Module 3

Award of Contract
 Syllabus Content

⚫ Contractor selection

⚫ Prequalification

⚫ Request for Proposal (RFP),

⚫ Request for Qualification (RFQ) Qualitative

⚫ Quantitative methods of contractor prequalification.

 SELECTION PROCEDURES AND
QUALIFICATIONS

⚫ The owner, typically assisted by the designer, formulates a

procedure to attract and evaluate interested contractors.

⚫ This procedure may be informal or highly structured,

depending on the size and complexity of the project and
owner’s organization.

⚫ Private sector owners may award contracts on the basis of

prices offered informally (even orally).

⚫ Most public agencies are required by law to use competitive

bidding.
 SELECTION PROCEDURES AND
QUALIFICATIONS

⚫ The first step in the selection procedure is to invite contractors

to submit information about their qualifications in the form of
a statement of qualifications (SOQ).

⚫ Invitation can be public notice or private invitation.

⚫ In general, competitive bidding for public projects requires the

following qualifications of contractors submitting bids: Valid
state and local license(s) to perform the work.

⚫ Proof of financial capability to enter into contract, as

evidenced by the ability to supply bid and performance bonds.
 SELECTION PROCEDURES AND QUALIFICATIONS

⚫ The following is a general checklist of

pre-qualification information that may be
requested by the owner:

⚫ Constructor name, location, license, and corporate

structure.

⚫ Business data: financial information, bonding

capacity, bank references, Construction experience:
projects constructed or under construction, size,
type, performance on schedule, and budget work
force on contractor payroll vs. subcontracting
 Pre-qualification information checklist

⚫ Equipment owned vs. rentals

⚫ Safety records: written program,
⚫ Actual experience
⚫ Quality control: written program
⚫ Resumes of key executive and supervisory staff
⚫ Current work load: remaining bonding capacity
⚫ Personnel to be assigned to key positions of
management and field supervision
⚫ Performance of completed project references
⚫ Record of litigation
 SELECTION PROCEDURES AND
QUALIFICATIONS

⚫ “Construction Contractor’s Qualification Statement

for Engineered Construction” for use as a suggested
generic pre-qualification statement or a
contract-specific qualification statement.

⚫ In examining and evaluating the information

submitted, the owner may make independent checks
on the contractor’s credit standing, visit projects
completed, interview owners and operators,
investigate safety records, and review other
indicators of performance capability.
 CONTRACTOR QUALIFICATIONS

⚫ Private owners may choose the contractor that they

consider the best qualified.

⚫ The owner may use the qualification information to

develop a “short list” of pre-qualified contractors who are
asked to: Bid competitively for the work on a unit-price
or lump sum basis.

⚫ Present priced proposals for negotiation of a contract on

mutually acceptable terms.

⚫ Public owners may use the qualification information to

select a short list bidders.
 SELECTION BY COMPETITIVE BIDDING

⚫ Two ingredients for true price competition bidding

are: Clear, concise set of construction plans,
specifications, other proposed contract documents
(Specify the product to be delivered)

⚫ Defined procedure for the bidding award process

(Provide a systematic approach).

⚫ The bidding procedure protects both the owner and

the bidders by providing a systematic approach to
bidding and awarding the contract.
 Role of Designer

⚫ Designer’s degree of involvement in the bidding process

depends on the agreement for professional services with the
owner.

⚫ In a typical arrangement, the designer: Prepares drawings,

specifications, bidding documents, and estimates of probable
costs for the review and approval of the owner.

⚫ Assists the owner in obtaining bids or priced proposals for

each contract to be awarded.

⚫ Assists the owner in evaluating bids or proposals and in

awarding contracts.
 Competitive Bidding for Public Works

⚫ Competitive bidding is usually mandated by law or agency

regulations for federal, state and local government projects.

⚫ Beyond the general mandate, there are numerous specific rules and
criteria that are defined by the set of documents issued to
prospective bidders.

⚫ These documents generally include: Bidding documents that apply

to the bidding process (e.g. invitation to bid, instruction to bidders,
information for bidders, and bid forms).

⚫ Contract documents specify contractor’s performance (e.g.

owner/contractor agreement, performance and payment bonds, the
bid or proposal, general conditions, drawings, specifications,
supplementary conditions, addenda and change or extra work
orders)
 Owner’s Bidding Procedures for Public
Works

⚫ The procedures required to solicit and inform

bidders, to receive and analyze bids, and to award
contracts under a competitive bidding system
include specific actions prior to the bid opening,
during the bid opening process after bid opening.

⚫ These activities are conducted by the owner, assisted

by designer, legal counsel and other advisers.
 Competitive Bidding for Private Work

⚫ The private sector owner may elect to follow essentially

the same procedures in securing competitive bids as has
been outlined for the public sector.

⚫ The owner may invite a broad spectrum of the

construction industry to participate, or may limit
participation to select bidders list chosen by
pre-qualification.

⚫ In either case, the owner and bidders rely on defined

bidding and contract documents.
 SELECTION PROCEDURES FOR COMPETITIVE
NEGOTIATED CONTRACTS

⚫ Where structured price bidding may not be

appropriate, the owner first compares the
qualifications submitted by interested contractors
then selects the contractor best qualified for the
project, according to established criteria, and finally
negotiates a contract for project construction with
that firm or person.

