01. Introduction.

Tendering is the administrative procedure of sending out drawing and bills of quantities or specifications to contractors for them to state their prices for all the items of one contract. Besides the contractors price, other considerations include his competence and financial standing. The tender is treated as an offer to do the work for a certain amount of money (firm price), or a certain amount of profit (cost reimbursement or cost plus). The tender which is submitted by the competing firms is generally based on a bill of quantities, a bill of approximate quantities or other specifications which enable the tenders attain higher levels of accuracy, the statement of work. For instance, a bill of quantities is a list of all the materials (and other work such as amount of excavation) of a project which have sufficient detail to obtain a realistic cost, or rate per described item of work/material. The tenders should not only show the unit cost per material/work, but should also if possible, break it down to labour, plant and material costs. In this way the individual who is selecting the tender will be quite confident that the tender is feasible. Bids are not only chosen on cost alone. Sometimes contractors submit lower tenders to win the contract and win the work. Either the costs that the contractor incurs is greater than the price he is charging the client (as a consequence of a lower tender determining the contract sum), and thus is likely to go insolvent, or he will claim for "loss and/or expense" due to discrepancies in the contract documents (this can be done deliberately). The lowest tender is not always a feasible tender. The lowest tender is the most likely to increase the contract sum, the most throughout the course of the project.

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02. Task 01.

Specify why this client needs the engineer to call tenders and explain what are the benefits he will get by this exercise . Clients will usually identify their needs in terms of commercial or social pressure to change; by an examination of primary objectives such as: 1. Space requirements: the need to improve production levels, add to production capacity, accommodate new processes or provide domestic or social accommodation; 2. Investment: to exploit opportunities to invest in buildings; 3. Identity: to enhance the individuals or organizations standing in its market or society; 4. Location: could lead to a better use of resources, capture a new market or improve amenity; 5. Politics: mainly in the public sector. The clients experience of building will influence his expectation of the industry. Property developers on the one hand can influence their professional advisers and the contractual arrangements, and select a contractor with the right commitment to meeting project targets. The main aim is to achieve a degree of certainty in the building process. On the other hand, individuals and inexperienced clients are guided by their advisers and contractors, and will be offered what the construction team think they need. In general a client aims to appoint a team which he can trust and rely on to reduce uncertainties during a buildings design, construction and use. This is achieved by control of the following: 1. The design: by designing to a budget, taking advantage of the contractors experience, avoiding excessive use of new systems, designing for buildability, safety, security, producing a good life expectancy and low maintenance, allowing flexibility for future change and employing environmental and energy efficient designs; 2. The time: by contractors accepting more responsibility for meeting completion dates, and designers being more aware of the importance of complete information well in advance of work on site; 3. The cost: by achieving realistic cost estimates and tenders which reflect the final cost, reducing risk of contractual claims stemming from poor documentation and late

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receipt of information, and avoiding delays which can cause loss of revenue and costly funding arrangements. Many clients are prepared to pay for a good service and see these objectives being met through alternative methods of contracting. The client has traditionally occupied a passive role in the construction process. Standard forms of contract require the employer to pay for work properly executed, give possession to the site on the agreed date and appoint his professional team to design, supervise and inspect the work and account the finances. A more realistic view is that the client is the most important member of the team because, as patron for the scheme, he identifies the need for the building and he must pay everyone who is directly or indirectly involved in the construction process.

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03. Task 02.

