TENDERING PROCESS

Terminology
 ASL – Approved Supplier List
 EOI – expression of interest: a business expression indicating an intent to bid
 IFB – Invitation for bids: is an invitation to contractors or equipment suppliers, through a
bidding process, to submit a proposal on a specific project to be realized or product or
service to be furnished
 ITT – Invitation to tender: is a special procedure for generating competing offers from
different bidders looking to obtain an award of business activity in works, supply, or
service contracts.
 PQQ – pre-qualification questionnaire: a series of questions for potential tenderers to
answer regarding their level of experience, capacity and financial standing.
 ITV – Invitation to vendors
 RFA – request for applications
 RFD – request for documentation
 RFI – request for information: is a standard business process whose purpose is to
collect written information about the capabilities of various suppliers. Normally it follows
a format that can be used for comparative purposes.
 RFO – request for offers
 RFP – request for proposal
 RFQ – request for quotation or request for qualifications
 RFN – request for negotiation
 RFS – request for services
Tendering Procedure
1. Preparation of tender documents
2. Issue of notice inviting tender or tender call notice
3. Submission and opening of tenders and their scrutiny
4. Acceptance of tender and award of contract
 Tender Process

Pre-Tender Tender Evaluation Award &

Contract
• EOI • CFT / CFB • Tender • Preffered
• Pre- • Tender Opening Tender
Qualification • Tender • Tender
• Tender Addendums Evaluation
Documents • Close Tender • Tender
Interviews
• Tender
Recommendat
ion
 Bidding Process
Opportunity
Tender

Follow Up

Awarding
Evaluation

Bid Preparation
Announcement

PQQ Technical Pre-job Meetings & Award Letter/Note

EOI Financial Technical Offer Interviews Contract
RFI Approval Financial Offer Negotiations Signature
Contractual Terms Commencement
Review
Amendments &
Follow up
Documentation
Final Review
Approval
Submitting
Information to be given in a tender
notice
1. Name of the department inviting tender
2. Name of work and location
3. Designation of officer inviting tender
4. Last date and time of receipt of tender
5. Period of availability of tender document
6. Cost of tender document
7. Time of completion and type of contract
8. Earnest Money Deposit to be paid
9. Date, time and place of opening the tender
10. Designation of the officer opening the tender
Information to be given in a tender
document
 Instruction to Bidder
 Conditions of Contract
 Schedule of Requirement
 Specifications & allied Tech. details
 Price Schedule
 Contract Form
 Other Standard Forms
Pre-qualification Procedure
 Process of selecting a pool or set of right contractors for the project.
Sometimes works are awarded on the basis of quotations invited
from a group of ‘selected tenderer’ (a group of known reputed
contractors) who are considered suitable for that job. This method
is known as ‘pre-qualification’ and saves a lot of time.
 Pre-qualification is done based on the number of similar works
executed, experience, , staff strength, capital turn over, safety and
labour relations record etc.
 Contractors have to fill up the PQ questionnaire which includes
financial information, details of similar works, concurrent
commitments – any projects qhich are currently running, certificates
of completed jobs, testimonials of previous clients, organization
structure, quality and safety policy, construction methodology
adopted, plant and equipment details etc
Pre-bid conference
 There shall be a pre-bid conference in which the doubts of
the intending tenderers shall be clarified, besides discussions
on any additional suggestion proposed by the tenderers. If
found necessary, a corrigendum to the tender documents
would be issued to all the intending tenderers, and thereafter
no further query/condition shall be entertained. There would
be no bar to hold the pre-bid conference more than once,
especially in more complex types of works.
Evaluation of Bids
Award
Bid Evaluation
Opening of Bids Recommendatio
Report
n

