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State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Methods of Tendering

All tendering procedures shall conform to the Act and regulations issued pursuant to The Project Development and Construction Management Act 1994 including:

Ministerial Direction No. 1 Tendering Provisions for Public Construction­ effective from 1 July 2008 Ministerial Direction No. 2 Contractual Provisions for Public Construction ­ effective from 1 December


Ministerial Direction No 3 Bushfire Preparedness for Public Construction ­ effective from 1 February 2010.

Associated Guides and Practice Notes, published from time to time.

The main methods of tendering are:

  • 1. Two stage selective tender (also termed public sought Expression of Interest followed by Request for Tender)

  • 2. Tendering by invitation (using the government pre­qualified register to identify short list of tenderers).

Other tendering methods which may apply include:

1. Public tendering 2. Single written tender or three tender submissions for low value work in accord with MD1 and MD2 3. Certificate of Exemption­ signed by the Minister or Accountable Officer (Secretary Department of Health) certifying that special circumstances apply.

The decision of appropriate procurement method will have been ratified by the department following a comprehensive assessment of alternatives. Those likely include lump sum, construction management, design & construct, schedule of rates, public private partnerships and other viable procurement methods where the advantages and disadvantages of each procurement method recommended by the professional team for endorsement by the PCG and approval by the Department.

Selective Tendering

Selective Tendering is the most commonly used tender method for the Department's capital works projects. It is a 2 stage tender process commencing with advertisements called Expression of Interest (EOI) being placed on government website, in a major metropolitan newspaper, and/or local paper for rural projects; inviting tenderers to register their interest in tendering for the project. The advertisement should indicate the selection criteria applicable to the project and state that a shortlist will be made from those registering.

Registrants are evaluated and a short­list of tenderers is identified by a SP normally comprised of consultants and members of the PCG.

The short list is submitted to the department for approval. The short listed tenderers will be subject to risk and financial assessments, which has an influence on the level of security to be incorporated into the tender documents. For projects greater than $5M it is expected that the financial assessment of the short listed tenderers will be undertaken by a suitable independent financial advisor.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance The level of security

The level of security in the form of a Bank Guarantee set out in the Tender documents is to be set in accordance with the risk assessment by the financial advisor.

A Request for Tenders (RFT) consisting of detailed tender documents is then issued to short listed tenderers in the second stage of the process. The number of tenderers in this situation is usually between three and six. The SP may interview some or all tenderers.

When tendering for construction contractors on lump sum projects from a prequalified panel, it is usual to accept the lowest conforming tender. It is expected that the pre­selection process should have eliminated any cause for rejection of a tenderer on grounds such as capability, experience, quality of service and financial viability There are however, occasions when this does not occur eg failure to comply with tender requirements (if omissions, non­conformity or any obvious mistake has been made) or there are other criteria not covered by the pre­selection process such as value for money, time to complete works or quality requirements.

This method of tendering is the most suitable for the department's capital works projects that are fully documented.

Public Tender

Public tendering is a system by which an invitation to tender is advertised in the press and on the Victorian

Government Purchasing Board ­ ‘Tenders Vic' web site

. NOTE: Details for

publication of tenders on the web may be subject to change following recent ‘Machinery of Government


Builders/Contractors are asked to apply for tender documents or are able to download them from the tenders' site.

All applicants registering interest to tender will be issued with tender documents.

This method of tendering may be deemed suitable for small (less than $1M), non­complex and/or remote area projects where it is difficult to obtain contestable tenders.

Tender by Invitation

Under this system of Tendering, a number of Contractors are chosen from a Whole of Government or Agency Specific Register of pre­qualified contractors, such as the Construction Supplier Register (CSR), or an approved agency register that complies with government guidelines.

The tenderers selected for invitation are approved by the SP nominated by the PCG, having regard to the acceptability and capability of the tenderers to satisfactorily carry out the project.

The tenderers chosen are invited to tender for the project and tender documents are issued to them in the normal manner.

Under ‘Tender by Invitation', except if any omissions or obvious mistake has been made, it is usual to accept the lowest conforming tender, as the pre­selection process should have eliminated any cause for rejection of a tenderer on any other grounds.

This method of tendering is suitable for projects where there is a need to expedite the process, for remote regional works, for construction management type projects, where special expertise is required or where there may be a number of ongoing, linked, small, individual projects.

