The megha structure built accross the world needs good engineers, architect, contractor and thus the contracts and tenders. The tender meaning in the construction projects is most important process and it allows to invite the best possibility fit contractors to complete a building or infrastructure projects at appropriate time.
In this blog we will talk about the meaning of tender and what is tendering process and why it is needed in construction industry before we start any construction projects.
What is Tender Meaning?
Tendering is the process of finalising a construction project by inviting appropriate contractors to submit the proposal. The tendering is for achieving the best possibile outcome for the project by selecting the most capable and qualified contractor. It is a way to ensure a fair, transparent and competitive selection process.
The contractor who is going to bid in the tender proposal are finalized based on the experience, finance, capacity, quality and rating.
What is The Purpose of Tendering Process?
The main purpose of tendering is to ask a bid for better transparency, quality and fair competition among the contractors to provide best suited and less possible bids to bring procuring services, goods and works. Here are key purposes of tendering are mentioned,
1. Selection of contractor:
- The primary purpose of tendering is to select a most capable and qualified contractor for the construction projects.
2. Evaluating Proposal:-
- Tendering process involves inviting contractors to submit proposals for the project and evaluating those proposals to determine the most favourable one.
3. Better Project Planning:-
- The tendering is a meaning process helps to improve project planning as contractors are required to submit detailed proposal that outline the scope of work, realistic delivery schedule and with in budget.
4. Access to Expertise:
- It provides access to the expertise and resources of the selected contractor, who can bring a wealth of experience and knowledge to the project.
5. Fair Process:
- It is designed to be a fair nd transparent process, giving all contractors equal opportunity to participate.
Types of Tenders :
(A) Open Tender:
- It involves advertising, inviting tender from the selected tenders and awarding the contract to successful bidder.
(B) Selective Tender:
- Selective tender restrict the number of renderers who are invited to submit bids.
(C) Negotiating Tender:
- This form of tendering is used in case of specialist complicated works.
(D) Joint Ventures:
- It is particularly suitable for a complex project where number of consultant and specialists involved. The agreement among the joint venture participants are carefully worked out and possible backed up with performance guarantee.
Tendering broadly includes preparation of tender program, formulation of technical and particular specifications, deciding the type of contract, drafting of general and special conditions of contract, bidding tenders, opening and evaluation of tenders, negotiations, award and shining of contract.
Tender Preparation :
The first step in tender preparation is to conduct the site investigation for collecting all relevant data relating to the site, the availability of material, rates of labours and materials, sources of water and power, political environment of area, these details are necessary before an estimate of the work to be executed can be prepared.
The next step to breakdown the work to be awarded, lay down specifications, preparation of drawings, methods of execution, responsibility of clients and contractors, develope preliminary plan for equipment, estimate time of execution and its duration. Thereafter estimate the cost of the work and breakdown the cost in the form of bill of quantities (BOQ).
Tendering Procedure :
The tendering procedure includes a series of activities, following are some mentioned here in sequence:
Pre-qualification of The Contractors:
- Financial status, liquidity status, classification,
- Technical competence, organisation set up, past experience, reputation of consultant/firm, architectural/structural design facilities.
- Resources like equipments, engineers, labourers, etc.
- The contractor is already overloaded and his attitude towards solving problems.
Period of Submission of Tender:-
It is essential that allowed tenderer should be adequate to enable them to correctly calculate and check their tenders before submission. Hurried calculations on their part may involve an element of approximation or an error. Allowing short time period to tenderer for submitting their quotations may not save time as if the submitted quotation is unreasonable, and re-tendering take time in long run.
Sufficient time should be allowed to the tenderer to study the amendments and allow for these in their quotations in addition to the time required in dispatch of the amendments and tender. It is therefore, essential that when an amendment to the tender effects the quotation, date of submission of tender is suitably extended.
Issue of Tenders :-
Tender documents are issued to selected/pre-qualified contractors and are despatched under the registered AD. Before issuing tender documents, the issuing officer must ensure that he has obtained the sanction of the competent authority to issue tender and the tender documents have been scrutinised by the technical authorities.
Opening and Evaluation of Bids :-
The tenders are received at fixed time and date and opened in the presence of the tenderers. All the tenders will be signed by the officers opening the tenders. The price bids of only those tenders, which are technically acceptable and are quoted without conditions will be considered for making a comparative statement. The tenders received are then evaluated from technical, commercial and contractual view point.
The point of disagreements, various matters which either do not satisfy the tender requirements or those that are not offered by the contractor are sought out and resolved through correspondence and face to face meetings. Than the lowest bidder who is technically and satisfy all the specifications with terms and conditions is usually awarded.
Award and Signing of Contracts:-
Once the tender is accepted, the letter of intent can be issued to the successful tender. Thereafter, the agreement can be signed on the stamp paper and all the documents forming part of the agreement shall be attached to it and certified copies distributed to the concered officials. The usual documents accompanying the agreement will include:
- Original tender documents
- Schedule of rates for engaging workmen, equipments
- List of variations from what was originally specified in the tender mutually between the owner and contractor
The Benefits of Tendering:-
- Reduced costs by competions: Tendering can help reduce the cost of a construction project by creating competitions between contractors, leading to better pricing and cost savings for the client.
- Improve transparency: The process is designed to be fair, transparent and competitive which helps to ensure that the best possible outcome is achieved for the project.
- Reduced risk: The process helps minimise risk for the client by transferring the responsibility for delivery of the project to the contractor.
- Improved quality: The process ensures that the project is delivered to the required quality standard, as contractors are incentivised to provide high-quality proposals in order to win the contract.
- Effective resource allocation: Contracting and tendering helps to allocate resources effectively as the most capable and qualified contractor is selected to deliver the project.
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