Examination of Post- Notification of

Bids qualification Award

Evaluation &
Requests for
Comparison of
Clarification
bids
 Opening of Bids
 The opening of bids should take place immediately after the deadline for submission
in the presence of bidders’ representatives who wish to attend.
 Bids, modifications and withdrawals received after the deadline must not be opened.
 The outer envelope of these late bids and modifications should be opened first and
the names of the bidders submitting late bids or modifications read out and recorded.
The inner envelopes of all late submissions must be returned unopened to the
respective bidders.
 Withdrawal notices received prior to the deadline should be opened next and read out
and recorded.
 Bids which are the subject of a withdrawal notice must not be opened and must be
returned unopened to the respective bidders.
 All bids and modifications received prior to the deadline must be opened next.
 No bid shall be rejected or an opinion/judgment voiced as to its responsiveness at the
bid opening, except for late bids.
 Immediately after the opening of bids, all bids which were opened must be stored
safely and confidentially and be made available only to those directly involved in the
evaluation process.
 Preliminary Examination of Bids
 Each bid will be examined to determine if it:
 is properly signed and accompanied by a power of attorney;
 is accompanied by the required bid security;
 is complete and generally in order (if not, any omission must be noted);
 is substantially responsive to the bidding documents (if not, any deviations, omissions or
variations must be noted);
 is free of computational errors (any such errors must be noted); and
 requires any clarifications (any such clarification must be noted).
The evaluation committee must decide which deviations (including omissions and
variations) or reservations identified at this point are material and therefore the relevant
bids should be declared as not substantially responsive. If a bid is not substantially
responsive, it should be rejected and cannot be made responsive by correction or
withdrawal of the nonconforming deviation or reservation.
At the end of this stage, the committee should be agreed on:
 those bids which are substantially nonresponsive and should not be considered further; and
 any clarification which should be requested from bidders.
 The outcome of the examination should be summarized
Requests for Clarification
 All requests for clarification must be made in writing, and the
response must also be given in writing.
 A log of all requests for clarification and responses must be
kept.
 Requests for clarification can be sought at any time, up to the
contract award decision.
 Evaluation and Comparison of
Bids
 Bids which have not been declared substantially nonresponsive will then have to be
evaluated in depth. Before a bid can be evaluated the following must be done:
 computational errors must be corrected in accordance with the relevant provision in the
instructions to bidders;
 bid prices must be converted to a common currency in accordance with the relevant provision
in the instructions to bidders;
 adjustments should be made for any obvious omissions, deviations or variations which are not
considered to be material and which can be quantified;
 the adjusted bid price resulting from the above would constitute the basis for the subsequent
evaluation and comparison of bids.
 The detailed evaluation of a bid involves first checking that the technical
characteristics, functional performance and commercial conditions of the bid are in
accordance with the bid requirements.
 The next step is to apply the evaluation criteria specified in the bidding documents
and adjust each bid as appropriate using the evaluation criteria. Only the criteria
specified in the bid document can be applied. No new criteria must be introduced at
evaluation,and the specified criteria must be applied wherever appropriate. Specified
criteria cannot be waived during evaluation.
Evaluation and Comparison of
Bids
 Where there are a large number of bids to be evaluated (over six) and the
spread of bid prices is relatively wide, it is not necessary, in the first instance,
to evaluate all bids in detail. One can usually determine, from the specified
evaluation criteria, the range of bid prices relative to the lowest bid price
which stand a reliable chance of being the lowest evaluated bid. In such
cases it is recommended that, in the first instance, only those bids within this
range should be subjected to a detailed evaluation. If the lowest priced bid
is rejected during evaluation, the range must be predetermined, and all bids
in the revised range must be subject to a detailed evaluation.