Standard Contract Forms

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Standard lump sum contracts

The standard form of construction contract for Victorian Government departments is Australian Standard Lump Sum AS 2124­1992 General Condition of Contract (AS 2124) with government approved Special Conditions as set out in Ministerial Direction No. 2 Contractual Provisions for Public Construction (MD2). These guidelines are based on tendering for projects using this standard contract. Consultants are expected to assess alternative procurement options however, approval of the department is required if another form of contract or amended special conditions is to be used.

Conditions of Tender

The standard Conditions of Tender for Victorian public sector projects shall be used when seeking contractors for capital works projects.

Reference to the Conditions of Tender need to be included when advertising tenders. This will apply for expression of interest or inviting tenderers to make detailed submissions for the project. The advertisement should state that these documents will be made available to those firms proposing to make submissions, upon request.

Special Conditions of Contract

The Guide to Contractual Provisions for Public Construction issued in accordance with Ministerial Direction No 2; lists the standard forms of contract which may be employed by Government Departments and agencies to obtain construction works and services. The Department's Project Manager can provide access to this guide if required.

The Department participates in whole of Government Construction activities, including the development of model special condition clauses to be used in all Government and Agency Contracts.

These model clauses will be made available by the department's Project Manager for consultants involved in documentation and tendering activities.

Construction Management

Construction Management is a method for the delivery of construction work; which is more flexible than traditional contracts in a range of areas and may be applicable where:

It is necessary to exercise control over work methods and timing eg. in occupied or functioning buildings It is difficult to fully quantify the required work or there may be no accurate documentation of existing services and infrastructure It is necessary to expedite a project by letting progressive or staged packages of work.

The Construction Manager (CM) may operate as an agent of the principal or as a head contractor. The main difference between these is in the former, the CM is arranges separate contracts where the agency or department enter into the contracts with the sub­contractors directly whereas in the latter case the CM has contracts with sub­contractors and the CM acts as the principal to these contracts with the sub­contractors.

The CM is usually paid a fee based on a tendered percentage of the value of the separate contracts. This percentage may vary depending on the services provided directly by the construction manager such as hoisting, security, hoardings, set­out, permits and approvals, industrial relations, tendering, early works, demolition etc.

Suitable Construction Managers are typically drawn from larger contracting firms.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Engagement of a Construction Manager and the letting of sub­contracts and materials supply contracts must be in accordance with the Ministerial Directions, Guides and Practice Notes. The contract with the Construction Manager must specify that the Construction Manager will be appointed as the ‘Principal Contractor' as defined in the OH&S Regulations, and will be primarily responsible for OH&S in the construction workplace, including for sub­contractors.


Government procurement principles require that probity in tendering is applied to all project procurements. The key issues of concern are that the following steps occur:

Probity is part of the process of procurement and permeates the whole tender phase When projects are identified as of sufficient complexity, risk or scale (>$10M) a probity plan is prepared and a probity advisor may be engaged There is evidence retained to support that probity issues identified were dealt with

Where necessary a probity advisor or probity auditor shall review the process and certify as to the suitability of the tender, evaluation and award activities. Note that the probity advisor is not involved in the selection of the successful contractor but to attest to the suitability of the tender process.

Of particular interest will be that all tenderers are treated equally and fairly, that all material is kept confidential and that an audit trail of communications and decision­making is retained for proof of process.

A Probity Plan Template is available from the Building Commission website

for use on public construction projects. The probity plan template

should be customised to take account of project specific risks, especially those identified in the project risk assessment, the procurement method risk assessment, project profile modelling or strategic procurement plan.

Advertisement of Tenderers

Advertisement of initial stages of Selective or Public tenders must be undertaken by:

Inclusion in the Victorian Government Composite Advertisement. This is arranged by the Branch e­ mailing to the Department's Corporate Communications Unit a ‘Victorian Government Composite Advertisement Booking Form' or a ‘Promotions Unit ­ Media Booking Form'. Advertisement on the Victorian Government Purchasing Board ­ ‘Tenders Vic' web site

. Note that this web site can accommodate uploaded tender documents

for download by prospective tenderers. Optional advertisement in Metropolitan or Regional newspapers for works in Regional Victoria.

Selection of Tenderers

As previously stated, the most common tendering method for capital works projects is the 2 stage process.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance This entails obtaining registrations

This entails obtaining registrations of interest or use of the CSR pre­qualification register and shortlisting the most suitable tenderers.

The short listing of the Expressions of Interest stage or CSR shortlisting is followed by a detailed RTF.

