Module 2 - Tenders
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Module 2 - Tenders
• Types of tenders
• Tender Notice
• Inviting
• Work order
• Tender document
• Tender acceptance
• Tender for demolition work
• Earnest money deposit
• Security deposit
• Retention amount
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What is Tender?
• Tender means an offer to carry out work, that is pre-described or to supply or purchase goods of
prefixed specifications at a price to be quoted the tenderer.
• Tender is an offer which incorporates the sum of money, time and other conditions required to
carry out the contract obligations in order to Complete a project or a part of it consisting of
specified works , at a price quoted by the tenderer.
Tendering
• Tendering is the management and commercial function of determining the tender based upon
the estimate and other details prepared by contractor’s estimator and other personals.
• Architect himself is not builder – owner conducts process of calling tenders or rate quotations
from contactors with the help of architect
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Tender
• It is an offer in written form: Legally speaking, it is an offer to receive an offer for the work, within
the 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.
• c) No item should be over looked and special condition.
Difference Between A Tender And A Contract
• The term tender formally means an invitation to trade under the terms of offer.
• A contract is the term used for when the parties have reached agreement.
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Essential qualities of a good tender:
• 1. Tender should be based upon definite and detailed information. The items of work described in
bill of quantities included in the tender should be very clear and specific.
• 2. Drawing shall be supplied wherever details are involved. Wherever description is difficult,
drawing should be given to complement description.
• 3. All factory-made products should be specified as far as possible with their trade name (close
specifications). You may attach a list of approved makes or manufacturers to the tender
document.
• 4. Avoid as far as possible the use of phrase “As approved by architect”, Instead spell out more in
details your requirements and if needed, supplement the statement by a drawing.
• 5. Basic price of material shall be mentioned in the tender.
• 6. The basic concept of tendering is a competition on equal base. Therefore, it is essential that
information given may be in the form of specifications, conditions of work, abstracts, quantities or
drawings shall be same information to all the contractors who shall offer tenders.
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COMPONENTS OF A TENDER
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Components of a tender : Detail
A checklist.
1. Instructions to contractor
1.1 Type of tender (Item rate tender or lumps um tender).
1.2 Location and brief description of work and name of owner. (Name of work, site address and owner’s name
1.3 Price of Blank tender form.
1.4 Amount of Earnest Money Deposit (E.M.D) to be paid to whom and how.
1.5 Time and place of submitting filled in tender.
1.6 Note: Owner reserves right to reject any or all tenders without giving reasons. (This note is important and
shall not be forgotten.)
2. General conditions and preliminaries:
Prepared by the architect’s office.
In this, you should not forget to refer standard specifications, such as ISI or P.W.D.
This should also include a list of Basic Rates of major building materials and a list of approved manufactures of
materials
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Components of a tender : Detail
A checklist.
3. LETTER OF OFFER:
From contractor to Architect.
This letter is prescribed by architect’s office. (a specimen letter given in Appendix 14.I)
4. Copy of Articles of Agreement and General Conditions of contract. (Printed papers available with
I.I.A)
5. Bill of Quantities (Contract Bill) only in case of an item rate tender.
6. Drawings (Contract Drawings) giving location, overall size, types of building construction etc. for
an item rate tender. OR In case of lump sum tender, a complete set of working drawings including
R.C.C. schedule or structural steel details etc.
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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
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TENDER NOTICE / NOTICE INVITING TENDER
Format of an ideal Tender Notice
• Name of the Project.
• Name & Address of the Company floating the tender.
• Name of work, materials or services.
• Place of work location.
• Approximate estimated cost of work.
• Earnest Money.
• Period of completion.
• Date on which the Tender Document sale commences.
• Date and time up to which tender documents can be obtained.
• The cost of tender documents.
• The date and time up to which the tenders to be submitted and
are to be opened.
• Specification.
• Eligibility Criterion. Prepared by [Link]. Shafna Maliyakkal
METHODS OF CALLING TENDER
Types of tender: Types of Client:
1. Private or an individual owner.
Open tender/ Public tender
2. Semi-public organizations
Close tender 3. Public Bodies such as Government
Competitive tender Departments.
