UNIT III: TENDER AND CONTRACT

Prepared by Ar. Raghavendran. R.

Associate Professor, MEASI Academy of Architecture, Chennai 600014
UNIT III:
TENDER AND CONTRACT

• Tender
• Definition
• Types of tender
• Open and Closed Tenders
• Conditions of Tender
• Tender Notice
• Tender Documents
• Concept of EMD
• Submission of Tender
• Tender Scrutiny and Analysis
• Recommendations
• Work Order
• E-Tendering
• Advantages, Procedures and Conditions
UNIT III:
TENDER AND CONTRACT

• Tender Definition
Tender is a formal offer for supply of goods or for doing a work

• Types of Tender
• Open Tender
• Published through newspapers or other media
• Work/tender can be participated through or by the empanelled
suppliers/contractors of that category
• Closed Tender
• Limited to certain number of contractors of that particular category
as per the value of the project
• Conditions of Tender
• Two Bid system
• Technical Bid
• Price Bid
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TENDER AND CONTRACT

• Technical Bid
The Tender Schedule requires,
a) Contractor’s ability to do the work
b) his manpower
c) Equipment and Machineries
d) Financial Stability
e) Quantum of works carried out
f) Time of completion of each project
g) Bank Guarantee and Capability of handling such works
h) Production of solvency certificate, income tax returns and performance
certificate

• Price Bid
• In this tender document, only the schedule of quantities is given which
points out the specification of a particular item of work and the quantity of
such item
• Tenderer has to give rates and final amount of each item including overall
project total cost based on quoted amounts.
UNIT III:
TENDER AND CONTRACT

• EMD (Earnest Money Deposit)

• Refundable Deposit to be made by intending tenderer to confirm their
earnest interest in the tendering process.
• To be made at the time of submission of tender documents
• To be paid in the form of a demand draft
• Amount will be normally 1% of the estimated cost of project and will be
clearly mentioned in the tender documents if required.

Tender Processing:
• Submission of Tender
• All tender documents are to be submitted on the prescribed day and time as
per tender conditions
• Place of submission will also be mentioned in the tender conditions
• Tender documents will be opened in front of participating tenderers or
authorized representatives
UNIT III:
TENDER AND CONTRACT

• Tender Scrutiny and Analysis

• As soon as the tender documents are opened by the employer, it’ll be handed
over to the Project Architect for further Scrutiny and recommendations

• The project Architect scrutinizes the said tender documents in the following
manner
• To ascertain if the contractor is capable of executing the work, his
credentials, financial background, performance certificate, etc.
• To ascertain the quality of work carried out by him in all his previous
work
• To check if any additional conditions are demanded by the contractor
• Whether the contractor has signed in all pages of the tender document
• To ascertain if the rates are given in figured as well as in words and also
no overwriting has been done, either in rates or figures
• The architect after having checked all the above completely, prepares a
comparative statement showing rates and amounts quoted by each
contractor and arrives at the final figure given by the contractor as well
as his own figure.
UNIT III:
TENDER AND CONTRACT

• Tender Scrutiny and Analysis

• After analysing the total figure arrived at by the Project Architect, he
recommends the name of the contractor to whom the work should be
awarded by the promotor/Owner. The promotor/Owner shall accept the
recommendation and allot the work to the contractor by means of issuing
work order with contract terms and conditions.
UNIT III:
TENDER AND CONTRACT

• Contract
• Definition
• Contract Agreement
• Necessity of contract
• Contents
• Articles of Agreement, terms and conditions, Bill of Quantities and
Specifications
• Certification of Contractor’s Bills at various stages
UNIT III:
TENDER AND CONTRACT

• Contract
• Definition
• A contract is one where the successful tenderer is awarded with the
execution of a particular project as recommended by the Project
Architect
• Contract Agreement
• The contractor will normally be agreeable to all terms and conditions
as stipulated in the tender conditions in the form of a general,
technical agreement having been signed between the owner and
contractor.
• Such agreement will comprise of the tendered cost of the project,
the completion time, defects and liability period, retention mount,
virtual completion, clerk of works, articles of agreement, etc.
UNIT III:
TENDER AND CONTRACT

• Contract
• Defects liability Period
• The period or time as stipulated in the tender schedule during which
time if tiny defects in the construction of the building is observed
and pointed out , it is liable for the contractor to rectify those
defects at his own cost and such a period is called defects liability
period
• Retention Amount
• A Certain percentage on the running bill produced by the contractor
will be deducted by the owner during the course of the work. This is
called a retention amount.
• Articles of Agreement
• An agreement which involves the Owner, the contractor and the
project architect. This also mentions the duties of the architect in
the process of completion of the project.
UNIT III:
TENDER AND CONTRACT

• Contract
• Virtual Completion Certificate
• In the opinion of the Project Architect, if the work is completed and
ready for occupation, he/she issues a certificate to that effect. This
certificate paves way for the contractor to get back 50% of the
retention amount held back by the owner.
• Clerk of Works
• A technical person appointed by the architect on behalf of the client
to take care of day to day works at site. He will be paid by the
Owner. Such technical personnel is called “Clerk of Works”. His
duties are to coordinate the construction work with the contractor at
site, interpretation of the drawings sent by the Project Architect,
interacting with the Client, Contractor and the Owner of the Project,
arranging for all site meetings, checking the quality of work being
done by the contractor from time to time and obtaining relevant
certificates of bills of the contractor by the project architect, etc.
UNIT III:
TENDER AND CONTRACT
• Contract
• Bill of Quantities and Specification
• Bill of Quantities is about the total quantity of any work to be carried out in
the building. It may be volumetric or Voluminous or areas wise. Based on such
quantities, the rates of each item could be worked out depending upon
specifications.
• Specification provides the details on the method by which the materials are to
be installed.
• Appendix
• In contract, when the agreement is signed between the Owner and Contractor,
the same contains an Appendix Clause, which comprises of,
• Defects Liability Period
• Period of Final Measurement
• Date of Commencement
• Date of Completion
• Liquidated damages
• Value of work for interim certificate
• Percentage of Retention Amount
• Limit of Retention fund
• Installment after Virtual Completion
• Rate of interest for delayed payments
UNIT III:
TENDER AND CONTRACT