Projects over $200,000

Guidelines for tendering procedures on capital works projects in excess of $200,000 are that tenders must be sought from a short­list of pre­qualified building or specialist contractors or through public advertisement:

If advertised, an indication of the scope and size of the project should be included in the advertisement; but any reference to the estimated value of the works should not be included. Advertisements are to be placed in a major metropolitan or regional newspaper within the Victorian Government Composite Advertisement, plus on the ‘Tenders Vic' web site; and if appropriate, in the local press A shortlist of tenderers will then be prepared from the registration of interest using agreed key selection criteria.

Key Selection Criteria

Key selection criteria for shortlisting contractors who have registered their interest in a project normally include but are not necessarily limited to:

Compliance with the mandatory requirements set out in Ministerial Directions, and associated Guides and Practice Notes. Compliance with the mandatory requirements in respect of the Victorian Government's OH&S and Industrial Relations policy Building practitioner number and registration category Affiliation Relevant experience Current workload Financial status Referees Size and structure of company Nominated personnel ACN and ABN Environmental sustainability policies.

Key selection criteria, specific to each project, must be determined by the SP prior to tender advertisement. This includes:

The listing of mandatory criteria which must be met (these criteria are not weighted) o VIPP Statement or Certified VIPP plan (as applicable at the RFT stage only) Other criteria to be used to differentiate between tenders, including their respective weightings.

Number of Tenderers

The Department will normally include between 3 and 6 tenderers on a short list and generally will not be prepared to approve the acceptance of a tender where fewer than three competitive tenders have been sought.

However, approval may be given in exceptional circumstances such as:

When the urgency of the work is of overriding significance, for example, items of building safety, summer bushfire preparedness or it is imperative for the delivery of services to patients/clients and staff Where there are fewer than three firms who are capable of handling the particular project requirements

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance ● When fewer than

When fewer than three tenders have been received in response to an advertisement and the tenders are within 10% of the agreed estimate.

If no tenders/quotations have been received, approval should be sought from the Department regarding the timing of seeking further tenders.

Tender Process

Tender procedures must be clearly set out and recorded to ensure evidence of full compliance with the Code. Care should be taken regarding the receipt, recording, assessment, confidentiality etc. of all communications including verbal, written and electronic methods. Audits may be undertaken at any stage of the tender process by internal or external auditors such as the Victorian Auditor General's Office or the Ombudsman.


The standard tender process consists of 4 main stages

Pre­Tender, Tender, Evaluation and Award

As shown in the following Table 1 ‘Stages of the Tender Process' the key components of each stage are listed, together with the typical responsibilities for each component.

Note: In a two stage tender process, the tender and evaluation processes are effectively repeated for both EOI and detailed RFT.

Selection Panel

An important early stage of the tender process is the formation of a tender Selection Panel (SP). The SP (usually at least 3 members) is drawn from members of the PCG including an Agency and Departmental and consultants representative e.g. Principal Consultant and/or the Quantity Surveyor.

The SP appoints a Chair and also nominates a single point of contact for the information of all tenderers. The nominated contact person shall record all communications regarding the tender process, control site visits and contact with the Agency on­site personnel, respond to tenderers seeking clarification, issue addenda if required, arrange SP meetings, interviews and ensure the steps in the process are followed.

The SP responsibilities include:

Tender behaviour abides with relevant legislation and the Code, Declare and manage any potential conflicts of interest, Ensure probity, ensure confidentiality and maintain an audit trail Facilitate any necessary inspections, briefings or site inductions provided for prospective tenderers.

Table 1 ­ Stages of the Tender Process

1 Pre­Tender



Appoint the Tender SP (and check for conflicts of interest

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance and confidentiality. If necessary

and confidentiality. If necessary prepare probity plan, seek


a briefing from a Probity Advisor) (PCG) Obtain and retain certification regarding confidentiality and conflict of interest from SP members (PM) Confirm selected tendering method(PCG/Department to approve) Check & sign­off drawings and specifications and confirm consistency with brief (Consultant/PM) Confirm suitable preliminaries have been inserted into the documents to reflect any special requirements (Consultant/QS/PM) Include tender requirements/rules such as VIIP, AUSFTA, Bank Guarantees, Liquidated Damages, and any schedules or other submissions to be included with the tender and any necessary references to web documents. (SP/ Consultant/Client Agency/PM) Check Market conditions (QS) Confirm pre­tender estimate (Cost Plan D) is within the approved budget (QS) Confirm packages to be tendered (Consultant/PM) Prepare tender evaluation Key Selection Criteria and their respective weightings (SP)

