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CC202 CONTRACT PROCEDURE

CHAPTER 2
TENDER PROCEDURE

TENDER PROCEDURE
Definition of Tender
o Tender is a statement issued to invite a party to perform a
job/work for the construction or supply works with the permission
from the parties involved.
Tender prepared by the developer while the recipient is a
contractor or supplier.

Definition of Quotations
o Quotation is a process to call and select a qualified contractor to
build and complete construction works value between RM 0001 to
RM 50 000.
o Quotation usually practised to fullfill immediate work, maintenance
work and indent works. Quotation process usually for bumiputra
contractors only.

TENDER PROCEDURE
a) Immediate work
Work should be done immediately, usually selected contractor is a
contractor who is already known skills and ability to work. Example an example of work involved, such as pipeline repair or repair a leaking
roof and repair of public toilets.
b) Maintenance work
Maintenance work usually based on schedules of rates. Basiclly types
of the works is basic maintenance and maintenance of government
buildings. Maintenance works usually open for one week by Public Work
Department or other government body. BY this actions, usually prices
by contractor usually the same.
c) Indent work
This type of work is notified to the contractor work after they submit
their quotation - respectively. Only a successful contractor is required
to perform the work. The types of works involved is office renovation,
cleaning of building and painting.

TENDER PROCEDURE

TYPES OF TENDER

For works that exceeds the value


of RM 50 000.00, selection of contractors are made
through tender process.. Basiclly, there is
several common types of tender being used and
practised in our country.
The types of tender is :a.
b.
c.
d.
e.

Open Tender
Limited Tender
Selected Tender
Pre-qualification Tender
Negotiable tender

TENDER PROCEDURE

Open Tender
Open tender is an
offer by the government's customary and statutory bodies. This
types of tender is open to all contractor that fullfill the criteria
.This type of tender is open to all qualified contractors. The
number or tenderers is unlimited. This types of tender
used to get a good price by the big number of
contractors who enter this type of tender.
This allows the employer to make the right choice based
on appropriate and reasonable price.The employer will published
tender notice in local newspapers or display on the employer notice
board.
Benefits of Open Offer
Provide opportunities for new contractors(less experience).
The employer can choose the lowest price from a large number
of contractors.
This offer is suitable for the simple construction and requires
no special experience and qualifications.

Disadvantages of the open offer


Need a lot of time to process the tenders
submitted by contractors which is not suitable
for the project to be completed immediately
The selection of the lowest price of tender had a
risk because of the possibility of contractors will
produce low quality building due to the use of poor
quality materials to gain profit.
This types of tender is not encouraging
contractors to use modern equipment and new
techniques due to highly cost.
The difficulty in selecting a qualified contractor
and be wasted in the process of preparation and
selection.

TENDER PROCEDURE
Limited Tender

This offer is limited to certain contractors. Usually for bumiputra


contractors only. Only qualified and registrate bumi-contractors can
participate in this offer and the numbers are limited. This is a step by the
government's by DEB to make sure at least 30% of the total annual
contract give to the bumiputra. Usually this types of tender(limited
tender)advertised through local newspapers or display on the employer
notice board.
Limited Offer Advantages

Provide opportunities for bumiputra contractors to participate in the


construction industry, without competition from non-bumiputra
contractors.
Fulfill our country(government) obligation to encourage the 30% bumiputra
involved in construction industry.
The process of time this type of tender can be reduced.
Disadvantages Limited Offer

Only limited only to certain contractors


Tender offered higher prices due to a lack of competition

Selected Tender

TENDER PROCEDURE

This types of tender, employer(owner,clients) will offer the


constructions project to selected and qualified contractor.
Bid is submitted by the contractor which is selected by
the employer.
Competition is
between the selected contractor(tenderers). This offer
is implemented based on the following requirements:
Special projects that require specific expertise.
The project should be completed soon which is
only capable contractors are allowed to participate
in the offer.
The employer will get a list
of qualified contractors and invited them to
enter bids.Contractor selection are based on
organization, capabilities, experience and number of
projects being implemented. Letters will be sent to
the contractor selected to participate in the offer. The
letter was disclosed about related projects and tender.

