Professional Practice

TENDERS

Ar. Abhishek.S.Patil
What is Lump Sum Tender?
• A lump sum tender in construction refers to a type of contract, commonly known as a lump sum contract or fixed-
price contract, where the contractor agrees to complete the entire project for a single predetermined price.
• This price is established before the work begins and is based on detailed project plans, specifications, and scope of
work provided by the client.
Key Features of Lump Sum Tenders:
• Fixed Price: The contractor commits to completing the project for the agreed-upon amount, irrespective of actual
costs incurred during construction.
• Defined Scope: These contracts are suitable for projects with a clear and well-defined scope of work, minimizing
ambiguities and disputes.
• Risk Allocation: The financial risk largely shifts to the contractor, who must account for unforeseen contingencies
within their bid. However, contractors can benefit from cost savings if they complete the project under budget
• Payment Structure: Payments are typically made in installments based on the percentage of work completed, with
retention money held back until project completion.
Advantages:
• Cost Certainty for Owners: Owners know the total project cost upfront, making budgeting and financing easier.
• Simplified Management: Contractors can streamline accounting processes since costs are fixed.
Disadvantages:
• Limited Flexibility: Any changes in design or scope after contract signing require formal change orders, potentially
increasing costs for owners.
• Higher Contractor Markups: Contractors may include higher margins in their bids to cover risks associated with
unforeseen expenses.
Lump sum tenders are widely used in construction projects where the scope is clearly defined, providing simplicity and
cost predictability for both owners and contractors.
Procedure for the Tendering Process.
• The tendering process in construction involves soliciting bids from contractors to carry out a specific project. It
ensures fair competition and helps project owners select the most suitable contractor based on technical, financial,
and legal criteria.
Steps in the Tendering Process
Pre-Tender Stage:
Define project requirements, scope, and objectives.
Prepare tender documents, including specifications, drawings, timelines, and evaluation criteria.
Invitation to Tender (ITT):
Issue an ITT or Request for Proposal (RFP) to potential contractors.
These documents detail the project scope, budget, and selection criteria.
Bid Preparation and Submission:
Contractors review the tender documents and prepare their bids.
Bids typically include technical proposals, financial offers, compliance documents, and timelines.
Bid Evaluation:
The project owner evaluates submitted bids against predefined criteria such as price, technical capability,
experience, and regulatory compliance.
This may involve detailed analysis of both technical and financial aspects.
Contract Award:
The owner selects the winning bidder based on evaluation results.
A formal agreement is signed between the owner and the contractor outlining terms and conditions.
Post-Tender Negotiations:
In some cases, further negotiations are conducted to finalize details before signing the contract.
This ensures clarity on expectations and deliverables.
Execution of Work:
Once the contract is finalized, the contractor begins work by appointing subcontractors, obtaining permits, and
initiating construction activities.
Notice Inviting the Tender:
• The process of issuing a notice in tenders, often referred to as a "Notice Inviting Tender" (NIT), is a crucial step in
the procurement process. 1 It's essentially the formal announcement that an organization is seeking bids for a specific
project, service, or supply.
Key Steps and Components:
Preparation of the NIT:
The organization preparing the tender defines the scope of work, specifications, eligibility criteria, and terms and
conditions.
This involves creating a detailed document that outlines all the requirements for potential bidders.
Key elements included in the NIT:
•Tender title and reference number.
•Description of the work or procurement.
•Eligibility criteria for bidders.
•Submission deadline.
•Bid security (EMD) requirements.
•Instructions for obtaining tender documents.
•Contact information for inquiries.
•Evaluation criteria
•Mode of bid submission.
Publication and Distribution:
•The NIT is then published to make it accessible to potential bidders. Common methods include:
•Official websites: Government websites or the organization's own website.
•E-tendering portals: Online platforms specifically designed for tender publication and submission.
•Newspapers: Advertisements in relevant publications.
•Official gazettes: For government tenders
The goal is to ensure wide dissemination of the notice to attract a competitive pool of bidders.
Providing Tender Documents: Interested bidders can obtain the detailed tender documents, which may be available:
Online for download.
In physical form at a designated location.
Often there is a fee associated with obtaining the full tender documents.
Handling Queries and Clarifications:
•The issuing organization provides a channel for bidders to ask questions and seek clarifications regarding the tender.
•This may involve pre-bid meetings or written responses to inquiries.
•Any changes or addendums to the original tender are issued as corrigenda, and distributed to all interested parties.
Managing the Submission Process:
•The organization establishes clear guidelines for bid submission, including deadlines and formats.
•This may involve online submissions through e-tendering platforms or physical submissions in sealed envelopes.
Importance of the NIT:
•Transparency: Ensures a fair and open bidding process.
•Competition: Attracts multiple bidders, leading to competitive pricing and quality.
•Legal Compliance: Adheres to procurement regulations and guidelines.
•Efficiency: Streamlines the bidding process by providing clear information to bidders.
Procedure of Opening the Tenders:
• The procedure for opening of tenders in construction follows a structured and transparent process, especially for
government and public sector projects.
1. Tender Submission Deadline
• Bidders must submit their tenders before the specified closing date and time.