Give a brief explanation about the Tender process and documents comprising with the tender. Construction Tenders are written offers from contractors to undertake a Construction work defined by drawings and specifications, in return of a certain sum of money. Most professionals will agree that the main objectives of tendering is two fold: firstly, the tendering process enables the employer to secure a suitable contractor to carry out the intended works at a competitive price; secondly, the process provides a level platform for tenderers to understand the requirements of the intended works and the various risks involved in carrying out the works before deciding on the tender price. When all the preliminaries are completed and the owner has decided to proceed with the work, tenders are invited. Legally this is an attempt to check if there would be interested contractors to carry out the work within the estimated limit of time and finance. The invitation to Tender is not binding to the owner to proceed with the work and does not cause any liability for any expenses to which contractors would spend in preparing and submitting their construction tender. A Tender Process (or "Invitation to Tender" process) is a method by which Contractors are selected for the Construction Process. The process involves creating a suite of Tender Documents to manage the Contractor selection process. The Tender Documents help the Owner to select the best possible Contractor available, and include documents such as the "Tender Document", "Finishing Schedule" and "Notes to Tenderers". The Tender Process includes all of the steps needed to select and contract a Building Contractor, quickly and efficiently.

There are four types of tendering. They are 1. Open tender. 2. Selective Tender. 3. Nomination. 4. Serial Tender (Selective and Nominal).

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Open tender type In open tender type, it is open to the public. All interested firms can apply for the contracts. Government organizations are normally using this type. AdvantagesNo favorisum. Price competition is very high. New firms can enter to the market. Employment opportunity s high. DisadvantagesSelected firms may not suitable for the project. Inexperienced firms can enter to the market. Tender evaluation period is very high. Tendering cost is high. Severe waste of estimating time.(more offer, one acceptance)

Selective tender type In this type client select tenderers who can give the offers.(6-8 contractors)First the client is inviting to contractors for tenders. Client fixes the time, prices and decided by favorable tenders. Mainly private sector is using this type.

AdvantagesClient can sure about selected contractor. Products quality is good. Aggregate tendering cost is less. Tender evaluation duration is lesser than open tender system. DisadvantagesFavorisum. Price competition is less. New firms cant enter to the industry.

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Nominated tender type In this type client writes letter to the contractor and inform his selection. Then the contractor forwarding bid to client. Normally government sector is not following this type. AdvantagesSure about the selected contractor. Early start of works. (planning and implementation consumes less time) DisadvantagesFavorisum is high. Price competition is less. New firms cant enter to the market.

Serial tender type At the time the client alls for tendering he may not have any projects but whenever he gets it client may call. At the beginning of the year client form the list & inviting to contractors according to order, normally for one year duration. AdvantagesQuality of the work is improving .Because the client knows the contractor well. Contractor is familiar with the details of construction so speedy and quality work can achieve. Gain benefits for continuity. DisadvantagesFavorisum. New firms difficult to enter to the market. In government tender procedure, they mostly use open tender type. Because in open tender type many bidders can bid . Because of it rate variation is very high. Because of it they can get low rates & can reduce the cost. Less cost is very important because government using the peoples money. If any important project has to be done within a short period government use Nomination tender type . Because as example maintains or a reconstruction of an important building after an explosions in an emergency, early start of work planning and implementation consumes less time. It is costly & timely benefitted thing.
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Content of a tender document. i. Instructions to tenderers About project Scope of work Client name & address Consultant name & address ii. iii. iv. v. Conditions of contract. BOQ. Specifications. Drawings Plans Sections Elevations Structural drawings vi. vii. Schedule of work. Form of tender Name Address Final tender sum viii. ix. Invitation to tender. Method statements.

Tender evaluation process. The purpose of bid evaluation is to determine lowest, qualified (eligible) responsive, evaluated bid out of the bids received. Till the opening of bids can withdraw or modifications of bids. First open the bids and check whether all the documents are submitted. Then check the omissions and arithmetical errors. Then check the front and end loading. Front loading is get large amount for preliminaries and then declare the project. End loading is done small amount for preliminaries. It is help to get attraction and get the contract. Then check the consistency in pricing according to market prices. If rates are higher than or lesser than 30% of market rates not going to consider the bids and ask them for explanations.
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Then check the % variations according to engineers estimates. Then schedule the bids according to order. Then compare the rates and select bidder with reasonable rates & workable and close to the consultants cost estimates. Then negotiate with him with or without any agreed discount. Finally prepare the bid evaluation report. Why a Tender Process? This additional service was created seeing and experiencing individuals utter confusion once they give out their plans for quotes to different building contractors. Quotes range from extremely high to average and low. With a tender invitation document every tenderer is quoting on the same quantities and personal choice items. Only then a well informed comparison can be made and with everybody on the same page the quess work is eliminated allowing you the client to make the right choices. By using a Invitation to Tender process, you can ensure that you choose the best available Contractor, at the best price. A qualified tenderer should have, Good reputation. Good quality of workmanship and efficient organization. Past experiences. Good financially stability. Good record of industrial relations. Equipment capabilities. Management capabilities. Technical knowledge. ICTAD approval or grading.