Selected tender Advantages


Employers in the end will have a good quality of
construction works due to selected contractor which is
skilled and have a good track record.
The less time taken to analyse of the bids
because all tender requirements provided by the
employer based on the number of contractors choosen.
The selection of a contractor who is skilled can be
done quickly because of all contractors(tenderers) have
their own expertise and ability.
The selection of the lowest price was fair.
Selected tender disadvantages
The price offer is high because
of less competition and competing contractors
consists of skilled and experienced among them.
Possible alliances occur between the contractor by
offering the same price..
Due to the ability of the contractor is constantly
changing, so there are
risks in taking and selecting a contractor that its works
quality decreased currently.

TENDER PROCEDURE

Pre-Qualification Tender
Offer only open to contractors who are selected through a
pre-qualification process. Usually for specific project and
require special expertise and high-class standard..Project
owner/client will advertise the notice of pre-qualification
tender in local newspapers to determine the ability of a
contractor who wants to participate in the
offer. Contractors who wish to participate in this offer
should fill in form that based on information about financial,
management and experience of the contractor and returned
it to the developer. Employers will review the information
provided and will make a selection to select the contractor
to participate in the offer as a tenderers. The successful
contractor usually appointed based on experience, skills,
work skills, working capital and modern techniques being
used.

Advantages of Pre-Qualification Tender


Quality construction is produced through the use of high
technology and experience of the contractor.
Only contractors who have experience and good
management and sufficient capital be eligible for this offer
To save time, effort and cost to prepare and review the
terms of the offer document for the number of contractors
that are not public.
secured project will be completed in the stipulated period.
Disadvantages of Pre-Qualification Tender
This offer is only eligible to contractors who have expertise
only.
construction costs would be higher due to the use of new
technologies that are rarely owned by other contractors.
Only suitable for large projects and are not suitable for
small projects.

TENDER PROCEDURE

Negotiate Tender

This tender is carried out for some reason according with


certain parties. This type of tender are not advertised.
Employer sent a letters to the selected contractor to make
the discussion about the project that will be implemented.
Among the matters discussed are aspects of design, cost
estimates, schedule of rates, management and
profitability. Basically, negotiate tender between employer
and contractors are made first before prepare of drawings
and materials list.
The offer is practiced for the following reasons:
Projects which require immediate completion
Project work requires expertise.
Ongoing project and by the phase.
Project financing made by the contractor
The project basicaly the same

Advantages of Negotiate Tender


The cost of process is low.
The contractor can advise and recommendations to the
architect and engineer early stages of project design.
Employers can estimate the costs each element based on
previous rates of the same projects.

Disadvantages Negotiate Tender


Tender prices is high.
Only certain contractors to be selected.
As the offer price is too high, control of wastage and time
not so good.
the planning stage of deviation caused losses to the
employer

TENDER PROCEDURE
TENDER DOCUMENT CONTENTS
The tender document is divided into two types:
The tender document for contract based on the bills of
quantities (BQ)
o Usually used for large projects
o Preparation requires a relatively long time
o It can provide as a foundation for assessing the work done for
interim payment and work changes.
The tender document for contract based on
drawings and specifications.
o The use to the project to be completed soon due to limited
time for Quantity Surveyor had to prepare Bills of Quantities.
o Suitable for low and moderate project costs.
o The contractor must include the total price for work in
bulk only (Lump Sum)

TENDER PROCEDURE

TENDER PROCEDURE

Table Tender Dokument(TTD)


o

This document is very similar to the tender document, but usually more complete
than the tender document that is sold to contractors.

Prepared before tender being offer to contractors or advertised(tender notice).


Documents place at a special special desk@place in the PWD @ residence office.
The tender document is used to enable the contractor get a clear picture of the
project and briefly describe tender contents.

Usually published during tender notice re-opens until closing date submissions of
tender.

TENDER PROCEDURE
DEFINITION OF TENDER NOTICE

Statement issued by the developer to invite contractors to enter tender for the
proposed project

Tender notice is to inform the contractors who are interested with important
details of a tender.
TENDER NOTICE ELEMENTS

Must be attractive and offer complete information about the project so that many
qualified contractors participate to the tender.

Tender shall be advertised in the local newspapers or posted on the notice board at
the employer's/owner office.