OPEN TENDER
• A bidding process that is open to all qualified bidders and where the sealed bids are opened in
public for scrutiny and are chosen on the basis of price and quality.
• The system of invitation of tender by public advertisements through Newspapers or the Internet
in the most open public manner is called the Open Tender System.
• This is most effective way of obtaining competitive rates.
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Different methods of calling tenders
• Open / Public Tender
• In case of projects owned by the semi public or the public bodies, in the procedure to be adopted, there should be no room
for favoritism or a partiality. The competition should be open to all. Hence, a notice shall be published in a newspaper calling
the contractors to fill in tender for a project.
• In such a notice, the following information shall be given:
• 1. Name of the client (Owner of the project)
• 2. Address of the proposed work site and name of the project.
• 3. Estimated cost of project.
• 4. Earnest money deposit.
• 5. Cost of blank tender form.
• 6. Time and place of issuing blank tender forms.
• 7. Time and place of submitting filled in tenders.
• The biggest disadvantage in a public tender notice is that one does not know the abilities of contractors offering themselves to
work for the project.
• To get the work, one may quote low rates. But often such a contractor is unable to carry out the work and to produce work of
good standard. Realizing that he is not making enough profits or he is loosing on the job, the contractor looses an item even at
the cost of quality. The contractor will try to raisePrepared
claims for variation and extra items, arguing with an architect now and then
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on small matters. “The owner reserves the right to accept pr to reject any or All the Tenders without giving any Reasons”
METHODS OF CALLING TENDER
Limited tenders:
• In this case only a limited number of agencies are asked to bid for the job. These agencies may be short-
listed from the Approved list of the contractors. Disadvantage of Open Tender The process is slow
CLOSE TENDER
• Invited through known contractor.
• Usually to participate in close tender minimum is five tender.
• Advantage of the Close Tender - Do it fairly quickly in close tender, especially for the urgent jobs.
Disadvantage of the Close Tender - Get complained by public for keeping the tender [Link] good in
government
COMPETITIVE TENDER
• A tender is the completed and priced pre prepared document that lays out all the terms, conditions and
specification. The Council usually invites between 6-7 suppliers to provide a tender.
• The tender enquiry is issued to all suppliers on the same day. The tender period allowed for pricing and
submitting a tender varies; however it is normally around 4 weeks. Tender returns all come back in plain,
unmarked envelopes to the Head of Legal Services for opening by the Procurement team, on the same
day and at the same time
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TYPE OF TENDER
Item Rate Tenders –
• For major works, item rate tenders are adopted.
• Owner indicates quantities and units only for all items of work and the tenderer quotes rates
for each individual item.
• Payment is made for the actual work done based on measurements.
• Disadvantage : uncertainty of the final amount of the cost of construction.
Lump Sum Tenders –
• Scope of Work, construction drawings & detailed specifications are given to tenderer along
with terms and conditions of contract.
• Schedule of quantities may or may not form a part of tender documents.
• The tenderer quotes a fixed price for whole work tendered.
• If this type of tender is adopted, the owner will be knowing cost of work. However, this is
subject to the conditions that there is no variation in scope of work.
• This type of tender can be considered when scope of work is frozen; when planning, designing
and working drawings are completed before inviting tenders.
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TYPE OF TENDER
Cost plus fee Tenders
This method of tendering is adopted for-
• Emergency works
• For miscellaneous works
• For works in which scope cannot be defined properly at tender stage.
Contractor is paid his actual cost of materials, labour, hire charges of machinery & a fee towards his profit
and overheads.
This fee may be a percentage of total cost with or without a ceiling or a lumpsum amount.
Here contractor’s risk is minimum and owner’s liability is not known on the eve of commencement of
works.
Under some circumstances, this type of contract is adopted in government or private sector works.
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TYPE OF
TENDER
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EMD - EARNEST MONEY DEPOSIT
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LIQUIDATED DAMAGES & UNLIQUIDATED DAMAGES
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 utilised, 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.
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SECURITY DEPOSIT
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SECURITY DEPOSIT
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RETENTION MONEY
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SECURITY DEPOSIT VS RETENTION MONEY
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