• E-Tendering
• E Tendering is a process of carrying out entire Tendering Cycle Online
including submission of Price Bid such that Efficiency, Economy, Speed of
Internet can be harnessed.
• E Tendering Cycle can be broken in to Key Modules

1)Tender Notice Creation 7) Tender Storage & Opening

2) Tender Promotion 8) Tender Evaluation
3) Tender Document 9) Negotiation
4) Pre Bid Meeting 10) Tender Award
5) Bid Submission 11) Vendor Registration & Rating
6) Payment Gateway 12) Tender Audit & Storage
UNIT III:
TENDER AND CONTRACT

• Benefits of Tendering Authority

• Completely Automated Process
• Shortens Procurement Cycle
• Economical and Environment Friendly
• Greater Transparency
• Improvement in work culture in the departments
• System aided Evaluation process
• On the fly reports/comparatives statement
• Minimize Human errors
• Minimal Storage Spaces
• Change in Perception – Progressive Organization
• Lesser hassle of communication and administration
UNIT III:
TENDER AND CONTRACT

• Benefits to Suppliers/Contractors
• Anytime & Anywhere Bidding
• Fair, Free and Fearless participation for vendors.
• No dependence on Newspaper, Courier, Banks,…
• Zero Administrative hassles
• Can carry out all activities from any computer
• Economical – saving on Traveling cost
• Reduces efforts & cost of bidding
• No tenders can be missed because of distance
• Can submit bid on last minute
UNIT III:
TENDER AND CONTRACT
• Manual Vs E Tendering System
Manual Tendering System
Longer Procurement Cycle
Expensive
Paper Based Procurement
Restricted Mobility
No work on Holidays
Prone to Human errors
Content not sharable
Physical Security
Wastage of space to store bids
Not retrievable
Ideal till 2003
E - Tendering System
Shorter Procurement Cycle
Economical – Fixed Cost
Environmentally Friendly
Anytime – Anywhere Bidding
Bidding possible on Holidays
Automated & Accurate process
Shareable Content
Foolproof Security
Lifelong storage on CD
One click access to bids
For year 2004 & Beyond
UNIT III:
TENDER AND CONTRACT

• Government Guidelines

For E Commerce Activities – IT ACT 2000

Any document which is digitally signed, by digital certificate issued by a licensed
Certifying Agency (CA) who is approved by Controller of Certifying Agency (CCA)
will be considered as a valid document in the court of law.

For E Procurement – CVC Guidelines

E Procurement is allowed as per the guidelines of CVC order no. 46/9/03 provided
the E-Procurement is done in a fair and transparent fashion & IT Act 2000 is
complied.
UNIT III:
TENDER AND CONTRACT

• Time Based Access

• No activity can be carried out before due date & Time for e.g. Tender
cannot be opened even by authorized User before due date
• Server Time cannot be tampered as it is mapped to National Standard
Time Server

• Time Stamping
• Key processes are time stamped
• Tender cannot be preponed.
• Tenders cannot be submitted after Due date and time
• Tender cannot be opened before Due date and time
• All processes can be time stamped
UNIT III:
TENDER AND CONTRACT

• New Trends in Project Formulation and different kinds of execution

• BOT (BUILD – OPERATE – TRANSFER)
• Under this scheme the developer/contractor will get an opportunity to
own and operate the facility that’s being built as per Owner’s
requirements for some time and during this period the developer can
commercially exploit the facility so developed. After the specified
period the facility would be transferred to the Owner.
• Role of the private sector partner is to bring the finance for the
project and take the responsibility to construct and maintain it. In
return, the public sector will allow it to collect revenue from the
users. The national highway projects contracted out by NHAI under
PPP mode is a major example for the BOT model.
• BOO (BUILD-OWN-OPERATE)
• This is a variant of the BOT and the difference is that the ownership of
the newly built facility will rest with the private party here. The
public sector partner agrees to ‘purchase’ the goods and services
produced by the project on mutually agreed terms and conditions.
UNIT III:
TENDER AND CONTRACT

• New Trends in Project Formulation and different kinds of execution

• BOLT (BUILD – OPERATE – LEASE – TRANSFER)
• In this approach, the government gives a concession to a private entity
to build a facility (and possibly design it as well), own the facility,
lease the facility to the public sector and then at the end of the lease
period transfer the ownership of the facility to the government.
• EXAMPLE: Taking into consideration the high traffic volume near Apollo
Hospitals, the municipal corporation identified Apollo Hospital
Enterprises Limited to execute the car parking scheme on a build,
operate, Lease and transfer basis.

• DBOT (DESIGN – BUILD – OPERATE – TRANSFER)

• This funding option is common when the client has no knowledge of
what the project entails. Hence he contracts the project to a company
to design, build, operate and then transfer it. Examples of such
projects are refinery constructions.