TENDER PROCEDURE
INFORMATION AND CONDITIONS OF TENDER NOTICE

Important information that should be included in tender notice : Logo and name of employer/owner
Work title
Type of tender
Classes to invited contractors
The head and sub heads
Payment of the tender document
Places to take the tender document
Place and time of the tender documents returned
Date of site visit, the time and location
Location for checking TTD
Time and date to check TTD
The closing date for tender

Tender Notice
Click here

TENDER PROCEDURE

DURATION OF TENDER NOTICE PROCESS


Usually the tender offer published in local
newspapers or by notice posted at the owner
notice board two weeks before site visit.

The tender statement(for tender notice) should


be sent to the press at - least two weeks before
the advertised date.

TENDER PROCEDURE

STANDARD FORM FOR TENDER PROCESS


The standard form used during the tendering process are:
Form of Quantity Surveyor appointment
This form is a confirmation between developer and quantity
surveyor to carry out work related to the management of
Quantity Surveyors in a construction project.
Bond of Performance Form
Is a letter of guarantee issued by a particular bank or financial
institution about the financial position of the contractor, so that
owner & consultant will have more confidence in contractor
abilities to construct/handle a works.

TENDER PROCEDURE
STANDARD FORM FOR TENDER PROCESS
Form of Contract
Form of agreement between the contractors and developers to
carry out a project. It contains the terms of agreements and
contracts that must be followed by both parties. Form of contract
used is whether JKR203/203A or PAM (equivalent contract)
Contractor Pre-Qualification Form
This form is used by the contractors who wants to enter the Prequalification tender. This form practised to observed contractor
organization to handle a project..Assessment is based on the
number of workers, the number of machines used and the
experience of handling previous projects.

Forms for Small Contractors and Material Suppliers


To appoint an organization as of small contractor or materials
supplier for the construction project.

TENDER PROCEDURE
STANDARD FORM FOR TENDER PROCESS
Summary of Tenderer
This form is used to list the capabilities in terms of financial, capital, plant, personnel
and experience of each participating tenderer.

Form of Current Projects


This form provides an explanation about ongoing construction projects by tenderers.
Form of Tender Error
This form is used to record all the errors made by the tenderers. The error of each
element in the BQ or tender document will be recorded for the make corrections.
Form of Tender Results

Which is the last form being used where QS will recommended the suitable/qualified
contractor to the owner/client to carried out works

TENDER PROCEDURE
TENDER CLOSING PROCESS

The closure means the tender closing date as stated in tender notice. When the
closing date of the tender, the completed tender documents by tenderers will put
inside provided tendering box. The tender box will be closed and kept in a engineer
office. Committee of opening tender will open the box after meeting/discussion.
THE USE OF TENDER BOX

Box used to keep the tender documents prepared/submitted by contractor. Tender


box is a locked box which is marked with project no., project name, date and time
of tender opening and date of submission based on tender notice.
After the closing date of tender, the tender box will be locked and kept in
the engineer office. Tender box will be reopen once Committee of opening tender had
a meeting/discussion.

TENDER PROCEDURE
OPENING OF TENDER PROCESS AND DUTIES OF COMMITTEE OPENING
TENDER

As we have explained the process of opening tender box will be done by members of
the tender opening. Members of this committee usually consists of three officers who
were appointed by the employer. Any documents submitted will be recorded in serial
number based on the amount of the tender documents.

For example, 1/10, 2/10, 3/10, 4/10 ... 9/10 and 10/10, if there are 10 tenderers
submit their tender respectively. This serial number will be listed together in a
special form together with tender prices being submitted. This form is known as a
Form of Tender Schedule.

Form of Tender Schedule will be handed over to the other committee to make a
tender evaluation or analysis. The committee must consist of not less than two
persons either Quantity Surveyor or Technical Officer in the relevant field of work.

TENDER PROCEDURE
TENDER ANALYSIS
Assessment of tenders carried out in two stages of assessment and evaluation which
is First Stage and Second Stage.
First Stage Assessment

The first assessment on the lowest tender for a few tender within a reasonable price
to meet the following conditions :Tender Perfection
Tender must be complete and free from any legal local authorities regulation and
reasonable contract to determine eligibility based on common practice.
Satisfactory Financial Position
Tenderers must submitting their evidence/proof or assessment officer satisfied with
financial condition to constuct a project. During the Satisfactory Performance,
tenderers who do not have a project or defined as 'sick' or getting a bad report from
the supervisor or the officer have a possibility facing a termination of work because
of unsatisfactory job performance.
Tenders which is not meet above conditions shall not being considerated to
further assessment in Second Stage.

