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CHAPTER NO:-1

1.Introduction:1.1 General:The project often get delayed and show time and cost overruns as a consequence. The
importance of bidding document, good biding process and the selection of contractor are
some of the important prerequisites for the successful completion of a project. The aim of the
study was to identify factors in bid process management that may lead to project success.
Subsequently, these factors were ranked by expert for their importance and ability to
influence the project results. To brainstorming sessions were organized for identifying
factors, One with a government organization which executes a large number of public
projects mainly through cost based selection and second with a private developer
organization which hires contractor through quality based selection process. Twelve factor
were shortlisted through this process and they were given importance ranking were
experienced professionals. The mean value and the descriptive statistics were worked out to
rank the factors. Top five factors in the bidding process, identified by using this process are
specification , special condition are contract, overall and similar experience, award criteria
and estimates.
Government officials in the developing countries face public ire for delay in project
execution and resultant cost increase. Delay and cost overruns occur in private projects also,
though the consequences of delay are different. Top five factors featured in the list are
insufficient equipment, inaccurate time estimate, payment to the contractors, change orders,
and inaccurate cost estimate. Many factors influence failure and success of a project and
contractor selection is one of the prominent reasons amongst that.The importance of selecting
right contractor and having proper bid documents is recognized by the industry and also by
the researchers. Standard bidding documents have been developed by the owners all over the
world or they have adopted standard documents developed by world Bank, Asian
Development Banks, FIDIC and others. However, in the developing countries, bidding
documents and procedures are yet to be standardized. Even where the process has been
standardized, the weightage of different selection criteria is a matter of debate.

Contractors must consider many factors when they develop their bidding strategies.
Bought on found in his survey (with useable responses from 126 general construction
contractors from around the Words) that the factors in developing a bidding strategy
(in descending order of importance to the contractors) are:

1. Clearness and detail of specifications


2. Past experience with similar work
3. Confidence in subcontractor bids
4. Location of project
5. Number of competitors
6. Duration of project
7. Workload
8. Market condition (busy or slow)
9. Size of bid
10. Opportunity for follow-on work
11. Relationship with architect/owner
12. Competitors bid history
13. Confidence in external events (interest rates, inflation, etc.)
8.1 Necessity of Bid process Management
The main objectives of the Bid process management are:
Choose suitable partner on best possible terms
Choose partner with skills, experience and resources
Secure desired service improvement & efficiency
In todays world, the bid process management has emerged as one of the main activities
of project management and adequate importance is attached while scheduling of the project
itself. Due to rapid increase in the project complexities, a delivery partner can be sought right
at the beginning or at any stages of project. Based on the involvement a project partner may
be classified as under:

Owners Consultants

Programme / Process / Project Management

Activity Consultants

Piece-meal Constructions

EPC/Turnkey

BOT/BOOT/BOO etc

Scope Of the project


The aim of the study was to identify factors in the bid process management that may lead to
project success. Subsequently, These actors were ranked by experts for their importance and
ability to influence the project results.
In this project the main top factors in construction bidding process, identified by using
this process are specifications, special conditions of contract, overall and similar experience,
award criteria and estimates. This above factors which affect the effective bidding process
and communication will work out from the various questionnaire surveys of different
projects. For this purpose questionnaire are designed accordingly and respective answers
should be collect from the Government and private project.
After the overall study of the projects to give the effective suggestion choosing the partners
on the best suitable turns and partners with skills, experience and resources.

Objective
1) To study concept of bidding of construction project.
2) To contractor selection vary between Public and Private projects.
3) To Analysis the data Educational profile and Work experience on the basis of their

organizations.
4) To study the bid process management on various present construction sites.
5) To discuss and give the effective suggestion on projects often get delayed and increase the

cost.

Methodology

1) The preliminary data which required for the project will be collect from the various
studies which are already carried out upon this construction bidding. Referring to
previous research, this study identified by public and private project of project
finalization. Efficient bidding is the most important term in project finalization process.
2) To brainstorming sessions were organized for identifying factors, One with a

government organization which executes a large number of public projects mainly


through cost based selection and second with a private developer organization which
hires contractor through quality based selection process.
3)

From the above overall study there are twelve factors were shortlisted through this
process and they were given importance ranking by experienced professionals, for
project finalization.

Table 1:Important Factors In

Bid Process Management

SI. No.

Factors

Bidding process

1.1

Splitting the contract packages/ Work Packages

1.2

Sequence of awarding contracts

1.3

Award Criteria

Bidding Documents

2.1

Bills of Quantities &Estimated cost

2.2

Tender Drawings

2.3

Specifications

2.4

Special Conditions of contract

2.5

Standard Bidding &contract Document

Contractor Qualification Criteria

3.1

Overall &Similar Experience

3.2

Financial Capacity

3.3

Bid Capacity

3.4

Proposed development of tools, equipment& plant


for given project

4) The whole bid process management study applies on live construction private or
government projects. And what are the actual bidding on live work and theoretical

studies. On the live project on bidding process questionnaire survey should be carried
out.
5) In the last step of the project, the analysis carry out on the above theoretical study and
the questionnaire survey, the suggestion if any given to the management team. As the
management can better understand and improve the bidding process management by
selection of contractor, education profile, work experience, count and ranking were
calculated by data analysis.

