The Tender
Procedure
Chapter 2
Definition of Tender
Tender is a statement from client who wish to provide
information about the proposed project to the
contractor.
• important way of procuring goods and services for a company (client).
• a document that lays down the terms and conditions of the offer; the
work required to be done that in an acceptable quality is also spelt out
in the document.
Function of Tender?
So that the client (the developer of the project) can choose
the most qualified contractor for carry out the proposed
project.
Tender notice
Quotation
an estimate of costs submitted by a contractor to
a prospective client
• formal document submitted by interested parties in response to an
invitation called tender by companies/owner/client.
• To select which of the bidders is the right party to run/supply the
product or complete the work.
• a standard business practice whereby suppliers/contractors are invited
to bid for products, projects and services.
Example of quotation
Difference between Tender
and Quotation
TENDER QUOTATION
Tender is the formal Quotation is the response
process of asking of the bidders where they
suppliers/contractors to bid quote their price for the
on the projects and services goods and services.
required by a client.
Tenders are more formal Quotation also refers to the
than quotations. estimate that people ask
from professionals for jobs
that they require done
TYPES OF TENDER
OPEN TENDER
SELECTIVE TENDER
LIMITED TENDER
NEGOTIABLE TENDER
PRE-QUALIFICATION TENDER
INFORMATION
TECHNOLOGY
OPEN TENDER
• Offered to all contractors.
• chosen on the basis of price and
quality.
• Usually contractors who offer the lowest
price will be selected.
• Also called competitive tender or public
tender.
INFORMATION
TECHNOLOGY
Advantages and
Disadvantages of Open Tender
Advantages 1. Provide an opportunity for newly registered
contractors or no experience.
2. Clients can choose the lowest tender price.
3. Ideal for construction costs is not difficult
and does not need any experience or
special qualifications.
Disadvantages 1. Bid preparation process takes a long time.
2. High risk.
3. Not grumpy on the use of the latest techniques
and equipment.
4. Difficulties in choosing a contractor.
SELECTIVE TENDER
• only invited contractors/suppliers
allowed to submit tenders.
• known by their track record.
• generally no more than 6.
• a preferred tenderer is selected based
on criteria such as price and
quality/experience and negotiations
entered into.
INFORMATION
TECHNOLOGY
Advantages and
Disadvantages of Selective
Tender
ADVANTAGES DISADVANTAGES
1. Contractors who participate in 1. Tender acquired is limited and
the offer have been selected close opportunities for those
among contractors. who are not being selected.
2. Clients are more confident of 2. Tender competition seize is
the quality of work. reduced.
3. Organization and equipment 3. New contractor did not get a
selected contractor is well chance to get an offer.
established.
LIMITED TENDER
• Released by the client to the
contractors who are in the class of the
qualifications specified in the offer
statement
• Bumiputra only
• Contractor qualifications obtained
during class list registration.
• Contractors are required to register with
the company (Construction Industry
Development Board) CIDB and PKK
• Class eligibility based on the contractor
company’s financial limits.
INFORMATION
TECHNOLOGY
Advantages and
Disadvantages of Limited
Tender
ADVANTAGES DISADVANTAGES
1. Quick selection process. 1. Skilled contractors and
2. Provide the opportunity to join specialists from other classes
tendering for contractors in are not given the opportunity to
certain classes enter the bid.
3. Provide competition to get 2. Competition to grab tender was
deals fairly with the same needy cause of other
contractor same class or contractors in other classes are
category. not eligible to tender.
4. Clients obtain quality building
contractors selected if really
experienced
NEGOTIABLE TENDER
• Negotiated tendering achieves a
contract between a client and a
contractor by direct negotiation, rather
than competitive bidding.
• This type of negotiation is used to
procure services in specialized areas.
• Contractors offering specialized
services include those who provide
construction of hydraulic systems or
airport planning, for example.
• This type of negotiation minimizes costs
for both the client and the contractor.
• The private sector frequently uses
negotiated tendering.
INFORMATION
TECHNOLOGY
Advantages and
Disadvantages of Negotiable
Tender
Advantages Disadvantages
1. Selected contractor has the 1. Close the opportunities to bid for
ability to project quality work. uninvited contractors.
2. Contractors who have the 2. Offer very limited competition.
experience and skills can
participate in the offer
negotiation.