• Late submissions are usually not accepted under any circumstances.
2. Tender Opening Meeting
• Held immediately after the deadline or at a pre-announced date and time.
• Conducted by a Tender Opening Committee (TOC) which includes authorized officials.
• A representative from the client/owner/consultant may also be present.
• Bidders or their representatives are allowed to attend (if specified in tender conditions).
3. Verification of Envelopes
• The envelopes (sealed) are checked for:
• Proper labeling (Name of the bidder, tender number, etc.)
•Any tampering or damage.
•If two-envelope system is used (Technical + Financial), only Technical bids are opened first.
4. Opening and Recording
• The tenders are opened in the presence of all present.
• Key details from each bid are read aloud and recorded:
• Name of bidder
• Tender amount (if financial bid is opened)
• Earnest Money Deposit (EMD) details
• Required documents (license, certificates, etc.)
Procedure of Opening the Tenders:
5. Preparation of Tender Opening Register / Minutes
• A formal record of the tender opening is prepared and signed by:
• All committee members
• Bidders’ representatives (if present)
• A copy is often shared with relevant departments for further evaluation.
6. Technical Evaluation
• If it’s a two-cover system:
• Only Technical Bids are evaluated first.
• Qualified bidders are then notified about the date of Financial Bid opening.
7. Financial Bid Opening
• For those who passed the technical stage, Financial Bids are opened.
• Process is again recorded, and the lowest responsive bidder (L1) is identified.
8. Award Recommendation
• The committee recommends the most suitable bidder (usually L1) for award, based on:
• Technical compliance
• Financial competitiveness
• Experience and capability
•All steps are governed by tender rules, CPWD manuals, CPPP guidelines, or state PWD procedures, depending
on the project type.
•In case of e-tendering, the system logs and timestamps every step electronically.
Scrutiny of Tenders:
Scrutiny of tenders in construction is a critical step in the procurement process, ensuring that bids are thoroughly
examined for compliance with tender requirements and to select the most suitable contractor. Here’s an overview of the
scrutiny process:
Scrutiny of Tenders: Key Steps
Initial Examination:
• The first step involves checking if all bids comply with the essential requirements outlined in the Invitation to
Tender (ITT). This includes verifying that all necessary documents are submitted and completed correctly.
• Non-compliant bids may be disqualified at this stage to focus on suitable submissions.
Technical Scrutiny:
• A technical committee, often consisting of experienced officers and experts, evaluates the technical validity of the
bids. They assess aspects such as methodology, resources, and sustainability proposals.
• This committee may seek further clarifications from bidders if needed.
Financial Scrutiny:
• Financial aspects of the bids are reviewed to ensure they meet the project's budgetary requirements. This includes
checking for any conditional offers or missing earnest money deposits.
• Only bids that meet financial criteria proceed to detailed evaluation.
Detailed Evaluation:
• Each compliant bid is scored against predefined criteria such as cost, technical capability, past performance, and
sustainability.
• This step ensures a fair comparison of all bids.
Post-Scrutiny Activities:
• After scrutiny, a tender report is prepared outlining the evaluation process, findings, and recommendations for
contract award.
• This report serves as documentation for the decisions made during the scrutiny process.
Importance of Scrutiny
Ensures Compliance: Scrutiny ensures that all bids meet the necessary legal and technical requirements.
Promotes Fairness: It provides a transparent and fair basis for evaluating bids, reducing the risk of bias.
Project Success: By selecting the most suitable contractor, scrutiny contributes to the overall success of the project.
This structured scrutiny process is essential for maintaining the integrity and effectiveness of the tendering process in
construction.
Preparation of Comparative Statements.
• Preparing a comparative statement in the context of tendering involves creating a document that compares and evaluates
the bids received from different contractors. This process helps in selecting the most suitable bidder based on various
criteria such as price, technical capability, and compliance with tender requirements.
Steps:
Identify Evaluation Criteria:
• Determine the key factors to compare, such as bid price, technical expertise, experience, and compliance with
specifications.
Compile Bid Information:
• Gather all relevant details from each bid, including financial offers, technical proposals, and supporting documents.
Create a Comparative Table:
• Set up a table or spreadsheet with columns for each evaluation criterion and rows for each bidder.
• Fill in the data from each bid, ensuring consistency in formatting and units.
Evaluate and Compare Bids:
• Assess each bid against the defined criteria, considering factors like sales tax, excise duty, freight charges, and any
discounts.
• Highlight any discrepancies or non-compliances in the bids.
Rank Bidders:
• Based on the evaluation, rank the bidders according to their scores or compliance levels.
• This ranking helps in identifying the most suitable bidder(s) for the project.
Documentation and Approval:
• The comparative statement should be thoroughly documented and reviewed by relevant authorities.
• Signatures from the preparer and reviewer(s) are essential to validate the document.
Preparation of Comparative Statements.
Importance of Comparative Statements in
Tendering
Transparency: Ensures a transparent evaluation
process.
Fairness: Allows for fair comparison of all bids
based on predefined criteria.
Decision Making: Facilitates informed decision-
making by providing a clear overview of each
bidder’s strengths and weaknesses.
THANK YOU