1.1.

ORGANIZATION OF PROJECT
The thesis format follows the logical steps of literature review, establishing the
questionnaires, developing the methodology, gathering and analyzing data and
drawing conclusions. The project stage-I involves following chapters:
1) The second chapter deals with the literature survey related to the construction
bidding in private and public project in construction industry. This review determined
the context of the research study and positioned this work relative to previous
research. This chapter will help to selection of contractor on the basic of prequalification and many previous skills and knowledge.
2) The third chapter deals with to study bid process management for finalization of
construction project.This chapter will provide total information about the role of
coordination in construction industry in India and effect of goal achievement on
performance of project.
3) The fourth chapter deals with the success of project finalization for construction
project. In this chapter the questionnaire was designed on the basis of bid process
management. The questionnaires are designed on the basis of eight coordination
methods.
The data collection will be obtained from the designed questionnaire. For this data
collection of two major construction projects were selected. The observed result is
tabulated and thereafter the result analysis is carried out. The last step of the project is
to give suggestion for successful bid process management for project finalization.

CHAPTER 2

2.
2.1.

LITERATURE SURVEY
INTRODUCTION

Generally, successful completion of construction projects requires many important


processes and one of them is the bidding process. During the bidding process,
selecting the most appropriate contractors to execute the project seems to be quite
difficult. Contractor selection plays a vital role in the overall success of any construction
project. Clients generally need the best criteria in selecting contractors in order to get
best results in term of cost, time, and quality for their projects. Historically, clients
usually award the contract to the lowest bidder during tendering. Despite the guidelines
that exist in the literature in selecting main contractors; in real practice, Other country
construction clients individually have their preferred criteria different from those
obtained in the literature. The main threat here is that clients do make costly mistakes in
their decisions to award the contracts to unqualified contractors and this would
eventually have damaging consequences on the project and clients investment. It
therefore became necessary to examine the different criteria adopted by clients in
selection contractors in order to find out the most criteria that clients should focus on
when awarding construction contracts to main contractors. To this regard, this paper is
aimed at identifying and ranking the actual criteria used by clients in real practice for the
selection of main contractors in India.

Bidding Process
Traditional Procurement system involve pre-qualification ,short-listing ,bid evaluation
processes

including

those

involving

designbuild

types

of

contracts(palaneeswaran,20000).Overall bidding process is linear and compartmentalized and


follows design ,bid and construction process (Hallowell,2009).In the traditional system ,
client or owner hires the designer who prepares the designs and estimates. The client floats
tenders based on this estimates and drawings . Interested contractors bid for the project and
they are typically selected by the least cost criteria amongst all technically qualified
contractors .This least cost criterion is widely debated but used selection method at least in
the developing countries such as India.

The objective of the contractor selection vary between public and private projects.
While in the private projects, the long term relationship with the contractor is considered in
selection, It is consider to be in appropriate in public project (Cheng, 2004). In public project
generally lowest bidder is selected with or without negotiation whereas in private projects
contracts is possible with other than lowest bidder or sometimes even at lowest bidder price.

Contract Packaging
Bid process must consider single prime contractor versus multiple prime contractors
when contract packaging decision are made. Slicing or packaging is also important for the
project performance and costs Bid cost go upward when there are multiple prime contractors.
In also results in higher claims and poor quality (Monti, 1997). A study carried out by
Holland revealed that the contractors add 6% on the cost perform by the lower tier contractor.
Multiple prime contractors also tend to decrease the competition and as result bid prices go
up. This is in addition to the increase administrative costs (Rojas,2008). The coordination
with multiple prime contractors becomes another challenge, observed Rojas. How ever ,the
statistical analysis of over 1000 projects with multiple prime contractors results in lower bid
price and hence overall lower costs (Rojas,2008).

Bidding document
Bid documents become part and parcel of the contract with successful bidder .Bid
document contains instruction for bidders condition of contracts , selection procedure ,
section bills of quantity and financial bid form , contract and guarantee formats .The success
of the contract lies in the effective bid documents. A vague document having poorly drafted
conditions of contract , open ended specifications and incorrect quantities may lead to change
orders , conflicts and claims. Developing countries show a problem of standardized bidding
documents. For a country like India, barring Public work Departments (PWD),the documents
lack standardization. The results are visible in terms of disputes, discrepancies an delays.
Funding agencies such as World Bank and Asian Development Bank (ADB) insist on using
their standardize or approved documents, where the procurement process is somewhat better.

Pre-qualification
Some clients prefer maintaining a list of pre qualified bidders. The process is
generally known as pre qualification of contractors. This is quite popular in private

organizations where they are concerned with the top quality. In government organizations,
when there are mini projects with the same departments and that too on a regular basis, the
maintain the list of prequalified bidders. The shortlisted bidders are generally asked to submit
financial bid for the given project. This reduces the time of technical evaluation.