Because of these qualities client should have get clear picture about the bidder. Because of it we can sure about the bidder. It is help to get some sure about constructions are going clearly and rightly. And it is help to get sure the client about get more value for his invested money.

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04. Task 03.

Explain how you will plan to collect data for preparation of rates and the way you will use these data to build up a unit rate for an item where you cant find any norms in BSR.(Building Schedule of Rates)

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05. Task 04.

Determine a suitable method for preparation of a unit rate for Masonry works of a two storeyed office building (Demonstrate the type of materials availability of materials cost of materials in the area etc.)

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06. Task 05.

Calculate unit rate for the following Items, 225mm thick brick work with 1:5 cement sand mortar in ground floor We can consider some space like 0.75m x 2.25m. Then we can calculate rate for this area. After that we can calculate all brick work in ground floor.

0.75m 2.25m

y y

Brick work including motor= 225x112.5x75 m Standard size of brick = 215x102.5x65 m

Stretches - 5x2x10 Headers - 5x20

= 100 = 100 200

Area of brick work = 2.25x0.75 = 1.6875m Volume of brick work = 2.25x0.225x0.75 = 0.3796 m Stand size = 0.215x0.103x0.065 = 0.2878 m Volume of motor = volume of brick work stand size = 0.3796-0.2878 = 0.0919 m Cement for motor = 0.0919x7 = 0.6433 = 0.64 bags 1m for cement = 0.64/ 1.6875 = 0.379 = 0.38 bags Sand for 0.0919m motor = 0.0919 x 0.49 = 0.045 cube 1m for sand = 0.045/ 1.6875 = 0.0266 = 0.027 cube
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Brick for 1m

= 200 / 1.6875 = 119 nrs

Cost for the bricks

= 119x Rs. 8.00 = Rs. 952.00

Cost for the cement = 0.38 x Rs. 720.00 = Rs. 273.60 Cost for the sand = 0.027 x Rs. 5000.00 = Rs. 135.00 Skilled Labor 1 day Unskilled labor 1 day Total sum = Rs. 1200.00 = Rs. 800.00 = Rs. 3360.60

Add overheads & profit (25%) = Rs. 840.15 Unit Rate for masonry work per 1m = Rs. 4200.75

Construction of a timber bracket with 1.5m x300mm Aluminium bracings at 600 mm intervals. Aluminium bracings will be fixed to wall with 50mm long brass screw nails and rawl plugs. (rate shall include for all necessary material what ever is missing in the description).

We can consider constructed 1500mmx300mm timber bracket with 3Nrs aluminum bracing. 1500mmx300mmx32mm thick timber bracket = 1.5mx Rs. 600.00 = Rs. 900.00 Screw nails 50mm = 6Nrs x Rs. 25.00 = Rs. 150.00 Row plugs = 6Nrs x Rs.10.00 = Rs. 60.00 Sand paper (No.0) = 2Nrs x Rs. 40.00 = Rs. Thinner 80.00

= 0.25ltr x Rs. 150.00 = Rs. 37.50

Sand sealer (wood preservative)

= 0.25ltr x Rs.450.00 = Rs. 112.50

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Enamel paint

= 0.50ltr x Rs.750.00 = Rs. 350.00

Allow paint brushes Wood putty Carpenter 1 day (1000/=) Labor 1 day (600/=) Painter 0.5 day (800/=)

= Rs. = Rs.

