Meeting 3

Requesting & Giving

Estimates and
Tender Procedures
REQUESTING AN ESTIMATE
Purpose of requesting an estimate:

• Preparing budget

• Avoiding price changes

 The Letter
Dear Mildred,
I am writing this letter in order to inform you that I am planning to upgrade
my computer system. I request you to send me a detailed quotation regarding
the requirements for up gradation of my computer system.
Here is the list of items I would like to upgrade:
 Graphic card of 2GB
 RAM 2GB
 HDD capacity of 500GB
I have a kind request to you to please do guide me in selecting the latest
upgrades and branded company. The price range and the quality should be
according to my satisfaction. Kindly send me the quotation of the following
items and get in touch with me as soon as possible.
Yours Sincerelly,
____________
Kelly McCarthy
 GIVING AN ESTIMATE
This letter is one of the basic forms of correspondence for
most businesses, and a good format will make it more
readable and easier to compose.

The most important thing about any estimate is

that it addresses all information requested by the
client.

It's advisable to itemize a quote or estimate, so the

costs are obvious, and the client can see that
everything's been included.
It's advisable to itemize a quote or estimate, so the
costs are obvious, and the client can see that
everything's been included.

A quote can be considered a commitment to a price

for legal purposes.

That means you need to give accurate figures.

At this stage, you're also probably competing with

other quotes.

That can actually be a positive element in your own

quote. If you give a good, well presented quote, you
can use the quote as a selling point to your client.
Basic Estimates
The estimate consists of:

Itemized prices for goods and / or services

Discounts were applicable.

Warranties where applicable.

A time frame for delivery.

Additional materials in relation to your estimate

 Competitive Estimates

The basic estimates will be the same, but the Additional

materials part can be very different.

Some businesses will provide a lot of additional materials as

a sales pitch.

It's not a bad idea, either, because your client can see your
work first hand.

Below is an example of a software company's estimate to a major

retail client. Note the use of headings as itemization.As you can
see, they haven't left much to chance, in terms of providing
additional information and materials.
Addressee

Your Reference
Our Reference

Contacts

Dear……..
I'm pleased to give our estimate of costs for our new Red Rose software packages as requested. We've included some information
regarding our support packages and online materials, so you can see the full Red Rose suite of software.

Unit costs (per 100 units, minimum order quantity):

Red Rose Graphic Master $100
Red Rose High Definition Media $120
Red Rose Sound Studio $110
Red Rose Animator $140
Red Rose Media File Converter $ 75
Red Rose Database $110
Red Rose Gold package $450
(Note: The Red Rose Gold package is all the other packages combined.)

Discounts:
Per 200 units: 5%
Per 500 units: 10%
Per 1000 units: 20%

Warranties
Unlimited unconditional refunds / replacement on any defective packages.

Support information
Free customer service support for all our trade clients
Online and phone technical support for all users
Upgrades free to users with all Red Rose software

We're happy to discuss any questions you may have about our products, and to provide any additional information you need.

Yours sincerely
Signed
Title
Additional materials enclosed / attached for your
consideration:

• 5 Red Rose Gold packages for evaluation

• Copies of industry reviews of the Red Rose software
• Industry sales figures showing Red Rose market share
• Our Red Rose packages have been achieving high sales nationally,
and we can honestly say that we're having to work hard to keep
up with demand.
TENDER PROCEDURES
 WHAT IS TENDER?
Tender is :
 an offer to contractor to do the work for
a certain amount of money
 incorporate time and other conditions
required
 to carry out the contract requirements

 main reason is to complete a project

 The tender which is submitted by the

contractor is generally based on a bill
of quantities & specifications of the
statement of work.
 Difference between
TENDER & CONTRACT

TENDER CONTRACT

 A contract is the
 The term tender term used when
formally means 2 parties have
an invitation to reached
trade under the agreement.
terms of offer.
 TENDER SYSTEM

 The process of finalization of contracts

is achieved through the tender
process.
Advantages of the Tender process
 Most effective method of locking
competitive rates.
 New technologies and options are
received through open tender process.
 TENDER NOTICE
 The Tender Notice is
a brief description of
the job being
tendered
 to be published in
Newspapers and on
the Internet.
 The Internet is a very
cost effective way of
publishing the
tenders.
 Format of an ideal tender notice
1. Name of the Project. 9. Date and time up to
2. Name & Address of the which tender documents
Company offering the can be obtained.
tender. 10. The cost of tender
3. Name of work, materials documents.
or services. 11. Due date of submission
12. Eligibility Criteria
4. Place of work location.
5. Approximate estimated
cost of work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender
Document sale
commences.
 TYPES OF TENDER
1. Open tender

2. Close tender / Selective tender

3. Negotiated tender
 Open tender
 Bidding process that is open to all qualified
bidders
 Tender usually published in the newspaper and
internet
 chosen on the basis of price and quality.
 This is most effective way of obtaining many
competitive rates.
Open tender - advantages

 Any contractor can tender their work

 No favoritism occurred
 maximum competition
 No commitment( terikat) to tender, all
tender received will be genuine.
Open tender - disadvantages
 Client must bear expensive cost of tendering
( reproducing number of dwgs, bq etc.
 The wrong contractor may be chosen because
they are from unknown background
 Time consuming
Limited / selective tender
Limited tender
 Tender open to bidders in the category stated in the
notice only.
 Example: limited tender is for Bumiputra bidders
only.

Selective tender
 A number of contractor of known reputations are
selected by the design team to submit a price of the
project.
 The contractor who submit the lowest tender is
generally awarded the contract.
 The number chosen to bid under this tender is little
 they are chosen for their expertise and experiences
 Negotiated tender

 Under this method, only one contractor is approached

 normally because the skills of the contractor are such

that the architect and other members of the design
team needed from the contractor’s specialist
knowledge use for design stage

 Following the completion of the design, the contractor

will price the bill of quantities and then enter into a
negotiation with the quantity surveyor.
 Tender process
tender notice

 tender invitation

 tender selection

 tender award
 WHAT IS CONTRACT?
 A contract is an exchange of promises
between two or more parties to do, or
refrain from doing, an act which is
enforceable in a court of law.

 It is a binding legal agreement.

 TYPES OF CONTRACT
 Lump Sum Contract
 Cost Plus Contract
 Turnkey Contract
 Percentage of Construction Fee Contracts
 Lump Sum Contract

 Also named "Fixed Fee Contract".

 With this kind of contract the engineer
and/or contractor agrees to do- the
described and specified project for a
fixed price.
 Often used in engineering contracts.
 Suitable if the scope and schedule of
the project are appropriately defined –
to allow the consulting engineer to
estimate project costs.
 Cost Plus Contract
 purchaser agrees to pay :
 the cost of all labor and materials
 plus an amount for contractor overhead and
 profit (usually as a percentage of the labor and
material cost).

 This types of contracts are favored because:

 the scope of the work is indeterminate
 highly uncertain
 labor, material and equipment needed are also
uncertain.

 Under this arrangement - complete records of all

time and materials spent by the contractor on the
work must be maintained.
 Turnkey Contracts
 An agreement under which a contractor
agrees to :
 complete a product so that it is ready for use
when delivered to the other contracting party.
Turnkey refers to something that is ready for
immediate use, generally used in the sale or
supply of goods or services.