⚫ This approach generally results in some form of

reimbursable cost-plus-fee contract, although
negotiated lump sum or unit-price arrangements are
not precluded.
 SELECTION PROCEDURES FOR
COMPETITIVE NEGOTIATED CONTRACTS

⚫ If competition more directly related to construction or

design-build services is desired, the owner selects a list of
contractors on the basis of qualification analysis.

⚫ The owner then solicits proposals from contractors on

the list to address certain topics defined by the owner.
(similar to the previously covered contractor
qualifications)

⚫ With this information available, the owner makes an

evaluation of the organizational and cost elements of the
work and negotiates a contract with the contractor
judged to have the best overall proposal.
SELECTION PROCEDURES FOR NONCOMPETITIVE
NEGOTIATED CONTRACTS

⚫ Situations where the owner may select a specific contractor

and negotiate the contract include the following: The owner
may choose the contractor based on his/her performance on
work previously done for the owner.

⚫ The contractor may have unique qualifications for the work to

be accomplished The contractor is already working at the site.

⚫ The urgency of the situation requires immediate action In the

case of sole source award of a contract by a public agency, the
contractor may have unique characteristics. (e.g. successful
relationship with the owner, specialized expertise, immediate
availability for handling emergency)
 Pre-Qualification of Contractors

⚫ In this process, the financial stability and competency of the

contractors is determined before the tender for the work are
invites.

⚫ After the contractor pre-qualified the tender forms are

supplied to only eligible contactors who possess requisite
qualifications for the job.

⚫ The contractors classified based on their financial status and

technical capability.

⚫ The contractors has to set standard application form giving all

detailed information regarding his past experience of carrying
out similar works, work on hand at present, financial status,
qualifications, tools and plants, equipment available with him
for executing work.
 Advantages of Pre-Qualification

⚫ As only competent qualified contractors can submit their

tender, the question of verifying the competency of contractor
will not arise.

⚫ Under this process the work can be allotted to the lowest

capable who is capable to carry out the work.

⚫ Fair competition: As only eligible and qualified contractors

can submit their tenders, there will be fair competition
amongst the qualified contractors.

⚫ Elimination of unqualified contractors: The contractors

unqualified for work can not apply thus their time, energy etc.
in filling tender form is saved.
Disadvantages of Pre-Qualification of Contractors

⚫ No open competition: As only qualified

contractors have to apply for the work, there is no
open competition.

⚫ Mal practices in classification: There is every

possibility of mal practice at the time
pre-qualification of contractors.

⚫ Complicated application form: Any ordinary

contractor may not be able to fill the complicated
form correctly.
 Weighted Point Score Method of
Pre-Qualification of Contractors

⚫ First step is to weightage of each criteria/parameters in

ratio/decimal is determined by considering the total weightage of all
parameters like profitability, annual turn over, net worth etc.

⚫ The score of the first contractors (in points) for different

parameters/criteria is determined.

⚫ The weightage point score of the first contractor, for different

parameters are determined by multiplying the weightage (in
ratio/decimal) with the score.

⚫ The total weighted point score of the first contractor is determined

by adding the weighted point score for various parameters.

⚫ Following this method, the total weighted point score of the other
contractors is also determined.
 Weighted Point Score Method of
Pre-Qualification of Contractors

⚫ The maximum (possible) weighted point score for the

different parameters is determined by multiplying the
maximum point earmarked for the for the parameter
with its corresponding weightage (in ratio/decimal).

⚫ The maximum (possible) total weighted point score is

determined by adding the maximum (possible) weighted
point score for various parameters.

⚫ The cutoff weighted point score is determined by

considering the guidelines given for pre-qualification (ex.
If contractors who will get more than 60% of total points
will pre-qualify for bidding process)
Example Pre-qualification
Pre-qualification data of contractors
 Post-qualification

⚫ Under this procedure, the competency of the

contractors is determined after tenders are opened
out. The lowest tender is generally accepted and the
qualifications of the concerned contractors are
studies before actually signing the contract.
 Advantages of Post-Qualification

⚫ Full competition: As any contractor can fill the tender

under their procedure, full competition among the contractors
exists. This may lead to lower cost of the work.

⚫ Sound contract: Under this procedure, the details of one

particular contractor in relation to the nature of the proposed
work are only studied and hence, there are less chances for
such contracts to end prematurely.

⚫ Saving in time: Under this procedure, list of qualified

contractors is to be kept and hence the lengthy procedure of
collecting and maintaining the records of contractors are
avoided.
 Disadvantages of Post-Qualification

⚫ Doubts of favoritism: Normally, it is a practice to accept the tender o the lowest

amount. Now, if under this procedure, the contractor of the lowest tender is found
unfit for the job, it becomes very difficult for the officer in-charge to disqualify such
contractor and to accept the tender of some other contractor.

⚫ It is likely that a doubt of favoritism may raise against the officer in-charge for
recommending the other contractor.

⚫ Short period of decision: The contract is generally awarded after a short period
of the opening of the tenders and hence, the time between the opening of contract
and the award of the contract proves to be too short for deciding the qualifications of
the concerned contractors.

⚫ Undue influence: once the tenders are opened out, the contractor of the lowest
tender is known.

⚫ This contractor may then try to being under influence or pressure to the awarding
officer to so as to get the contract for the work without any relation to his capacity,
ability or financial condition.
Thank you…