50.00 20.00

= Rs. 1000.00 = Rs. 600.00 = Rs. 400.00

= Rs.3760.00 Add overhead & profit (25%) = Rs. 940.00

Total Sum

= Rs. 4700.00

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07. Task 06.

Why do we need a Bill of Quantities to build up a proper estimate?

Bills of quantities provide the most detailed basis for estimating cost. Each contractor tendering for work will be familiar with their use and can save wasteful effort in preparing quantities for the same building. They represent a clear list of items included in the contract and a schdule on which variations may be valued. Bills of Quantities for the same building. They represent a clear list of items included in the contract and a schedule on which variations may ne valued. Bills of Quantity give a fair basis for competition, and a firm contract sum is known in advance. A bill of Quantities is a trade order list of materials, labour and services necessary to complete a given project. For the projects the client may employ a proffesional QS to prepare a Bill of Quantities, each tenderer is issued with several copies of the Bill of Quantities. The Bill of Quantities is then used to assist the builder in arriving at his tender figure by pricing each item in the Bill of Quantities. Apart from being arranged in trade order, each trade has the facility for each description to be priced and totalled to give the total cost of each trade. The total trade cost is then transferred to a genaral summary to obtain the total project cost. In order to be able to refer to any section in the Bill of Quantities, each description is given a separate and distinct reference. It is also normal practice for each page to be numbered and labelled with the project name and trade. A Bill of Quantities prerared by a proffesional Quantity Surveyor is prepared in accordance with the rules set out in the SLS 573 / SMM 7. As such is not an order list. Other Bill of Quantity formats include; Specification and Bill of Quantities: As the name implies, this document contains both the specefication and the Bill of Quantities rather than having two separate documents. Specified Bill of Quantities: This document is similar to the specification and bill of Quantities except that the specification is incorporated with the Bill of Quantities in the form of preamble notes and the bill of quantity descriptions. The quantities do not normally form part of the contract but the preambles and descriptions are part of the contract.

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Elemental bill of Quantities: A Bill of Quantities prepared in elemental format rather than the traditional trade order sequence. Provisional bill of Quantities : A bill of quantities containing provisional quantities and issued to tenderes on the basis that the billed quantities will be adjusted during construction where they differ from the actual quantity. This type of bill of quantities is normally used where the drawings and specification cannot be finalised prior to calling tenders. It has the advantage of reducing the documentation period and allows the builder to commence work earlier. Operational Bill of quantities: This type is rarely used and is simply a Bill of Quantities presented in site operational sequence rather than the traditional trade order sequence. Builders Bill: An abbreviated Bill of Quantities where the quantities have not been prepared in accordance with the SLS573 / SMM 7, but often contain bulked quantities and incoporate sub-contract quatations where appropriate. They are used by builders when they are not issued with a Bill of Quantities by the client and serve as a quick and convenient method when preparing a tender. There are no formal rules covering their preparation and format. The amount of detail is the preregative of each particular builder.

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08. Task 07.

Determine the factors that can effect for the profit margin of the above mentioned Shopping complex at Nugegoda and how the health welfare and safty factors will effect through the construction period in this area.

When the contractors price the tenders they decide their profit margin. But when considering the profit at the completion of the project, it will be vary from target profit because of many factors. In this shopping complex building project, also there will be many factors effect for the profit margin of the contractor. This proposed land is situated at urban area facing high level road. So there will be problem of transportation of materials to the site due to traffic. Also materials can be damage or delay during transportation. So it is directly effect to delay works of the project. Also if contractor cannot handover the project relevant date he has to pay liquidated damages to the employer. Contractor has to spend his own money as liquidated damages. So the profit of the contractor is decreased. During the construction period, the contractor shall take full responsibility for the works. If any loss or damage happens to the works result of contractor during the period, the contractor shall rectify such loss or damage. Health safety & welfare is the major function in construction industry to protection of every time. In this construction project every workers should follow construction safety and welfare policy and safety rules for the protection. Also safety managers are responsible for the safety and they have to give solutions to identified hazards in construction firm. They address the employees from their always reminding health and safety is the most important thing to success of final work done. Everyone is responsible for health and safety in the work place. Management is responsible for providing workers with the necessary tools, training and protective equipment to perform the work. Safety is important at site. Labors safety equipment must be worn for each job, such as safety glasses for eye protection, safety caps, belts at all times within the confines of the construction area where there is a potential for failing materials or tools, gloves when handling materials, and safety boots are necessary for protection against foot injuries.

