Electrical Design, Estimation & Tendering

Electrical Design, Estimation & Tendering

An Introduction for Scientists and Engineers

Craft & Diploma Level

Zack B. Mukindia

Electrical Engineering

Meru National Polytechnic

School of Electrical and Electronics Engineering

Zack Mukindia. School of Electrical & Electronics Engineering @ Meru National Polytechnic Page 1
 Electrical Design, Estimation & Tendering

3.0 TENDERING 1. Request for tender is prepared:

What is Tendering? The request for tender outlines what is required, the
 Tender is defined as an offer contractual requirements and how you should respond.
 Tendering is the process of making an offer, bid or proposal, or Characteristics of a tender notice
expressing interest in response to an invitation or request for Notice inviting tenders should be clear, brief and should contain
tender. the following particulars
TENDERING PROCESS 1. Brief description of the work
There are seven main steps in the tender process:
2. Estimated cost putt to tender
1. Tender process is determined:
3. Period of completion of work
2. Request for tender is prepared:
3. Tenders are invited: 4. Earnest money deposit
4. Suppliers respond: 5. Cost of tender documents
5. Evaluation and selection: 6. Eligibility criteria for tendering
6. Notification and debriefing: 7. Production of documents for obtaining blank tender documents
7. Contracts established and managed: 8. Last date for receipt of applications for issue of blank tender
1. Tender process is determined: forms
The organization requesting the tender will determine the type of 9. Place and period of issue of tender documents
tender that will be used, as well as what will be involved in the 10.Last date for receipt of tenders and place of submission
tender process. 11.Date, time and place of opening of tenders
Pre-requisites for tendering
1. Availability of clear site free from legal or physical obstacles 2. Tenders are invited:
2. Adequate funds to make payment in time The value, complexity and business category determine how
3. Procurement of materials stipulated for issue to the contractor tenders are invited.
4. Finalization of designs and working drawings 4. Suppliers respond:
5. List of pre-qualified contractors if pre-qualification procedure is You should first obtain all relevant documentation. Then:
a. Attend any pre tender briefing sessions being conducted
adopted
b. Clarify any uncertainties
6. Statutory clearances to commence the work
c. Plan your response
7. Essential infrastructure at the site d. Prepare your response
8. Completion of any other pre-contract activity specific to the e. Submit your response in the right format, on time and at
work/site the right location
9. Free accessibility to site for inspection and later if the work is 5. Evaluation and selection:
awarded Each tender will be checked for compliance, and if compliant,
then evaluated against the criteria specified in the tender
documentation. The tender that offers best value for money

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will win the business.
6. Notification and debriefing:
When a contract has been awarded, the successful tenderer
will be advised in writing of the outcome. Unsuccessful
tenderers are also advised and offered a debriefing interview.
7. Contracts established and managed:
Generally a formal agreement will be required between the
successful tenderer and the relevant agency.
TYPES OF TENDERING METHODS
There are three types of tendering methods used in construction
industry!
1. Open Tendering
2. Selective Tendering
3.Negotiated Tendering.
Open Tendering
 An open tendering process is an invitation to tender by public
advertisement.
 There are no restrictions placed on who can submit a tender.
 Suppliers are required to submit all required information and
are evaluated against the stated selection criteria.
Advantages of Open Tendering
1. No Favourism (everyone can apply for the tender)
2. High competition in pricing ( client will take good prize)
3. It is a transparent process
4. New firms can enter into the market
5. Increased employment opportunities ( new firms comes)
6. New experience (new technology)
7. Helps contractors to grow
8. Contractors get new client
Disadvantages of open tendering
1. Selected contractor might not suit the project (ex: no experience)
2. Inexperienced firms can enter into the market
3. Unknown firms can enter into the markets
4. Waste of estimating time
5. High aggregate cost for tender (ex: electricity, transport)
Zack Mukindia. School of Electrical & Electronics Engineering @ Meru National Polytechnic
Electrical Design, Estimation & Tendering
6. High evaluation time (because we have to check all the documents)
7. Unrealistic competition
8. Arbitrations
Selective Tendering (restrictive tendering)
 Certain Contractors are invited to tender.
 These Contractors are selected on their integrity, ability and characteristics
before they are invited to tender.
 It follows that only firms of sufficient standing and experience in that
particular type of work will be approached.
 The lowest tender will generally have to be accepted.
Stages of selective tendering
 In selective tendering there can be two stages,
1. One stage selective tendering
2. Two stage selective tendering
One stage selective tendering
 Client advertise for contractor to apply for short listing
 Short list the contractors who are considered suitable to do the work &
approved list is maintained by the client. (competition)
Two stage selective tendering
 Two stage selective tendering combined elements of competition and
negotiation into a formula where the employer could utilize the contractor's
expertise at an early stage of the project cycle so as to maximize innovation,
ingenuity and quality and simultaneously optimize cost, time and resource
input.
 A contractor is selected competitively early in the design process.
 The tender documents contain approximately quantities of the major value
items.
 As design and planning proceed, the final tender is developed from cost and
priced data supplied with the initial tender.
 It involves
1. Selection of suitable contractor: - This involves the selection of a suitable
contractor and the establishment of a level of pricing for subsequent
negotiations.
2. Determination of Contract Price
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 Electrical Design, Estimation & Tendering

