Tendering , Bidding and

Contracting

by
Prof. Prahlad R
 Tendering Procedure

The first step that leads to the formation of a building or
engineering contract is an invitation to tender

An invitation to tender, is not an offer

It is an attempt to ascertain if an offer can be received from
interested builders to execute the work within the estimated
limit of time and finance

The owner or employer of the project sends it to known
agencies by post in the case of private works or

by public advertisement if the employer happens to be a
public body

The advertisement is called Tender Notice
• The party to whom the notice is addressed sends its response
to the employer which response is called: 'tender‘
• In engineering practice the word tender usually means an
offer by a contractor to undertake a work in return for a sum
of money
Revocation of Tender Notification
• Generally, the owner may at any moment revoke the
invitation to tender without making himself responsible for
any expenses incurred by persons in connection with the
preparation of the tenders
Before tenders are invited the following tender documents
should be ready
a) Notice inviting tenders in appropriate form briefly known
as NIT
b) Instruction to bidders (ITB)
c) Tender Form
d) Conditions of contract ( GCC & SCC)
e) The Schedule of Quantities of works (BOQ)
f) A complete set of drawings referred to in the schedule of
quantities
g) A complete set of specifications of the work to be done
Publishing NIT

Should be published sufficiently in advance to enable the
intending tenders to carefully work out their tenders.

A time less than one month is seldom sufficient

The contents of the notice should be so drafted as to attract
the attention of the tenderers for whom it is intended

Also to caution others who may not be interested or not
qualified to tender

In addition it should give sufficient information about the
proposed work to avoid no of queries

In the case of public works and government contracts, the
notice should incorporate the words "On behalf of the
President of India" or "On behalf of the Governor of the
State“
Information to be given in a tender notice:
1. Name of the inviting authority
2. Nature of the work and its location
3. Estimated cost of the work
4. Time limit for completion of the work
5. Type of bid such as item rate, percentage rate or lump
sum etc
6. Earnest money deposit and its mode of payment
7. Security deposit and its mode of payment
8. Blank Tender documents issuance date and address
9. Mode of submission of tender, namely one cover, two
covers or three covers
10. Sealed bid submission place, date and time
11. Date, time, place and procedure of opening of sealed bids
 EMD
 For works estimated to cost upto Rs Ten Crores or as notified
from time to time: 2% (Two percent) of the estimated cost.
 For works estimated to cost more than Rs Ten Crores or as
notified from time to time : Rs. Twenty lakhs plus 1% (one
percent) of the estimated cost put to tender in excess of Rs.
Ten Crores.
 In case of petty works costing Rs. 25,000/- or less the
Executive Engineer may, at his discretion, dispense with the
conditions for calling for Earnest Money
Refund of Earnest Money
 The earnest money given by all the bidders except the lowest
bidder should be refunded immediately after the expiry of
stipulated bid validity period or immediately after acceptance
of the successful bidder, whichever is earlier.
 Earnest money shall be refunded on receipt of Performance
Guarantee submitted on award of work.
MODES OF INVITING TENDERS
There are three possible modes of inviting Tenders
1. Negotiated Tenders

The owner may decide to call for discussions and entrust
the execution of the work to a contractor or with whom he
had an experience and developed confidence

owner negotiate the price to be paid with a single
contractor

The rates and or cost are mutually agreed and agreement
entered into

This mode is not suitable for public works
2. Limited Competition

Instead of inviting tenders openly, an employer may invite
tenders from few selected contractors in limited
competition

The owner may not be required to incur expenses and
spend time in public invitation

Care must be exercised to keep the names of contractors
competing in the process secret
Open Competition
• Tenders are invited by public advertisement such as
newspapers, periodicals, or trade journals
• The open competition is usually adopted for public works
• Tender notification must be published sufficiently in advance
and given wide publicity in national newspapers
• Draw back of this method is, the firm submitting the lowest
bid may be unsuitable for carrying out the work
• This drawback can be eliminated by Prequalifying of bidders
RFI, EOI, ROI, RFP, RFO, RFT, IFB, RFQ ????
Purchaser does Similar to an RFI Purchaser seeks Purchaser has Purchaser has
not have solution based clearly defined
sufficient Often used as a submissions to criteria or clearly defined
information to screening or meet their specification criteria or
write detailed short listing tool needs
Judged on both specification
request Purchaser is not Possibly no clear price and
Purchaser is not necessarily specification qualitative Judged
necessarily committed to factors
buying Greater primarily or
committed to
buying flexibility than Purchaser is solely on price
Likely to involve an RFT committed to
Likely to involve a further buying Purchaser is
a further request before Suited to
final decision professional committed to
request before
final decision services buying
 Instruction to Bidders /Tenderers (ITB)