  • 2 Tender Stage


(may be 2 part

depending on selected tendering method)

Select an appropriate tender period; advertising date; tender validity period; and closing location, date and time (PM/QS/SP) Assemble and check tender documents including where applicable, contract and special conditions, drawings, specifications, Bill of Quantities if applicable, provisional sums (Consultant/PM) Nominate a contact person for queries during the tender period. In some situations, prospective tenderers may need to attend organised site visits and client and consultant briefings. (SP) In a 2 stage tender process, o The EOI stage will be simpler and reference some requirements only. o The RFT stage will include full documentation and call for detailed submissions including price and program details (Consultant/PM) Arrange to advertise tender (PM). In some instances this may be assigned to the Construction Manager depending on the method of procurement selected. Manage queries and the issue of any necessary addenda during the tender period, and if appropriate issue an extension to the tender date (SP). Close tenders at the time and date specified in the tender documents. Where tenders close within the department's system, the submissions shall be forwarded to the SP members by the department's representative attending the tender opening (PM)

  • 3 Evaluation Stage


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State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance ● List and record

List and record tenders ensuring confidentially of tender submissions and manage documentation security (SP) Assess tenders for conformance with tender requirements and reject late or non­conforming tenders (SP) Apply key selection criteria and agreed weightings to conforming tenders and identify the best value tender as the preferred tender (SP) Clarify any uncertain aspects of the preferred tender (SP nominated contact person) Undertake referee checks (SP) Negotiate any variations to the tender documents, such as options and resolve any conditional statements (SP) If successful negotiations can not be reached with the preferred tenderer, consider the next best value tender (SP) Re­confirm budget is available to proceed Prepare and sign off the tender evaluation and recommendation report (SP), note All Tender SP members are to sign­off on the preferred tenderer as the Recommended Tenderer (SP).


4 Contract Award Stage

Submit tender evaluation and recommendation report for approval (Selection Panel) Obtain endorsement (PCG) Obtain approval (Department Delegate with Authority) Advise Principal of approval (Department) Award contract (Principal)

The stages are for ‘normal' projects, using standard contract documents. The stages are equally applicable to Lump Sum and Construction Management tenders.

Opening of Tenders and Approval to Accept a Tender

To ensure that proper recording of submitted tenders is carried out, the SP must adopt a formal procedure for the receipt and opening of tenders. If not using the department's formal tender closing process, tenders are to be closed in the Health Service/Agency offices with suitable facilities and processes.

The tender opening process requires that an opening panel of at least 2 persons should be constituted. One of these people must be an officer of the department or Agency with knowledge of probity and confidentiality. It is normal practice to have a tender box that can be secured (i.e. locked) available until tender close and only tenders received on time shall be considered for evaluation. Tenders for publicly funded projects shall not be received in consultant's offices.

The date and time for receipt of tenders should be at a predetermined place, time and day as required by the Code and the opening of tenders should record in order of opening the relevant tender summary details as listed below. Any tenders received after the nominated date and time shall be marked as such, shall remain unopened and shall be returned to the submitting party.

Tenders usually close at 2­00PM on a Thursday, which is not either side of a public holiday.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Tender Opening Summary Form

The tender brief should clearly specify the information required to be included in tenders. The following information shall be recorded on the tender opening summary form:

The full legal name of the tenderer ACN / ABN of Tenderer Building Practitioner Number Tendered price

Note that where a tenderer provides an alternative tender, this should be included on a separate line of the Tender Opening Summary Form.


The SP are to ensure that tenderers submit a tender price, which is fully conforming for all works described in the documentation and that there are no conditions, exclusions or exceptions.

Tenderers may offer alternative tender prices providing that a conforming tender is also submitted and all technical details of the alternative are provided including performance characteristics of proposed materials, timing, warranties and so forth.

Tenders must be provided on the approved document formats or in the manner set out in the tender EOI or RFT.

Under no circumstances will late tenders be considered.


Following the opening, a tender evaluation should be undertaken and a tender evaluation and recommendation report prepared by the SP with input from the Project Manager, Principal Consultant and Quantity Surveyor. Approval to accept a tender is based on the tender evaluation and recommendation report by the SP, and following endorsement by the PCG.


