ae ‘TENDER ADJUSTMENTS. The winning of a contract can be more than simply giving the lowest price. The style of presentation, for example, is important for design and build contracts, and method statements are commonly required by construction managers. There is, of course, a balance to be achieved between what the client wants and appearing to be too clever; different clients have different expectations, The contractor needs to consider the criteria the client will use for selection. These can be: 1. Price; will the lowest price alone be the basis for selection? 2. Time; will a programme show the client that the contractor has thought about how the job can be finished on time, or ahead of time? 3. Allocation of money; will the way in which money is distributed in the priced bills help or irritate the client? 4. Method statement; would the client wish to know the methods to be adopted before accepting the offer? 5. Safety and quality; does the client expect a statement of safety or quality showing how the contractor will manage this particular contract? 6. Construction team; is the contractor proposing to supervise the job with experienced staff who will work as an effective team with the consultants? 7. Presentation; how important is an accurate, well-presented offer? Completion of priced bills The Tender Summary form produces a tender sum which must be transferred to the bills of quantities for submission. If a priced bill of quantities has to be submitted with the tender, then the way in which money is spread in the bill should be decided at the final review meeting. The contractor often changes the actual breakdown of prices in a priced bill of quantities to 1. Produce a reasonable cash flow from interim valuations. 2. Apportion monies in a way which the client will find acceptable. 3. Increase the money set against under measured items and decrease the price of over measured items.The example tender analysis forms given show the first bill total was £664 705 before the project overheads were added and any adjustments were made, The tender sum arrived at after final review was £698 437. If the bill was inked in using the first pricing level, the amount remaining for project overheads would be: £698 437 - £664 705 = £33 732 This is not the true project overheads sum but is the amount needed to bring the bill total up to the tender sum. If the parties agreed to proceed on this breakdown a part of the project overheads, overheads and profit would remain in the measured work portion of the bill. In particular, the items to be carried out by domestic sub-contractors would carry a considerable mark-up. ‘Taking the example a stage further, if the estimator had the use of a computer and hiad made the tender adjustments before inking in the bill for the client, the breakdown would be in line with the tender summary below: £ £ Measured work and provisional sums: 529 398 (including £620 fluctuations on labour) Project overheads Labour 12.960 Plant 37890 Materials 5.780 Sub-contracts 3.300 Staff 37619 Fluctuations 1675 Water 650 Insurances 5.000 Risk/opportunity 10.000 Bond 1050 Overheads and profit 18.000 133 924 Provisional sums and dayworks 45100 Tender total 708 422The client should not be surprised to see this large sum (£133 924) for project overheads because it is based on the true allowance. If the contractor anticipates a problem with this breakdown, he can move some money, either: 1. Into ‘safe’ items in the measured work portion of the bill, looking for work which will be carried out early in the contract (safe items are those which appear to be measured correctly or are judged to be undermeasured at tender stage), or 2. By using a computer system to add a percentage to all the rates in a bill of quantities. The project overheads total should be broken down in the bill of quantities with sums for fixed and time-related items. A surprising number of contractors ignore this breakdown and prefer to insert a lump sum in the collection; they assume that if their tender is the lowest, more details can be submitted to meet the needs of the quantity surveyor (or engineer) for valuation purposes. The contractor also knows that if there are some small queries raised by the client then his tender is (probably) being considered for acceptance. ‘When contractors are tendering in a competitive market in which work is scarce, they know that their bids must be close to the predicted cost of carrying out the work, with little mark-up. Sometimes tenders can be slightly below cost. The contractor, in taking a calculated risk on how the contract will tum out, may price some items in a way which appears to be inconsistent. As an example, assume that a bill of quantities has two equal amounts in items for breaking out rock one in reducing the site levels and the other in excavations for drains. Contractor A priced both items at £18.00/m3 and contractor B priced the rock in open excavations as nil and in drains at £36.00.The overall effect on the tender sum was the same but contractor B had discovered a serious undermeasurement in the drainage bill; he was therefore hoping the drainage bill would be remeasured and valued at the higher rate. This might appear to make sense but, as many contractors have leamed to their cost, plans can go wrong. If the quantity of rock in open ‘excavation increased substantially, the contractor would suffer a serious financial loss.