 Once a suitable contractor is selected, he will work together with the project 5. ICTAD grading and relevant documentary evidence: - ICTAD grading is
team start contributing to the pre contract process in his capacity as unbiased one that saying about the company which is good in construction work & that
but independent construction expert. company has evidence to prove that, their company is good in work &
 This contractor will contribute the following: completing projects.
i. Contribution as a Technical Advisor to the Design Process 6. Financial information: - Because some of the companies are new to the
ii. Practical Skills and Buildability industry. So their financial side is not stronger than the other old companies.
iii. Minimization of Project Delay 7. Experience as a main contractor: - Clients like to give their tender to an
 During this stage, a negotiation to reach an agreement on the final contract experienced company. So experience as a main contractor is very important
price is undertaken and the pre contract process is perfected. bench mark to get a tender from client.
 If no agreement being reached, the employer has an option to abandon the Negotiated Tenders:
tendering exercise and re-tender the works using any other tendering  The Client / Principal Agent will approach one Contractor selected on merit to
procedure. submit a tender for the work.
Advantages of Selective tender  The method used to arrive at the pricing is usually left to the Contractor and
 Well known contractor can be on the basis of a Bills of Quantities.
 Good quality  Often the services of a Quantity Surveyor is used to advise on rates and prices
 Less aggregate cost for tender during negotiations.
 Less evaluation time Reasons for applying this type of tendering are:
Disadvantages of Selective tender 1. Time does not allow for normal tendering on open tenders or selective
 Favourism tendering.
 Less price competition 2. Technicalities around the design and development of details can require the
specialist knowledge of the Contractor.
 Cartel tendering
3. Where the final cost requires to be established at an early stage of
 New firms cannot enter in to the market
development and the design will be controlled by the costs.
 Regular updating is necessary Advantages:
Factors which used by client to formulate the select list
i. Client has flexibility in terms of choosing their preferred contractor.
1. Information of the company: - Information enables the clients to know how ii. Time and cost savings involved in removing the tendering process.
much they can trust that company. It can allow early supplier involvement.
iii.
2. Awards & achievements: - When the companies are continuing their work iv. Contractor’s costs and pricing are more transparent as they are not seeking to
some departments presenting awards for best company of the year...etc. When win the bid purely on the lowest tender.
companies are offering awards clients like to handover their tender to these
companies. Because there's no any risk to the client.
Disadvantages:
3. Successfully complete projects:-it is essential to know the successfully
completed projects.
4. Work in progress: - The work they doing during they applying for the tender i. There are fewer options for the client to choose between and so there may be
is more important for client to handover their tender for the contractor. That is less innovation.
a benchmark for the company to take a tender. ii. The costs may be driven up by the lack of competitive bidding.