Where relevant, alternative options are deemed appropriate to consider, the tender provides for the inclusion or exclusion of separable works packages, the SP may:

Undertake negotiations with a schedule of amendments to the documents or tender to comply with the project budget Record all negotiations to clearly illustrate how the final decision has been reached The Code stipulates that negotiations must commence with the best value tender and be completed prior to going to next best value conforming tender if required. Negotiation may include seeking comments or clarifications from the preferred tenderer regarding options or alternative proposals, where savings may be achieved, without affecting the facilities performance requirements.

It is important to retain records of the negotiations so that agreed changes be incorporated into the Contract and referenced during the Contract Administration stage of the project.


The PCG will give due consideration to the tender evaluation and recommendation report from the SP and ensure all conditions of the Act, MDs, associated Guides, Practice Notes and the Code have been met.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance


Upon endorsement of the SP tender evaluation and recommendation report by the PCG, the Health Service/Agency shall obtain departmental approval before any commitments are made, contracts are executed, letters sent, insurances and permits sought and works commence.


Following the SP report to the PCG (with representation from the Health Service/Agency and Department) endorsement the preferred tenderer can be notified of their preferred status. No letter of intent or letter of appointment shall be issued to the preferred tenderer until formal notice has been provided by the Minister or delegate to the Principal of the contract.

All unsuccessful tenderers should also be notified of the outcome following a letter of acceptance being issued. Unsuccessful tenderers should be provided with the contact details of a nominated representative of the SP who can provide feedback. All feedback provided should be positive and relate to the tenderer's own submission so as to assist the tenderer with future tenders. No reference should be made to other submissions, other than the name and amount of the successful tender.

The appointment of a contractor shall also be publicly notified, such as through the ‘Tenders Vic' web site.

Procedures Required for Departmental Projects

A standard approach to pre and post tender acceptance, for instances where the principal is either the Secretary or the Minister, is set out in the Procedures Required for Departmental Projects Checklist.

Tender Evaluation and Recommendation Report

The purpose of this section is to alert Health Services/Agencies and Consultants involved in managing projects of the information to be included in the tender evaluation and recommendation report in order to comply with process, probity and audit requirements.

In accordance with industry practice and government audit requirements, the department will carry out random independent audits of the tendering process used in awarding contracts. The administrative time of all parties involved in the audit process can be minimised if relevant information is included in the tender evaluation and recommendation report.

The Code requirements need to be adequately covered. Requirements may be included in the body of the report, as attachments or as summaries as applicable.

Typical Inclusions for Tender Evaluation and Recommendation Report

Tender / Scope

Brief description of the scope of works being tendered Proposed procurement method Nominate the Principal to the contract

Pre Tender Estimate

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Cost Plan D estimate of building works tendered Date estimate prepared.

Type of Tender

Expression of interest and short list including the names of shortlisted tenderers or Prequalified tender or Public tender.

Tender Documents

Conditions of Tender or indicate standard conditions used Contract Conditions and Special Conditions or indicate standard forms used Refer to documentation ­ working drawings, specification and BofQ where applicable (to be made available in full if required) Tender Pro formas and schedules which are required tender inclusions (these may include web based references) Bill of Quantities if included.

Key Selection Criteria

Pre­determined Key Selection Criteria (KSC) Identification of Mandatory KSC's Weightings of KSC's

Tender Advertisement

Copy of advertisement and date of tender advertisement Name of newspapers used for advertisement Tender period including closing date, time and place Nominated contact for queries.

Addenda (and Clarifications) Issued During Tender Period

Refer to Log of all queries received, together with responses (to be made available in full if required) Copy of each written addendum issued Copy of advice to tenderers if the issue of addenda caused an extension to the tender period Confirmation that all tenderers received all addenda and incorporated the addenda into their tender

Tender Opening

Formal/documented procedure adopted with details of where, when and names of persons responsible for opening and recording tenders received Shortlisted tenderers. Tenderers who have collected tender documents and did not submit a tender are to be noted. It is good practice to contact non­tenderers and obtain an explanation for a tender not being submitted.

Tender Validity Period

In weeks or days with expiry calendar date to be included. This is usually 90 days.

Note: To prevent tenders from lapsing, it shall be the responsibility of the Principal Consultant to seek, on the Agency's behalf, confirmation from tenderers for an extension of the validity period if a tender is not awarded before the expiry of the original validity period.

Tenders Received

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Copy of the Tender Opening Summary Form.