 The adjusted bid price of each bidder will require adjustment in accordance
with the evaluation criteria in the bidding documents, in the manner and
details specified therein, to arrive at the evaluated bid price.
 The evaluated bid prices are compared and ranked in ascending order to
determine the bidder with the lowest evaluated price.
Post-qualification
 A successful bidder must be qualified to satisfactorily perform the
contract.
 Therefore, it must be determined whether the bidder offering the lowest
evaluated bid is so qualified.
 If bidders were prequalified prior to bidding, then a simple check should
be made to determine that the lowest evaluated bidder still satisfies the
qualifying requirements specified for prequalification.
 If no prequalification was done, then it must be determined that the
lowest evaluated bidder has the relevant previous experience, and
financial, technical and production capability and capacity to perform
the contract. This must be based on the qualifying criteria specified in
the bidding documents.
 A positive determination is a prerequisite for the award of the contract to
the bidder.
 A negative determination must result in rejection of the bid; in which
event, the committee must proceed to the next lowest evaluated bid to
make a similar determination of the bidder’s capabilities to perform the
contract satisfactorily
Award Recommendation
 The successful bidder whose bid has been determined to be
substantially responsive and has been determined to be the
lowest evaluated bidder and who has been determined to be
qualified to perform the contract satisfactorily, must be
recommended for award of the contract.
Bid Evaluation Report
 A bid evaluation report with the award recommendation must be prepared.
 The bid evaluation report should reflect the logical sequence of the bid evaluation
process in the following manner:
 receipt and opening of bids
 examination of bids
 substantially nonresponsive bids
 correction of arithmetic errors
 currency conversion
 adjustment for nonmaterial deviations
 bids subject to detailed evaluation
 evaluation of bids
 comparison of bids
 lowest evaluated responsive bid
 post-qualification
 award recommendation
 The bid evaluation should be prepared in the format outlined in the Model Bid
 Evaluation Report in the manner and detail outlined therein, including all forms and
annexes.
Notification of Award
 When the award recommendation has been approved, a
notification of award (letter of acceptance) should be sent out
immediately to the successful bidder.
 Negotiations must not be held with the successful bidder with
the intention of getting a reduction in price or a change in the
scope of the contract.
 Negotiations are only allowed under exceptional
circumstances
Notice Inviting Tender
 For execution of a work through contract, especially in an
open bidding system, the jobs need to be given due publicity
& a common practice is to publish “Notice Inviting Tender”.
NIT’s are generally publicized through press or internet.
 NIT’s would include name of the authority inviting bids, name
of the project, brief details of the project, estimated cost and
time of completion of the project, EMD etc.
Technical Bid
 Contains information that may be required to establish the
credentials of the tenderer
 A) EMD
 Power of Attorney
 Income & sales Tax clearance certificates
 Concurrent commitments and past experience
 Project Schedule proposed
 Organization chart proposed
 Cash flow projections
 List of Machinery, Equipments & Materials
Financial Bid
 Consists of the total price of the contractor to complete the
project.
 Total price and discount if any is conveyed to the owner by
means of a cover letter
 Also contains filled up BOQ in which the contractor enter
their rates in words and figures for all the items
Letter of Intent
 A letter of intent is a document outlining one or more
agreements between two or more parties before the
agreements are finalized.
Work Order
 Written order from the client providing specific
authorization to the contractor to proceed with
the performance of the contract without further instructions.
 Work Order includes specila terms and conditions, mode of
payment, security deposit. Total value of contract etc.
Short Tender Notice
 When a work is to be completed very quickly or no contractor
prefers to accept the work (THE TENDER IS FLOATED),
then a notice with short duration is again published by the
client. Such a tender notice is called “SHORT TENDER
NOTICE”.
 The terms and conditions remain the same as that for
ordinary tender notice.
QUOTATION
 For small jobs, the owner/engineer gives an offer to the
contractor for quoting rates for works and supplies required.
 No EMD is required with a quotation.
EARNEST MONEY DEPOSIT
 It is the amount of money to be deposited along with the
tender document to the department by the contractors
quoting a tender. This money is a guarantee against the
refusal of any contractor to take up the work after the
acceptance of his tender. In case of refusal, this amount is
forfeited.
 EMD of contractors whose tenders are not accepted will be
refunded.
 1% - 2% of the estimated cost of work is the Earnest Money
Deposit.
LIQUIDATED DAMAGES
 It is an amount of compensation payable by a contractor to
the owner due to delayed construction. This amount of
compensation is not related with real damage. This does not
relieve the contractor from his obligations and liabilities under
the contract. In case if a part of the project or premise is
used by the owner before its completion, the amount to be
paid is reduced in proportion to the value of the part that has
been utilized, after issuing the certificate of occupancy.
UNLIQUIDATED DAMAGES
 It is an amount of compensation payable when a contract is
broken. The party who suffers such a breach is entitled to
receive this amount from the party who has broken the
contract.
FIRM PRICE & FIRM PERIOD
 Sometimes owner award the work at a firm price or fixed
rate. As the labour wages and materials cost increases, it is
advisable to provide escalation and over run compensation.

