice of a suitable contractor depends on:+ # Type of works # Size of the job In remote areas there may be only one contractor available if the job is not sufficiently attractive to interest outside contractors, S, Company with specialist plant or techniques Large organisations have developed and patented a special technique, design or piece of ‘equipment considered a market leader because of the following advantages; Increased speed of erection, work more efficiently, cheaper, client takes advantage of the ‘company's expertise rather than use more traditional methods, Examples are use of prefabricated units by Uon, Economic Housing Group (EHG), EPS by National Housing Corporation. iegotiated Tendering Sometimes the client has to do without competitive tendering and chooses to negotiate a price with 1 or 2 contractors. Negotiation is preferred when:- # A quick start of work is required «© The firm (contracting) has specialist plan or technique that is required foer the works « The building industry is over-stressed and the contractors are kept busy There is good business relationship between the contractor and employer like past relationship. ‘There are 2 types of negotiated tendering:~ Single Stage- Where the employer nominates a contractor and together they negotiate rates.Two Stage: Where tendets are invited and on the basis of the tender sums, the employer negotiates rates with one of the tenderers. Advantages i, Makes it possible to retain services of a firm (s) which have been found satisfactory in the past, ii. M-may produce lower figures than tender sums under normal tendering procedures. This is particularly so in the 2 stage tendering. iii, Cost of tendering is reduceds in that the QS has to do only a single tender analysis and that only few documents are produced. Disadvantages i Itmight take too long before construction starts {i. The long-term effect would be high costs- as the Quantity Surveyor has to hold several meetings with the Contractor to agree on each and every rate,