Tender Evaluation

An analysis of tenders against each predetermined key criteria including:

Method of delivery Cost Time Quality Environmental Sustainability, such as materials, resources, water and waste management Team OH&S and IR Compliance with Government requirements in Ministerial Directions (mandatory) VIPP compliance, being a Certified VIPP Plan or VIPP Statement (depending on tendered value) Ranking of tenders ­ often summarised in the form of a matrix Subcontractor ­ approval of nominations Reference checks.

Ranking of tenders ­ often summarised in the form of a matrix Subcontractor ­ approval of nominations Reference checks.

Financial Capacity

Where a Health Service/Agency or department is to enter into a contract they should confirm that their financial and legal advisers are satisfied with the financial and legal status of the recommended tenderer.

For a contract perceived to be high risk, complex or large ($5M or more) an independent assessment of financial viability is to be undertaken; and the level of surety (generally in the form of unconditional bank undertakings) is to be set accordingly.

Project Risks

Several studies of disputes in the building and construction industry have revealed that a major cause of disputation (including litigation) results from the poor management of risks. Disputes are costly, often cause project delays, and should be avoided wherever possible through the pro­active management of risk. Major causes of disputes arise from:

Poor quality documentation (ambiguous, inconsistent or incomplete drawings and specification are typical matters of concern) and it is important that the consultant attest as to the suitability of the documents as fit for purpose. Another area of concern arises from client initiated changes and the disruption to all parties can create extensive problems for the contractor and consultants and it is important that the client carefully consider the suitability before agreeing to the design and sign off accordingly.

Project risks exist at all stages of a capital works project and the PCG or governance group should identify and incorporate key risks into a Project Risk Register. The Register should identify risks and have strategies for risk mitigation; it should be kept up to date throughout the project.

The SP shall re­visit the Risk Register to confirm that identified risks associated with tendering have been effectively managed; with specific attention to risks identified for the tendering process.

The experience and qualifications of the proposed contractor's management, supervision and other staff is an

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance important risk factor. Other

important risk factor. Other risks include issues of probity, transparency, timeliness, security, schedule of rates and charges etc. Risks are usually managed through inclusion in the key selection criteria and may affect the required level of contract security to be incorporated into the contract.

Contractor related risks should be ascertained at the EOI stage and at the RFT for a two stage tender process, and should be considered in the tender evaluation.

Project Timeframe

Timeliness is important to the Principal and occupiers of facilities. The experience of the department and project consultants should be used to develop a realistic project timeframe covering all stages from feasibility study to the end of occupied commissioning. As a project progresses, the project timeframe is revised and this permits more detailed planning by the occupiers for example regarding fit­out, commissioning and occupation.

At the tender stage, a tentative program will be sought from tenderers, showing how they intend to deliver the project within the contract period and the level of allowable delays called ‘float' in their program. The contract program should include allowances for expected delays caused by seasonal weather conditions and unexpected site conditions.

The contract conditions cover how delay and slippage are managed during the contract stage, but where time is critical to the Agency, Health Service or department negotiations at the tender evaluation stage may include the tenderers capacity to accelerate activities to make up for lost time.

Value for Money

The tender evaluation should consider value for money as a key evaluation criterion. This will include factors such as life cycle costs, alternative details/finishes offered, etc. Operations and maintenance costs can be more significant where the facility needs to be decanted or service delivery is interrupted while replacements or upgrades occur and the inclusion of a cheaper initial tender price may need to be critically appraised when considering the wider implications for the agency. This may result in the lowest tender not being recommended for acceptance.

Non­Conforming Tenders

All non­conforming tenderers are to be noted with reasons provided, for example:

Late tender Exclusions from tender price Failure to provide certified VIPP plan Qualification on materials/equipment which are different from those specified Qualification on performance criteria of mechanical or electrical equipment Qualification on time for completion which is different to that specified Qualification on price submitted, e.g. Rise and fall basis instead of fixed price Non­compliance with statutory documents.

Tender Recommendation Principles

Award should be based on the best value conforming tender in conjunction with project specifics and general tender selection criteria If a non lowest tender has been selected the reasons supporting the selection should be reported Confirm all non­conforming tenders are rejected Confirm all unsuccessful tenderers will be formally informed after award of a contract to the successful tenderer.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Attachments to be Included

The following attachments are to be included as an appendix to the tender recommendation report:

Summary of shortlisting process or minutes of pre­qualification meeting with the Contract Supplier Register Copy of tender advertisement Copy of the tender opening summary form and details of any tenders rejected because they were not received on time Statement from probity advisor, where appropriate.