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Safe work equipments are intended to provide employees with guidance and direction to perform their work safely. Various types of protective equipments and clothing are used by the personnel working in industries as protective measures against injuries. The ideal personal protective equipments and clothing are those which are safe convenient to uses and easy to clean. Various types of personnel protective equipments and clothing are along with their specific applications to different body parts.

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09. Task 08.

Work out necessary overheads for the above shopping complex during construction period. In order to remain in business every contractor needs to cover their overheads and produce a profit for the future viability and expansion of the firm. Overheads and profit will be added to the cost of all work items to cover the cost of running the contractor's establishment and to provide a profit. The establishment cost includes the head office running costs for the various departments, suchasestimating, buying, planning andaccounts, together with those departments that are essential to any commercial firm such as marketing, strategic planning, public relations, personnel and training. The amount added for overheads and profit is normally given as a percentage, the allowance generally being decided by the contractor's board of directors. The estimator will provide the cost for labour, plant and materials, leaving the deciding factor in a competitive tender of whether the contract will be won or lost dependant upon the percentage addition for overheads and profit. The contractor has four choices for the distribution of overheads and profit:

1. Percentage addition to all individual rates. This has an advantage where a variation to the work adds additional quantity, since the contractor will recover additional overheads and profit, but the converse is also true. 2. Add the total amount to one item in the preliminaries section. Usually to the supervision item. This has the advantage that the amount cannot be reduced, and puts the contractor in a strong negotiating position where a claim is made for additional supervision owing to the contract period being lengthened. 3. Addition to the summary total at the end of the bills of quantities. This reveals the overheads and profit addition, which can prove to be a disadvantage if an overestimate of provisional sums and provisional quantities is made in the bills of quantities. A remeasurement of these items may lead to a reduction in the contract sum and hence also in the blanket addition. 4. Add the amount selectively to specific items in the bills of quantities. This will improve cash flow. This has advantages, but is also dangerous where work is subject to remeasurement.

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Supervision of work (wages of work supervisors). Supervision of labor (wages of gangers). Temporary works.      Fencing and protection. Clearing and tidying up. Collection of building materials including cement and steel. Site buildings for accommodation of part labors. Central stores building.

Watchers for field stores and security of sites. Transportation of supervisory staff. Site office, furniture, stationery, supplies, water, light, etc. Wages of site office staff. Tools and implements for miscellaneous work. Setting out and measurements. Providing samples for testing. a) Bonds for bid performance and fidelity guarantee. b) Insurance of work and workmens compensation. a) Interest in capital investment. b) Business turnover tax.

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10. Task 09.

Describe the open tenders and selective tenders with examples discuss the factors to be considered while selecting the list of Tenderers for the shopping complex.

Open tendering

Details of the proposed project are advertised in the local or trade publications. The advert would include: type of work

Outline details

scale of work outline details

programme of work

Contractors wishing to tender reply to the advertisement and receive the contract documents from the design team leader or architect. In some instances contractors may be required to pay a deposit. This covers the cost of documentation and discourages idle curiosity. The deposit is refunded upon receipt of a bona fide tender. Any contractor, irrespective of size or capability, may apply for the documents and tender. The advertisement is not legally binding and the employer (client) is not bound to accept the lowest tender. Once completed all tenders will be returned by the stipulated date and time. It is then the decision of the client with advice from the design team to choose the successful contractor. Local authorities generally use open tendering, but its use has been declining in recent years.

