PROFESSIONAL PRACTICE

TENDERS AND CONTRACTS

 WHAT IS TENDER AND CONTRACT
A TENDER is called upon for executing
certain specified work or supplying
specified material, subjected to certain
terms and conditions like rates,time limit.
It is an offer in written form, legally
speaking it is an offer to receive an offer
for work within specified financial limits.
An architect must observe the following, before
inviting tenders
a) accuracy in bill of quantities as far as possible
b) all plans , specifications and details are correct
without any ambiguity
DEVELOPERS/CONSULTANTS
/PROJECT MANAGERS
CONTRACTORS
SUB-CONTRACTORS
SUPPLIERS
CONTRACT
When two or more persons have common
intension communicated to each other to create
some obligation between them,there is Said that
be an Agreement.
Agreement that can be enforced in court
The four essential elements of a contract are:
•Agreement
•consideration ( is the value given in return for a promise)
•Capacity
•legality
CALLING FOR TENDERS
Is the process by which a company ( private or government) invites potential suppliers to
submit offer for the execution of the project.
In simple words tendering calling procedure ( call for tenders) means that a public-sector
organization announces publicly that it wishes to have a contract executed
"Where the parties intend to initiate contractual relations, a submission in response to a call
for tenders can lead to the formation of contract. The call for tenders is the offer by the
owner to consider the bids it recieves and to enter into the contract to complete the project
where a bid is accepted.A bidder accepts that offer by submitting a bid that complies with
the requirements set out in the tender documents
GENERAL TERMS AND CONDITIONS OF TENDERS

1 The list of materials put up for sale by tender may please be seen at Annexure - 'A'
attached herewith.
2. The rates are to be submitted only in Annexure - 'B' attached herewith.
3. Ministry of Defense, Government of India, shall be hereinafter referred to as
stockholder.
4. Tender sets can be obtained from any of the under mentioned offices of MSTC
against written application and on payment of Rs. 300/- (all inclusive) per set by way of
Cash/pay order/Demand Draft in favor of MSTC Limited payable at station concerned.
5.The tender must be submitted by Specified Times on the date as mentioned on first
page of tender documents at MSTC Ltd. New Delhi.
6. All tender should be kept open for acceptance for a period of 45 (Forty Five) days
from the date of opening.
7. Tender will be opened immediately thereafter in the presence of such tenderers
who may like to be present.
8. The material are lying at various sites as per the details given in the Annexure ‘A’
TENDERING PROCESS
Tendering process can be divided into six stages. These stages are shown in below picture.

STAGE – 1 STAGE – 2 STAGE -3

APPROVAL TO
PREPARATION DOCUMENTATION
TENDER

STAGE -6 STAGE -4
CONTRACT STAGE -5
PROCESSING INVITATION
AWARDING

STAGE1:PREPARATION
•Final completion of drawings,specification,measurementItake-offProcess.
•Choose conditions of contract.
•Parties involved : architect,engineers,QS,client,projectmanager
STAGE-2: APPROVAL TO TENDER
The majority builders still obtain much of their work by system of tendering. There are three
principle method of choosing a contractor. They are,

•OPEN TENDER
•SELECTIVE TENDER
•NEGOTIATE TENDER
•TWO STAGE TENDERING
• SERIAL TENDERING
OPEN TENDERING
Contractors invited to tender for a contract through advertisements
• Can result in a large number of unsuitable firms tendering for the work
• Can result in wasted time and effort in the selection process
• Best prices by firms wanting to establish themselves
Advantages
Keep competition from large number of applicant.
Possibility to get competitive price.
No chance for favourism.
Provide opportunities to new comers, unknown contractors to enter to the market.
Disadvantages
Time and cost taken to review the large number of applicant.
The cost of tendering accumulated to the industry and general cost to the industry is
high. Difficulty to evaluate and select best one from wider range of applicant.
SELECTIVE TENDERING
• Architects will normally have a list of contractors who undertake different types of contracts
• Contractors are invited to tender on their proven record in relation to the type and size of
contract and their reliability
• Has in the past produced problems of 'ringing‘

Advantages

Cost of tendering is reduced.

Time consuming for the tender evaluation is reduced.
Allow only capable and approved firms are to be tender.
Provide limited competition and easy to screen and select.

Disadvantages

Let's competition forces high tender sum.