Conditions of Contract

Victorian Government approved conditions of contract must be used and must be incorporated into the tender documents. They consist of:

Conditions of tender. Consultants should consult the Department to obtain the current version. Lump sum general conditions of contract AS 2124 ­ 1992. This form of contract is used almost universally by Government Principals throughout Australia because of its allocation of risk (compared to later versions which are not considered acceptable). Annexure Part A to conditions of contract AS 2124 ­ 1992. This document provides specific contract details and selects options, where the general conditions of contract has provision for alternatives. Consultants should consult the Department's Project Manager for assistance in filling out the Annexure. It will for example contain details of contract security requirements to address perceived contract risks. Special conditions to lump sum contract AS 2124 ­ 1992. Consultants should consult the Department to obtain the current version. The Special Conditions are included in the contract through Annexure Part B to AS2124­1992.

In addition to the Conditions of Contract above, Consultants should give consideration to the Departmental considerations, which follow this section.

A standard contract for Construction Management is available by application to the Department.

Departmental Consideration for Contract Conditions

Variations for Latent Conditions

The tenderer is required to acquaint itself with the site and all physical conditions on the site or its surroundings. AS2124­1992 Clause 12 defines Latent Conditions essentially as those physical conditions or artificial obstructions encountered on the site by the contractor during the execution of the work which:

Differ materially from those which would have been ascertainable by the contractor Could not reasonably have been anticipated at the date of tender.

Latent conditions may relate to building works, services or sub­soil conditions.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Clause 12 then includes the notification procedures and conditions under which the Contractor may obtain additional payment, via a variation, where such a Latent Condition is encountered.

Infection Control During Construction

This section applies to relevant health care facilities remaining occupied whilst alterations or new works are carried out.

During the construction, demolition or renovation of buildings, increased air­borne particles originating from dry soil, dust or fragmenting building materials, and exhausts and emissions from plant and equipment are common. These can be exaggerated by prevailing climatic conditions. Resultant air pollution can cause hazards and discomfort to patients, staff or visitors by:

Increased particulate matter in breathing air ­ this is obviously important for patients with respiratory disease Conveying toxic substances, e.g. asbestos fibres Conveying an increased load of pathogenic micro­organisms, e.g. fungi. This has resulted in serious disease in some patients such as those who are immunocompromised.

The Standing Committee on Infection Control has drawn up the following interim recommendations in consultation with the Department.

The Infection Control Nurse (ICN), Infection Control Committee (ICC) or Infection Control Adviser (ICA) should be consulted at the time building construction, demolition or renovation is being planned. That is so that any infection control or other matter, which could affect patient care, is brought to the attention of the principal and the superintendent prior to work commencing.

The ICN, ICC or ICA should be advised of the date of commencement of building works and their anticipated duration. It is advisable for the consultant to consult with the facility's infection controller/s and the health care facility engineer or facility manager to provide appropriate protection.

The relevant points below should be incorporated in the contract for the works. These requirements do not cover other important matters to be considered, which may affect patient care such as noise pollution or vibration.

The Contractor shall be responsible for suppressing all air pollution emanating from the work site and shall ensure construction activities cause minimal interference with the operation and function of the hospital. The Contractor shall provide construction barriers between the work site and the rest of the health care facility with particular attention to areas such as patient care areas, laboratories, clinical areas, kitchen and dining facilities. Air intake areas specifically are to be protected to ensure that buildings are kept free of contamination. For construction/renovation areas inside hospital buildings, the Contractor shall ensure that the air flow is directed away from adjacent patient areas where practical to do so and otherwise take steps to ensure contaminated air is not introduced into adjacent occupied areas. The Contractor shall ensure that goods and people traffic from construction and set­down areas are directed away from patient care areas as much as is practical. The work site where it abuts occupied areas should be cleaned regularly; the intervals between cleaning should be based on the nature of the work and the need to minimise air pollution.

Working in Custodial, Forensic or Secure Facilities

For these situations, tenderers are to comply with additional requirements. These may extend to detailed briefings, inductions and instructions regarding site appearance, work methods, access, set down and storage areas and specialised requirements including the control of tools, utensils, equipment and materials that may serve to be used as weapons, escape means or for self harm. Full participation in the Agency induction

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance program is required. Advance

program is required.

