Tendering

Ir.Ben Lee See Kim

2a. Tender: Introduction
- Invitations to treat

 Advertisements
 Price lists
 Goods placed on shelves in a shop
 Auctions

 Tenders
 Tenders…
 A tender is put out large-scale, advertise the needs and invite
bids or tenders from a range of suppliers.
Simply, a tender /bid/request for proposal (RFP) is an offer in
writing to carry out work or to supply goods/services at a
certain price.
Tenders…

 A tender is a formal document used by potential suppliers to

buy goods or carry out services.
 The tender document sets out the proposals and
requirements of the supplier, inviting potential providers to
bid for the contract.
Tenders…
 An invitation to make an offer.
 May also be conditional offer – this will depend on the
wording of the document
Tenders - terminology
 “Tender” can have two meanings – refers to the tender
process and the documents
 Principal – client – invites tenders
 Contractor – the tenderer
2b. Pre-qualification
 Pre-qualification
 Screening of potential contractors, suppliers, or vendors (on the basis
of factors such as as experience, financial ability, managerial
ability, reputation, work history, etc.)
 To develop a list of qualified bidders who will receive the invitation-
to- bid (ITB) documents.
 more: http://www.businessdictionary.com/definition/prequalificati
on-of-bidders.html#ixzz1spVJZj00
 Pre-qualification (cont’d)
 Usually necessary for large or complex works, or other circumstances
in which the high costs of preparing detailed bids could discourage
competition - custom-designed equipment, industrial plant, specialized
services, and contracts to be let under turnkey, design and build, or
management contracting.
 To ensures that invitations to bid are extended only to those who have
adequate capabilities and resources.
 shall be based entirely upon the capability and resources of prospective
bidders to perform the particular contract satisfactorily, taking into
account :
 Pre-qualification (cont’d)
 (i) experience and past performance on similar contracts,
 (ii) capabilities with respect to personnel, Plants, machineries and
equipment, and construction or manufacturing facilities, and
 (iii) financial position.
 The invitation to prequalify for bidding shall be advertised and
notified as prescribed
 Scope of the contract and a clear statement of the requirements for
qualification shall be sent to those who responded to the invitation.
 Applicants that meet the specified criteria shall be allowed to bid.
 Pre-qualification (cont’d)
 Clients/Owners shall inform all applicants of the results of
prequalification.
 As soon as prequalification is completed, the bidding documents shall
be made available to the qualified prospective bidders.
 For prequalification for groups of contracts to be awarded over a
period of time, a limit for the number or total value of awards to any
one bidder may be made on the basis of the bidder's resources.
2c. Types of Tender

1. Competitive Tendering
(Open Tender or Selective
Tender).
2. Negotiated Tender
Obtaining Tenders (Selection of
Contractors)
 Irrespective of the procurement method chosen by the
client, he/she must first establish the method in selecting
the contractor, either by:
1. Competition, or
2. Negotiation
1. Competitive tendering

 Competitive tendering is one where all the contractors

bidding for a job submit their lowest possible prices for
carrying out the work based on a standard set of tender
documents.

 The tender documents set out the specifications of

materials and workmanship, scope of work, time for
completion, phased construction (if any), conditions of
contract and quantities of work (in the case of tenders
based on BQ).
 Open or Selective Tendering

 If a project is to be let on a competitive basis, the client must

choose whether to use open tendering or selective tendering as
a means of obtaining tenders.
Open Tender

 Open tendering is a system whereby the client advertises an

invitation to tender in a newspaper and any contractor who
meets the minimum requirements as spelt out in the
advertisement may submit a price for the work .

 Open to any organisation that fulfils the

requirements and requires the provider to submit a
price with their submission.
 The selection process is based on the price and
quality offered and the sealed bids are often
revealed in public to ensure transparency.
Advantages & Disadvantages of Open
Tendering
 Open tendering is favoured by many large public clients, such
as the local authorities, health, public works, water authorities
etc.