Advantages of open tendering

1. Unknown contractor can tender for the work. 2. There is no restrictive list of tenderers, which does not allow favouritism - a valid point for local authorities who are publicly accountable. 3. There is no obligation to tender therefore all tenders received will be genuine. 4. Open tendering secures maximum competition.
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Disadvantages of open tendering 1. Cost of tendering is expensive to the client who must bear the cost of reproducing multiple copies of drawings, bills of quantities, etc. 2. It is a lengthy operation requiring skilled estimating, the cost of which must be recovered on the job by the contractors. The higher the proportion of unsuccessful tenders the higher the cost to be recovered on the job. 3. The wrong contractor can be chosen. Little may known about the contractors - their record, experience, standard of workmanship, etc. 4. The lowest tender may not necessarily be a `bargain'. Choosing a low tender may result in: Poor work - a large number of, or even permanent, defects may occur unless there is close supervision by the client's agent. Poor organization - late completion, specialist subcontractors delayed, etc. 5. A contractor may be awarded work for which he has little or no experience and which he may be ill-equipped to deal with. 6. A contractor who has under priced his tender to win the contract may try to recoup this short fall through claims or hard and unsupported bargaining on the final account. 7. The worst scenario is that the contractor may become insolvent due to incompetence or low pricing on jobs. This will involve the client in expense and delay.

In summary, open tendering is a method which allows new or unknown contractors to break into the market, while maximizing competitiveness, and allowing the client to select a contractor offering one of the lowest prices. However, using unknown contractors without an established record is a risky option, as the client does not know how well the work will be carried out. Many good construction contractors avoid open tendering while others only resort to it if they are desperately struggling to win work. This is probably as good a reason as any for the client to consider alternative tendering options.

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Selective tendering This is the traditional method of awarding construction contracts. A number of contractors of known reputation are selected by the design team to submit a price for the project. The contractor who submits the lowest tender is generally then awarded the contract.

Tender list

The list of contractors will be made early in a project to allow the contractor to tender for the project if they wish. This will range from five to eight contractors depending on the type of work and value of the project.

The initial enquiry will sufficiently detail the project for the contractors to obtain a realistic appraisal of what is involved and to indicate whether or not they are interested in obtaining documentation (detail of information as advert for Open Tendering). Inclusion on the list of tenderers will depend upon the character of the project and the size, i.e. a contractor who builds motorways will not be geared to undertake an alterations project. Local authorities and government agencies keep a general list which contractors can apply to join. Contractors are carefully vetted before being put on the general list. From the general list, a `tender list' is made for specific projects. Areas to consider while compiling a general or tender list would include: 1. Standard of workmanship; 2. Size of company; 3. Contractors practice to sub-let work; 4. Reputation to meet completion dates; supervise quality of work and settle final account; 5. Examination of Boards of Directors - `a sine qua non'; 6. Financial stability - length of time in business, financial checks, bank references, etc; 7. Capacity available in relation to current workload; 8. Labour relations, number of disputes and stoppages in recent jobs; 9. The company's real willingness to tender.

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It may be necessary to visit a recently completed project or one still in progress by a contractor on the selected tender list to see how they operate on site. Once a general list is established it can be categorized into areas of work, i.e. road construction, house contractors, refurbishment contractors, etc. The established lists can be used on future projects but it is important that they are updated on a regular basis. If a formal list is not maintained an ad hoc tender list can be drawn up of contractors who are known to be suitable for a particular project. Alternatively, contractors can be invited by an advertisement, as in open tendering, to submit their name for inclusion in the list for a particular project - only those genuinely interested would reply.

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11. Task 10.

What type of a contract do you propose for the above shopping complex Explain your decision?

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Conclusion.

03 04 10

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Reference List
ICBT Handouts. http://books.google.lk/

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