Project Bidding

[Nina Ndichu]

1. What are the methods for project bidding?
2. Advantages and disadvantages of these?

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[owilli]

project bidding

Open tendering | restricted tendering | selective tendering | serial tendering | negotiations

[Nina Ndichu]

Serial tendering means wat? 

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[Nick]

And whats the difference between restricted and selective?

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[Sam Owelle]

1. Selective Tendering

Selective tendering may be either single stage or two stage, depending on whether the full benefits of competition are desired (in which case single stage tendering is used) or whether limited competition plus earlier commencement of the works on site is considered advantageous (using two stage tendering).

Under single stage selective tendering, a short list is drawn up of contractors who are considered to be suitable to carry out the proposed project. The names may be selected from an approved list or 'panel' maintained by the client, or may be specially chosen. In the latter case, the contractors may be invited, through suitably worded advertisements in the press, to apply to be considered for including in the tender list. This gives the client the opportunity to exclude any firms thought to be unsuitable and to limit the number of tenderers. At the same time, it gives any firm the opportunity to apply to be considered.

It is recommended that the number of tenderers should be limited to between five and eight, depending on the size and nature of the project. If the firms on the list are all ones which are reputable, well-established and suitable for the proposed work, and the client fixes the construction time, then the selection is resolved into a question of price alone and contract can be safely awarded to the firm submitting the most favorable tender.

Advantages

1. It ensures that only capable and approved firms submit tenders.

2. It tends to reduce the aggregate cost of tendering.

Disadvantages

1. The cost level of the tenders received will be higher, owing to there being less competition and also to the higher calibre of the tenderers.

Two stage selective tendering is used when it is desired to obtain the benefits of competition and at the same time to have the advantage of bringing a contractor into the planning of the project, thus making use of his practical knowledge and expertise. It may also result in an earlier start on site.

The first stage aims to select a suitable contractor by means of limited competition. The second stage is a process of negotiation with the selected contractor on the basis of the first stage tender. First, a short list of tenderers is prepared, as described for single stage tendering.

• First Stage

When being invited to tender, tenderers are informed of the second stage intentions, including any special requirements of the client and the nature and extent of the contractor's participation during the second stage. Tenderers are asked to tender on the basis of any of the following:

i. An ad hoc schedule of rates, consisting of the main or significant items only;

ii. A detailed build-up of prices for the main Preliminaries items;

iii. A construction programme showing estimated times and labour and plant resources which would be used, and also construction   methods;

iv. Details of all in labour rates and main materials prices and discounts which would go into the build-up of the detailed tender;

v. Percentage additions for profit and overheads;

vi. Proposed sub-letting of work, with additions for profit and attendance.

During this stage, discussion with each of the tenderers may be conducted in order to elucidate their proposals and to enable the contractors to make any suggestions with regard to design and/or construction methods. When these procedures have been concluded, a contractor is selected to go forward to the second stage. It is important that, in accepting the first stage tender, the parties define procedures for either of them to withdraw should the second stage negotiations prove abortive, and what, if any, payment may be due to either party in that event, including reimbursement of the contractor for any site works the contractor may have carried out.

• Second Stage

During this stage, finalization of the design proceeds in consultation with the selected contractor, and bills of quantities (or other detailed documents describing the proposed works) are prepared and priced on the basis of the first stage tender. Negotiation on the prices will follow until agreement is reached and a total contract sum arrived at, when the parties will enter into a contract for the construction works.

When time is pressing and it is desired to start work on site before final agreement is reached, a contract may be signed earlier. In that case, when the quantity surveyor considers that a sufficient measure of agreement has been reached on the prices for the principal parts of the work, he will recommend the client to proceed with arrangements for signing of a contract.

2. Restricted Tendering

Restricted tendering refers to a process in which few bidders are identified and invited to bid. Restricted tenders are not advertised. Restricted tendering may be used (i) when the process is complex or the specialized nature of the goods, works or services favours pre-qualified contractors; (ii) there is no reasonable alternative or substitute for the goods, works or services; or (iii) there is an urgent need for the goods, works and services being procured; (iv) the other available methods of procurement are impractical; and (v) the circumstances that give rise to the urgency were not foreseeable and were not the result of the negligent or slow conduct on the part of the procuring body. The Tender Committee approval must be obtained and the reasons given and recorded for official scrutiny and accountability.

There may be negotiations between the parties and the resulting contract should be in writing and signed by both parties. Moreover, this tendering method should not be used in a discriminatory manner, for example, where some entities are offered favoured preference as a result of nepotism, favouritism, corruption, etc.

3. Serial Tendering

Sometimes, when a large project is to be carried out in successive phases, a combination of selective tendering and nomination is employed. This is sometimes called serial tendering. The contractor is chosen for the first phase by means of selective competitive tendering. The accepted tender forms the basis of payment for the resulting contract in the normal way. The tender is also used for the second and later phases, provision being made for so doing in the initial contract by the inclusion of a formula for updating the prices. Alternatively, the contract for the first phase may specify negotiation of new rates, based upon the tendered prices, as the means of determining the payment for each successive phase in the series.

The purpose of serial tendering is to gain the benefits of continuity.

Good afternoon.

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