PRE-QUALIFIACATION
TENDER
• Also known as Two Stage Tender
• Prequalification is used to identify
contractors who would be allowed to
tender for certain contracts.
– The Offer is made by the client to contractor
before the actual tender is advertised.
– Contractors who get early invitation must get
pre-qualification form to fill and return the form
to the client.
– An assessment is made based on the
conditions which determined by the client. The
aim is to find out the ability, background and
record of contractor work.
• Once a company is pre-qualified for a
particular contract it is then eligible to
tender for that contract.
INFORMATION
TECHNOLOGY
Advantages and
Disadvantages of Pre-
Qualification Tender
Advantages Disadvantages
1. Will reduce the need to evaluate 1. Require screening process
unqualified contractors. and the cost of advertising in
2. Allows the client to acquire a qualified pre-qualification stage.
contractor in terms of experience, Therefore, the process
ability and a good work record. becomes longer.
3. Allows for unqualified bidders to be 2. Tender received may be high
weeded out and thus helps to speed (cost) because few qualified
up evaluation of bids since only a contractors.
limited number of pre-qualified bids
have to be examined
TENDER DOCUMENT
The tender document is a document that contains all
the information required by the contractor to assess
the project offered price.
The offer document contains a number of items
listed below.
• Cover letter
• Invitation to tender
• Form of tender
• Terms and conditions of contract
• Bill of quantities
• Design drawings (general layout plan, construction drawings)
• Specifications
• An agreement,
• delivery period
• scope of works expected etc
TENDER NOTICE
- A process to call
contractors/suppliers for doing
certain jobs or provide certain
services at a competitive price.
- Usually done through press
advertisements by Govt. Bodies.
Now a days it is also done on their
web sites (online).
Closing of tender
The date within which a client requires tenders
to be submitted by tenderers or contractors.
Opening of tender box
• A tender box is a mailbox that is used to receive the physical tender or
bid documents.
• The tender box would be open for interested parties to submit their
proposals for the duration of the bid or tender.
• Once the duration is over, the tender box is closed and sealed and can
only be opened by either the tender or bid evaluation committee or a
member of the procurement department with two witnesses.
Example of Tender Box
Tender opening committee
Tender shall be opened by the Tender Opening
Committee, comprising of 2 persons. One of them has
to be an officer of the Management and Professional
Group. Appointment of Tender Opening Committee
shall be made in writing by the Head of Department.
(The Ministry of Finance Malaysia, 2014)
Tender report
A tender report is a brief history of the tendering process
and an analysis of each tender submission and any
subsequent negotiations.
It is generally prepared by the cost consultant for
submission to the client but should have observations and
contributions from the design team regarding the perceived
value of each bid.
The report should conclude with a clear recommendation
as to the best value for money offer
Tender validation period
The minimum validity period of a tender is 90 days from
the date the offer is closed. Agencies must plan so that
the decision and the offer can be made in the tender
validity period. A long validity period of time may result
in a higher price offered.
Extension of tender
Validation period
Time period for tender validation process is being extended
Extension of tender validity period should be avoided
and always request from the if their tendered sum do
not vary after the extension. If the extension is too long
a retender exercise may be necessary.
TENDER BOARD AND ITS
AUTHORITY
A Tender board is a committee or institution involved
in the Government procurement procedure.
It formulates requirements for the intended purchase
of goods or services, compiles these formulations in
a tender document, and hands these documents out
to interested contractors, usually for a fee.
After the closing date for bids, the tender board
evaluates the proposals received and decides on the
awarding of the tender.
TENDER AWARD
• Qualified contractors will be awarded the tender.
• Tender acceptance letter will be issued to the
successful contractor.
• Contents of the letter are the offer price, date of
commencement of work, the amount of security
deposit, insurance policies that need to be taken, etc
TENDER REJECTION
• The tender offer price is too low or too high.
• Contractors are still in the process complete other
projects which received earlier.
• has a record of unsatisfactory work.
• not comply with tender’s requirement.
• Tender form not fill completely.
• Contractors participate in the tender which do not
made in the class.
RE-TENDERING
To submit a second or subsequent tender.
Re-tendering may be considered under the
following circumstances;
• Offer do not confirm to essential specification.
• Wherever there are major changes in specification and quantity, which
may have considerable impact on the price.
• Prices quoted are unreasonably high with reference to assessed price
or there is evidence of a sudden slump in prices.
THANK YOU,
FOR YOUR ATTENTION