Advance Payment

Payments in advance for the provision of materials, plant and equipment is not usually undertaken. However, prepayment may be made where it is considered appropriate by the Superintendent and approved by the Network/Agency (e.g. deposit for specialised items requiring long lead times or imported items of equipment from overseas). Attention needs to be paid to ensure that:

Prepayments are identified and adjusted in the progress certificate Additional Bank security and/or insurance must be obtained in favour of the Network/Agency Insurance to cater for currency fluctuations is included.

Consultants to Note: The provisions of AS2124­1992, Clause 42.4. On particular projects, if payment is to be considered at any time during the construction period of the work, then Alternate 2 must be adopted, with a modification to require additional security as per Alternate 1.


All goods and materials (as well as services supplied under the contract), which are incorporated into the works, are subject to GST.

Industrial Relations Instruments

The Code of Practice for the Building and Construction Industry covers the permissible forms of Industrial Relations Instruments in accordance with relevant Federal and State Awards. It needs to be emphasised that neither ‘Cash in Hand' payments nor pyramid sub­contracting are permitted.

The Federal Code of Conduct shall also apply to applicable projects.

Other points to be detailed in the documents are in relation to Site Amenities for construction workers and the Superintendent, First Aid, Safety, Hearing Protection, Apprentices, Worker Compensation, Long Service Leave, Protective Clothing, Disputes Procedure and Allowances.

Permit Systems

Agency specific permit systems or specific requirements need to be specified where works occur on functioning facilities. Permit approval systems should conform to the systems already in place for the facility and may cover:

Hot work Penetrations in the structure, particularly in fire rated components Temporary disconnection of services where tappings and extensions are required or where necessary to ensure safe working methods. Visitor and/or security arrangements

Construction Program and Cash Flow Information

A Construction Program is to be provided by the Tenderer and a copy is to be forwarded to the Department and the Network/Agency.

This program should show:

Duration time of the project Start and finish times for critical activities. This will form the basis for assessment by the Superintendent

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance of Extension of Time

of Extension of Time claims Monthly cash flow Allowances for expected delays such as seasonal weather conditions.

These items are to be updated as required during the project duration.

Site Meetings

The contractor is to arrange for site meetings throughout the duration of the contract. It is recommended that these be held fortnightly. Copies of Minutes of meetings are to be forwarded to the Department's Project Manager.


A signboard providing project information shall be erected on the site of the works. The format and wording on the signboard shall be as prescribed in the ‘Construction Site Sign Boards' Planning & Development Guideline or ‘Community Information Billboards' to the requirements of the Department of Premier & Cabinet and shall be submitted to the Department for approval.

Liquidated Damages and other Scheduled Sums

Careful consideration is required of the liquidated Damages and provisional and other sums included in contract schedules. Liquidated Damages in particular should be a justifiable pre­estimate of the damages likely to be suffered by the Principal due to late delivery of the works by the contractor, and should not contain a ‘penalty' element.


The following checklists relate to the content of this guideline.


Tendering Evaluation and Acceptance Checklist (MS Word, 104.5 KB)

The Tendering, Evaluation and Acceptance checklist is to be completed and signed with each project and sent to the appropriate Department of Health Project Manager.

Procedures Required for DH Projects Checklist (MS Word, 43.5 KB)

The Procedures checklist is to be completed in addition to the 'Tendering, Evaluation and Acceptance Checklist' for Departmental projects. It is to be sent to the appropriate Department of Health Project Manager.

Pro Formas

The following pro­formas relate to the content of this guideline.

Pro Formas

Tender Opening Summary (MS Word, 33.0 KB)

This form is to be completed and documents placed on file for each project. For Departmental Projects, use the standard form.

State Government of Victoria, Australia, Department of Health

Tendering, Evaluation and Acceptance

State Government of Victoria, Australia, Department of Health Tendering, Evaluation and Acceptance

Expression of Interest (EOI) Evaluation Form (MS Word, 71.5 KB)

This Form is to be used for each project tendering process to ensure fair and comparable tender evaluations.

Additional Tender Information (MS Word, 30.0 KB)

The additional Tender Information Required form is to be completed as required.

Statutory Declaration (MS Word, 26.5 KB)

The Statutory Declaration Form is to be completed by each tenderer.

Tender Form ­ VIPP Statement (MS Word, 40.5 KB)

This form is to be completed by each tenderer where applicable.