Instruction to Tenderers should be prepared by the
employer/Engineer

Purpose is to convey information and instructions that will
govern preparation, submission and evaluation of tenders

The instruction to tenderers should state that the employer
does not bind himself to award a contract to any of the
tenderers

If remuneration is to be made to tenderers, the sum should
be mentioned. If not , it should be stipulated that all costs and
expenses incurred in the tender preparation shall be borne by
Tenderers.
Check list for preparing Instructions to tenderers

The language of the tender

Number of tender copies required

Which documents have to be filled and returned by the
tenderers

Requirement for each tenderer to provide a power of attorney

Any special rules regarding treatment of taxes, duties and
other fiscal matters in the tender

Validity period of the tender

Procedure for issuing addenda to the tender documents

Procedure for dealing with queries raised by tenderers

Procedure to be adopted for tenderers to inspect the site of
the works

Procedure for inspecting any special documents not issued
with the tender documents (ex. Site investigation reports)

Circumstances under which alternative offers may be
submitted

Confidentiality of tender documents

Procedure for dealing with requests for extension of time by
tenderers.

Rules relating to disqualification/rejection of tenders (ex. late
arrivals, incomplete etc)

Information about the evaluation criteria
 Conditions of contract
Conditions have been prepared to provide a fair sharing of
responsibility and risk between employer and contractor and
contain many independent clauses. Generally two types of
conditions of contracts widely used in projects:

General conditions of contract

Special conditions of contract
GCC
 The GCC contains standard terms and conditions which are
generally applicable for all contracts irrespective of the nature
of work, supplier type and other factors
 It is more of strategic in nature
 It would not be advisable to change or adjust GCC as these
terms and conditions might have a long term legal implication
 Needs legal expert in preparation of clauses
SCC
 Special Conditions of Contract relates to the specific contract.
It includes terms and conditions which are applicable for that
particular contract
 SCC vary for each contract depending upon the nature of
work, supplier type and other factors
 Special Conditions of Contract will mostly consist of clauses
which are applicable only to the particular job or contract
 Although it is important to get the SCC veted by legal team,

but since it is generally specific to one contract and more of

tactical (operational) nature, it's implications may not be as

deep as the GCC

ex: To change the look of your home for a particular event or

function, you generally do not tamper with the foundation of

the building but may change the interior decoration for

different events
Example clauses for GCC & SCC…..

GCC SCC
Prequalification
 Prequalification
• In India the system of prequalification of bidders gained
importance from world bank financed project.
• It has now become common for any major or even medium
works.
• For large and complex works or highly specialized jobs,
prequalification of tenderers is carried out
• In this procedure the invitation in the first instance is only for
prequalification
• The intending bidders are supplied with prequalification
documents
These documents include:
 Past experience
 Major works on hand
 Technical personnel engaged
 Financial capacity
 Equipment's in hand
 Other relevant information
The applicants furnish the information in the prescribed
format along with certificates and supporting details

The employer scrutinizes the information received and
applicants fulfilling the selection criteria are qualified and
intimated accordingly