 Firm period is the duration of time over which the firm price is
valid.
SECURITY DEPOSIT
 Security deposit is the amount the contractor has to deposit with the owner
before awarding a work, after his tender is accepted. This amounts to
generally 5% to 10% of estimated cost of the project and is inclusive of the
EMD already deposited by the contractor along with the tender. This will be
refunded to the after the completion of the project. No interest is paid on SD.
 The contractor has to fulfill all the terms and conditions laid down in the
contract and maintain quality and speed satisfactorily. If he fails to do so, a
part or whole of the SD is forfeited by the department. If there is any fault in
the construction and the contractor refuses to demolish and reconstruct then
the department will carry out that work using the SD.
 If the cost of the project is a huge amount, t the contractor is made to
deposit only 50% of the amount in the initial stage and then the rest of the
SD is deducted in installments from the running bills of the contractor.
 SD is not collected in the case of a contract for supply of materials, as the
supplied materials become the security.
Measurement Book
 Payments for all works done and for supplies made on the basis of
measurements are recorded in measurement books(MB). It is a most
important record since it is the basis of all accounts of quantities
whether of work done or of materials supplied and payment made
thereof. It is the original record of actual measurement.
 It should be so written that the transactions are readily traceable.
 These books should be considered as very important accounts records
and maintained very carefully and accurately as these may have to be
produced as evidence in a court of law, if and when required.
 Measurements of only completed work/portion of work should be
recorded in Measurement Book.
 The location of measurement, should be clearly described so as to
facilitate their easy identification.
 All work shall be measured net in the decimal system subject to the
tolerances specified unless otherwise stated. IS 1200 shall be referred
to the relevant parts for the method of measurement of works.
Measurements
 All measurements should be neatly taken down in an authorised
measurement book in ink issued for the purpose, and no-where
else. Each set of measurement should commence with :-
 full name of work as given in the work order,
 location of work.
 name of contractor
 number and date of agreement/work order,
 date of commencement of work as per contract/actual
 date of completion of work as per contract/actual
 period of claim,
 date of measurement,
 name & designation of the person recording measurement
INTERIM CERTIFICATE
 Interim certificate is the most frequenly used certificate in
construction contracts, often use interchangeably with
a progress certificate. It has to fulfill two functions, such
as controlling the work progress and normalizing installment
payments or interim payments, agreed with the contractor
 The certificate guarantees a steady flow of cash, which in turn is
the driving force of the construction industry. Payments to the
contractor's account are made before work is completed.
 Interim payments can be agreed in advance and paid at
particular milestones, but they are more commonly,
regular payments, the value of which is based on
the value of work that has been completed
The defects liability period
 The defects liability period(DLP), also called defects
notification period (DNP) under FIDIC, is the period after the
construction is completed and accepted (also called practical
completion), and where the contractor is responsible for
fixing (at their cost) any defects arising in the infrastructure
during the DLP/DNP. It is usually one year (could be less)
and is clearly stipulated in the construction as well and the
supervision contract.
Retention amount
 Retention is a percentage (often 5%) of the amount certified as
due to the contractor on an interim certificate, that is deducted
from the amount due and retained by the client.
 The purpose of retention is to ensure that
the contractor properly completes the activities required of them
under the contract.
 Contractor has to complete the scope of work under his contract
in order to receive the retention money amount withheld.
 This is how employer is protected against the money he pays in
monthly progress claims.
 With such retention held, the contractor takes the responsibility
to complete the construction project as per the design and
quality stated in the initial contract.
Mobilization money

 The Mobilization Advance is a monetary payment made by

the client to the contractor for initial expenditure in respect of
site mobilization, and a fair proportion of job overheads or
preliminaries.
 Mobilization Advance Payment (MAP) reduces contractors’
need for working capital.
Arbitration
 Most commonly used mechanism for settlement of technical
disputes in a construction project.
 In India, the Arbitration & Conciliation Act 1996 provides the
legal frame work for arbitration process.
 Technical disputes can be resolved by single arbitrators or a
panel of several arbitrators, but it should be ensured that the
number is odd.
 Often, one arbitrator each is nominated by the contractor and
the owner and these individuals together choose a third
arbitrator to complete the constitution of a bench of
arbitrators
Causes leading to Arbitration
 Faulty administration of contracts
 Deviations
 Suspension of Works
 Delay in payment of bills
 Default by Contractor
GCC
 Compensation for delay and incentive for early completion
 Time & Extension for Delay
 Escalation Clauses
 Deviations/ Variations
 Settlement of Disputes and Arbitration
 Payment terms