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iii. There is a heavy reliance on trust between the parties.
iv. Unless it is carefully structured and controlled, the negotiation process can
create an adversarial atmosphere, even before the contract has been awarded.
v. It can be seen as anti-competitive and exclusive, with the potential for ‘cozy’
relationships to develop between the client and the supplier.
Electronic Tendering (e-Tendering)
 This uses a secure portal to conduct the entire tendering process
electronically.
 This involves every step in the tender process from expression of interest
through to contract award.
 This form of tendering requires organizations to register an interest online,
at which point they will be able to access all tender information and
questionnaire(s).
Elements of Tender Request Documents
1. Description of the goods and services to be procured: this
will include what the work will involve, and any technical
specifications or details relating to requirements, deliverables or
outcomes of the project.
2. Conditions of tender: this stipulates the terms and
requirements that must be met in order to be considered for the
project or contract. There may be technical qualifications,
experience, licensing, legal or financial conditions that ought to
be met in order to be eligible.
3. Evaluation criteria: this outlines how your submission will be
assessed and evaluated. This should be adhered to and used as
a guide when preparing your tender submission.
4. Submission content and format: details may be provided on
how you should present your submission. There may be
specifications relating to length of submissions, file format,
presentation etc. Templates or response forms may also be
provided. It is important to use these when available, and
adhere to format and presentation instructions.
Zack Mukindia. School of Electrical & Electronics Engineering @ Meru National Polytechnic
Electrical Design, Estimation & Tendering
5. Process rules and information: this may include things such
as the deadline for submission; where and when it should be
submitted, what should be included in the submission; for
example pricing information or schedule, and person(s) to
contact for clarification or enquiries regarding the tender.
6. Conditions of Contract: Draft contract conditions: this may
indicate the general or standard terms and conditions of the
contract, with additions or alterations made when a winning
tender is announced. This should also include any non-
standard terms and conditions - these should be highlighted
within the tender documents
The ‘estimate’ and the ‘tender’
 This refers to the figure which is submitted to the client on the
form of tender i.e. the price for which the contractor is willing to
carry out the work.
 The estimate-is the net cost to the contractor of carrying out
the work shown on the drawings and described in the
specifications.
 It comprises of labour, material and plant costs together with
the cost of providing all the site services such as temporary
telephone, site huts, transport, electricity, site supervision, etc.
 The estimate is exclusive of management costs, overheads,
profit, allowances for risk and other tender adjustments
required , and it is only when these additional sums have been
considered and added on to the net cost as defined that the
estimate in converted into the tender.
Direct costs and indirect costs
For the purposes of tendering costs may be classified as
1. Direct costs
2. Indirect costs
Direct costs
These are costs which can be directly associated with the carrying
out of the builder’s contractual obligations on site,
They can be sub-divided into those associated with the actual
production of the building work such as materials, plant and site
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labour costs, and those which constitute the expense involved in

providing site back-up facilities and services without which the
building work itself could not be executed.
These includes
 Cost of supervision
 Temporary electricity supply
 Water supply
 Accommodation
 Transport and travelling
Indirect (head office) costs
 The cost involved in running the site and in producing the
actual building itself
 In addition to these costs, the contractor incurs much more
expense indirectly simply as a result of running his business.
 Indirect costs includes
1. Salaries of staff,
2. Telephone charges
3. Stationary, postage, books, etc.
4. Company cars
5. Bank charges
6. Electricity and fuel
7. Maintenance
8. Insurances
9. Company pension schemes
10.Replacement of furniture
11.Computer hire
12.Audit fees
13.Advertising
14.Salesmen, cars and commission
15.Journals, magazines and newspapers
16.Drawing office charges
17.Interest on working capital, loans, retention money
Profit
Profit is defined as the amount of income which remains after all
production and other costs have been deducted.
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