The blank tender forms are then issued only to those
tenderers who are shortlisted in prequalification process
 PREPARATION AND SUBMISSION OF TENDER
1. Purchase /Collect Tender documents.
2. Study of tender drawings
3. Visit to the site of the work to ascertain:
4. Calculation or verification of quantities
5. Pre-bid meeting
6. Rate analysis
7. Working out percentage/ lumpsum/ Item rates
8. Bid pricing
9. Documentation
10. Bid submission
 Site visit
Sit e visit is made to ascertain the following parameters
a) Nature of site, access to it, foundation conditions, weather
norms, surface drainage, safety, extent of site available for site
office, labour camp, material dumps / stores, storage of
machinery, equipment or work shop shade and movement of
men and machinery in general.
b) Nearest railway station, bus station, fuel stations, banks, etc.
c) Sources and prices of raw material, suppliers with their
addresses, transportation facilities and cost involved.
d) Availability of local labour, skilled and unskilled, prevailing wages,
piece rate workers and their addresses.
e) Nearest sources of power, water, etc.
Pre-Bid Meeting
 Pre-Bid Meeting
Pre-bid discussion
 Before submission of the final bids by the Contractors, they are
given an opportunity to clarify their queries with regards to the
tender and accordingly make necessary provisions in their bids
 Pre bid meetings are also conducted to
• to bring clarity regarding sprit of various provisions – avoids
bidders to consider unwarranted assumptions
• to bring necessary modifications, if required
 It is important that the pre bid minutes are made a part of Contract
Agreement
 Raise questions from the point of view of avoiding conflicts on a
later date during execution
 Pre-Bid Meeting
Pre-bid discussion
 Such meetings are conducted in the presence of all bidders
 Attending pre-bid meetings may not be compulsory, but it
is recommended to be a part of it
 Many owners/consultants avoid pre-bid meeting
 Pre-bid discussions have an important relevance in case of
disputes on a later date
 An effective tender analysis leads to a fruitful pre-bid
discussion
Documentation
 The tenderer shall submit, with his Tender, a tender security in the
form annexed in the Instructions
 The tenderer shall price the whole of the Works, and submit a
Tender, in accordance with the Tender Documents. A Tender which
excludes part of the works may be rejected as unresponsive
 Each of the Schedules shall be completed as appropriate to the
particular Schedule.
 The Bill of Quantities shall be fully priced, with a rate entered for
each item.
 Each amount shall be carried forward to the Summary, the total of
which shall be carried forward to the Letter of Tender
 If any item is not priced, there shall be no payment for the work
described in the item, which shall be deemed covered by other rates
and/or prices.
 The tenderer shall also submit the following supplementary
information accompanying, but not forming part of, his Tender:
Name and address of the bank or other entity which will provide the
Performance Security
Conditions of Contract and undertaking to provide these security
documents in accordance with the exact wording of these Annexes
 Name and address of the insurers and their principal terms for the
insurances
 Details of the arrangements and methods which the tenderer
proposes to adopt for the execution of the Works, in sufficient
detail to demonstrate their adequacy to achieve the requirements
of the Contract including completion within the Time for
Completion;
 Any proposals for subcontracting the execution of parts of the
Works
 The names, qualifications and experience of key personnel
proposed for the management of the contract and the execution
of the Works, both on and off site, including curriculum vitae of
the senior personnel
  Copies of documents required to be attached such as registration in a
particular class, list of works executed, works in hand, list of machinery
and equipment available/proposed to be acquired etc. are generally
kept ready and are crosschecked with the notice requirements of the
tender notice.
 A Tender which is not accompanied by this information may be
rejected as unresponsive.
 The completed Tender shall not have any alterations or erasures, except
any which may be specified in an Addendum to Tender Documents
 Only one Tender may be submitted by each tenderer, except for any
alternative offers
 Each alternative Tender shall include all information necessary for its
complete evaluation by the Employer, including any relevant calculations,
specifications, construction methods, timing implications, breakdowns of
prices, and other relevant details
• The Tenderer shall prepare one original set and three

photocopy sets of the documents comprising the Tender and

supplementary information

• Each such set shall be submitted in an inner envelope within

an outer envelope, with each document and each envelope

being clearly marked "ORIGINAL" or "COPY" as appropriate

• The original and copies of the Tender shall be signed by a

person or persons duly authorised to bind the tenderer.

 Submission of the Tender
The Tenderer shall prepare one original set and photocopy sets of
the documents comprising the Tender and supplementary
information

METHODS OF BIDDING
Single-stage Single-envelope
Single-stage Two-envelope
Two stage Single envelope
Two-stage Two-envelope.
Prequalification.