Conceptunal Model For Contractor Selection


A conceptual model has been structured for contractor selection including bid price
and non-price criteria in relation to Article 40 of PPL 4734 and also taking into account the
needs of public clients. In structuring the model, most of non-price evaluation criteria that
may not
be translated into numerical impact data are eliminated in order to avoid the subjective
evaluation of contractors and others are grouped according to similarities and relations
between them. In the model non-price criteria are grouped at 9 main headings as Contractors
Organization, Past Performance, Past Experience, Plant and Equipment, Personnel, Project
Management, Quality Management, Health and Safety Management, Environmental
Management. Each main criteria has its own sub-criteria as shown in Table 1. Price criteria
refers to the lowest cost in evaluation process. The model enables the user to designate the
weighting of non-price and price criteria depending on the needs and wants of the clients
and/or projects.
Non-price evaluation criteria for contractor selection given below

Contractors Organization

Past Performance

Past Experience

Plant and Equipment

Personnel

Project Management

Quality Management

Health and Safety Management

Environmental

Management

FACTORS AFFECTING THE BID/NO BID DECISION


The study aim and objectives necessitated the identification of the various factors that
have been found to influence the bid / no bid decision. The review of the literature resulted in
identifying 94 potential factors affecting a contractors bid/ no bid decision. These 94 factors
were drawn together from the sources shown in Table
1. The factors identified were then divided to ten groups. The groups were developed on an
intuitive issues, including project characteristics, business benefits, the client characteristics,
the contract, project finance, company characteristics/ situation, firms' previous experience,
bidding situation, economic situation, and competition.

Factors affecting the bid & identified from the literature review
1 Project characteristics:
1. Size of contract in SR
2. Duration of the project
3. Type of project
4. Job start time
5. Methods of construction (manually, mechanically)
6. Location of the project
7. Type of equipment required
8. Type of labour required
9. Site clearance of obstruction
10. Degree of build ability
11. Site accessibility.
12. The projects' stakeholders
13. Design quality
14. Design team
15. Local climate
16. Public exposure
17. Degree of technological difficulties
18. Safety hazards
19. Completeness of drawings and specification
19. Degree of difficulties

20. Type of procurement methods


21. Degree of possible alternative design to
reduce cost
22. Expecting date of commencing
23. Pubic objection
2 Business benefits:
1. The benefits expected in terms of the
company reputation
2. Need for continuity in employment of key
personal and work force
3. Establishing long relationship with the client
3 The client characteristics:
1. Local custom
2. Relationship with the owner
3. The client reputation among other contractors,
with whom they had worked
4. The client requirements
5. Owner (Private, Public)
6. Prompt payment habit of the client
7. The client financial capacity
8. Size of client

4 The contract:
1. Type of contract
2. Clearness of the work and specifications
3. The ability of modifying the contract
4. The ability of portion subcontracted to others
5. Fines for delay
6. Type and number of supervisory and labor required
7. Consultants interpretation of the specification
8. Use of nominated sub-contractor
9. The contract special requirements
10. Contract conditions

5 Project finance
1. Original price estimated by the client
2. Work capital required to start the job
3. The possibility of delay or shortage on payment
4. Project cash flow
5. The project mark-up size
6. Percentage of insurance premium
7. Anticipated value of liquidated damage
8. Tax liability
9. Financial goals of the company
10. Degree of difficulties in obtaining bank loan
11. Market share

6 Company characteristics/situation
1. Availability of required cash
2. Ability of doing the job
3. Availability of required equipment
4. Availability of qualified human resources
5. Uncertainty in cost estimate
6. Need for work
7. General (office) overhead
8. Current work load
9. Reliability level of subcontractors
10. The project is matching the company strategy and future vision
11. Strength in industry
12. Specific features that provide competitive advantage
13. Availability of qualified sub-contractors
14. Familiarity with site condition
15. Strength of business partner/ subsidiaries
16. Company ability of design involvement and innovation

7 Firms' previous experience


1. Past experience with similar project
2. Past profit in similar job

3. Past experience with general contractor


4. Past experience in managing similar project

8 Bidding situation
1. Required bond capacity
2. Time allowed for submitting bids
3. Time of bidding (season)
4. Bidding document price
5. Prequalification requirements
6. Tendering duration
7. Bidding methods

9 Economic situation
1. Risk involved in investment
2. Availability of equipment and materials
3. Overall economy (availability of work)
4. Quality of available labor
5. Availability of labor
6. Governmental division requirements
7. Risks expected fluctuation in labor materiel etc

10 Competition
1. Who else is likely to bid for this job?
2. How many bidders will there be?
3. Are the bidders equal, or are they similar contractors
with similar overheads?
4. Future project
5. Market condition

CHAPTER NO 3

To Contractor Selection Vary Between Public And Private


Projects.
Introduction

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