Opportunities for collusion among competitors and mislead the time.
Miss opportunities.(new comers)
Industry complain those who have not shortlisted.
NEGOTIATED TENDERING
• Usually used to employ contractors of a specialist nature, or to extend an existing contract,
i. e. where a wing is added to a building after the building has been started
• Cost Reimbursement contract is a variation of this which can be used when completion
time is more important than cost.

Why client went to negotiate?

 Business relationship
 Contractor, finance project (client find difficult to finance then negotiate with the
builders who is willing to finance the project)
 Continuation of contract
 Special circumstances (only one contractor available to work)
 Special expertise of equipment
 Wish to take advantages of the builder's specialized knowledge at the design stage.
 To have quick start
TWO STAGE TENDERING
• Used to bring in a contractor at the design
stage which is useful to advise the architect
of any problems with the design of the
building.
• The contractor would be selected by
tendering on an approximate Bo. Q, a bill
for a similar project or a notional bill
• Unit rates would be negotiated on the
basis of the original tender
SERIAL TENDERING
• This method tenders are invited from a selected list on
the basis of a typical (notional) bill of quantities.
• The contractor chosen normally submits the lowest price
who undertakes to enter into a series of contracts to carry
out the work using the rates in the notional bill of
quantities.
• Method reduces the tender costs and normally results in
contractors quoting low rates in order to obtain a
guaranteed programmed of work.
STAGE-3 : TENDER DOCUMENTS
Tender documents are prepared to seek tenders (offers).
Also tender document help to maintain & protect the relationship between client&
contractor.
DOCUMENTS TO TENDER
1. Invitation for bid
2. Instruction to bidder
3. Standard forms
4. Condition of contract
5. Form of tender
6. Bidding data
7. Contract data
8. Specifications I general and special
9. Bills of quantities (BOQ)with pricing preambles
10. Drawings
11. Schedules of additional infomation
• Sample copy of letter of acceptance
• Sample copy of bank guarantee for performance bond
• Schedule of day work rates
• Sample copy of bank guarantee for advance payment
• Sub soil investigation report
• Special/particular specifications
STAGE -4 : INVITATION
Based on selection of tendering methods
 Open competitive / bid tender- produce tender notice
 Selective-shot listed contractors will be invited to tender if they wish
 Negotiated-only one contractor is approached- direct entry to project

TENDER NOTICE / NOTICE INVITING TENDER:

 The Tender Notice is a brief description of the job being tendered which is 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
a. Name of the Project.
b. Name & Address of the Company floating the tender.
c. Name of work, materials or services.
d. Place of work location.
e. Approximate estimated cost of work.
f. Earnest Money. g. Period of completion.
g. Date on which the Tender Document sale commences.
h. Date on which the Tender Document sale commences.
i. Date and time up to which tender documents can be obtained.
j. The cost of tender documents.
k. The date and time up to which the tenders to be submitted and
are to be opened.
l. Specification.
m. Eligibility Criterion.
STAGE -5 : PROCESSING
• Received tender submitted by contractor
• Tender assessment / evaluation
Completed tenders are received
Arithmetical check
Reasonable tender sum
Reasonable completion time
Capabilities of tenders under considerations
• Tender recommendation / report – tender board

GUIDELINES TO FULFILL IN THE TENDER SYSTEM

The capacity, past credentials and financial status of the tendered is thoroughly investigated
before awarding the contract. These aspects should be commented in detail along with the
tender documents.
The rates should be quoted in the numbers and words without any corrections. To take
advantage of any possible increase in statutory taxes & duties, the tax component such as excise
duty, Sales Tax, Works Contract Tax, etc. should be clearly indicated.
Tender should not quote many special conditions as some of them may have financial
implications, did this can be added to your quoted cost. Also it creates confusion and creates
room for manipulative forces.
The rates quoted for individual items should be realistic and should not be abnormal and
unworkable.
STAGE -6 : AWARD CONTRACT
•Pre-award meeting with contractors – validation of lowest complying
bid
•Validate lowest bid - Pre-contract meeting with contractor for
contract signing
• Approval by tender board / treasury (tender exceeds RM10 mill.) –
an acceptance of tender form is issued to tendered , signed by the
authorized officer
THANK YOU
K.SUCHITHA 1701035 SEM-9 / ‘A’