 Advantages of open tendering:

(i) Gives every qualified contractor a chance to tender
for a job.
(ii) The large number of tenderers results in very
competitive tenders with corresponding low price.
(iii) Ensure transparency for the selection of
contractor.
 Disadvantages of open tendering:

(i) Long tender list.

The cost to a contractor of preparing for a tender is high.

(ii) Large number of tender documents that need to be

prepared with resultant high cost of documentation and the
consequent equally large amount of administrative work in
shortlisting the most competitive tenderers.
Selective tendering

 To avoid the high costs, the client can choose to use the selective
tendering system instead of the open tendering system.
 This still gives rise to good competition among the tenderers but
with the advantage that the tender list will be shorter.
 It consists of drawing up a list of chosen firms and asking
them to tender. It is by far the most common arrangement
because it allows price to be the deciding criterion; all other
selection factors will have been dealt with at the pre-
qualification stage
 It requires providers to pass a pre-qualification process. Once
they have pre-qualified they are invited to tender and asked
to submit a price
. Negotiated tender
 A client may choose to do away with competition and choose to
approach only one contractor to negotiate a price. Some of the
circumstances under which negotiation may be preferable could be:
(i) Where an early start is required.
(ii) There exist a good working relationship of long standing between the
client and contractor.
(iii) Joint partnership between the developer and the contractor in
undertaking the development of a project.
(iv) Where the client envisages a new project which is very similar in size,
scope and design to one recently completed or ongoing, and where good
relationship exists between the client and contractor.
(v) In times of construction boom when the building industry is
overstretched and contractors are busy with works.
2d. CONTRACT – Tender Documents
 Tender Documentation (Hackett, Mark &
Robinson, Ian, {p117}, 2003)
 The tender documents are a set of documents upon which
the tenderer works out the price and submit a bid for a
project.
 The tender documents should comprise the following:
- A checklist of all tender documents.
- Instructions to tenderers.
- Drawings, schedules and specification.
- The bills of quantities or pricing schedules.
- Health and safety plan.
- The form of tender
- The conditions of contract
Tender form

I/We, the undersigned, agree to contract for, perform with diligence and complete the works as
described in the documents listed at 3 above and in accordance with the tender conditions
contained herein for the total tender amount of ,

Amount in words Ringgit Malaysia___________________________________________

The total tender amount is made up as follows
1. Concrete/brickwork RM _____________
2. Drywall partitioning RM______________
3. Plumbing RM______________
4. Carpeting RM______________
5. Joinery RM_______________
Total tender amount RM_______________

This tender shall remain in full legal force for a period of 45 calendar days from the date of the
tender.
Company:
Address :
Signature Name of signatory ____________________
Capacity of signatory _________________________
Instructions to Tenderers
 The instructions to the tenderers should be clear and
include the following:
 Where and by when to submit the tender
 Any information required to be submitted with the tender, such as
method statement, quality control resources and programme of
work
 Method of packaging and identifying the tender
 Method for dealing with any queries relating to the tender
documents
 Method of dealing with any errors or inconsistencies in the tender
documents discovered after they have been issued
 Others (refer to notes)
Tendering Procedures
1- Tender documents
 Notices to tenderers
 Conditions of tendering
 Form of tender documents
 General conditions of contract
 Specifications
Tender procedures (cont’d)
2- Conforming tenders

3-Withdrawal of a tender

4- Acceptance of a tender
Tender process
 Defining the objectives
 Preparation of tender documents
 Expression of interest
 Request for tender
 Evaluations of tenders submitted
 Award of the contract
Evaluation of tenders
 Evaluation of tenders should be based on the conditions of
tendering and selection criteria. For example:
 Conformity
 Innovation
 Value for money
 Quality assurance
 Technical resources
 Previous contract performance
 What Tender Thresholds Are
EXAMPLE:

Below are the MINIMUM number of written or verbal quotes

required, or the level at which full tendering procedures are
necessary. Whenever possible these must be adhered to.
THANK YOU FOR
LISTENING