TENDER PROCEDURE
TENDER ANALYSIS
Second Stage Assessment
The second stage of assessment is made on a number of tenders that pass the
evaluation of the first stage begins with the lowest to the highest tender prices. This
following criteria were used to determine the most advantageous/profitable tender
for consideration.
Tender Price
Tender prices submitted by the tenderer will be compared with the
department/client budget. Department/client budget should ensure first their
reasonableness.
Experience
Evaluation based of experience is important especially for the contractors who
offered low prices of tender. To enable the lowest or lower tender prices to be
considered, contractors(tenderer) should have a good record in two similir projects
within five years. (as a proof to clients that although offered the lower/lowest prices
contractors have the ability for the construction works)

TENDER PROCEDURE
TENDER ANALYSIS
Second Stage Assessment
Current Performance
Current work/present work is a project still under construction/not completed during
the closing date of tender. Job performance of tenderers will be categorized as
follows:
Excellence - exceed the actual percentage of progress schedule.
Satisfactory - the same percentage of the actual progress or backward from
schedule of less than 30%.
Current job performance evaluation shall be based on a report from the
Superintendent or Engineer Officer who observed the project.
Technical Staff
These factors are evaluated based on the number of technical staff, compared with
technical staff minimum estimates requirement(Anggaran Keperluan Minimum-AKM) to
carry out the tendered project in a great shape.

TENDER PROCEDURE
TENDER ANALYSIS
Second Stage Assessment
Plant, Quarry and Factories
If the technical technical less than AKM requirement bu the tenderer(contractor)
have a quary, factories and etc, or other relevent factors that can support their
tender prices respectively-can be considered
All the analysis and evaluation will be entered into the tender report for
submitted to the Tender Board to be considered. ThenTender Board will make
selection of the successful contractors to implement the project.

TENDER PROCEDURE
TENDER REPORT
Tender Board prepared tender report to facilitate the selection of contractor
a. A summary of the scope of work to be undertaken as the project name,
determination and etc.
b. Explain how to invite tenders for the project and
describes when the tender is opened and closed, and the conduct of the
tender isover.

c. Lists the tenderer - the price of the tender and the


tenderer including the completion of the tender of the lowest prices first.

TENDER PROCEDURE

d. Review of the mistakes that occurred in the tender and


lists the errors tenderer. In the list of the latest bid price shall be recorded,
including errors that occurred if any.
e. Departments to submit budget estimates and the differences with each tenderer.
f. The background of the contractor as the company's name, class, and the list of
projects the contractor has been and is being implemented.
g. Suggestions and support to institutions to accept the offer to eligible contractors
upon the matters above are analyzed and studied.

TENDER PROCEDURE
DUTIES AND RESPONBILITIES OF THE BOARD OF OFFER

Duties and powers of the board of the tender depends on the stages
respectively
.

1. Federal Tender Board


It is represented by the Director-General of the Public Works
Department, Treasury,Ministry of Economic Planning RayaUnit / State / UPEN or any
body / unit concerned.
Offer - This offer is designed to work - work the federal level alone. The Board is
authorized to confirm the tender of more than RM 250,000.00.
2. State Tender Board
The Board is represented by the secretary of state / Secretary, State Financial
Officer, Director of JKR and others. The Board is authorized to
certify deals financed by the state government alone.
3. District Tender Board
The Board is represented by the secretary of state, finance officer for which he is a
member of the committee and the authorities acknowledge the quotation of small
deals that do not exceed RM 10,000.00 only.

TENDER PROCEDURE
TENDER AWARDS
Means the the offer made to the contractors, which is their tender being selected
and accepted for the work/supply(s)
Owner/Client will issue a letter of acceptance of tender to the selected
contractor. The Contractor shallnot withdraw or had a risks to se sued if the offer by
owner/client being rejected. This is because as soon as the contractor
received the letter of acceptance of tender, contractual relations exist between the
owner/Client and contractor.
Letter of acceptance of the offer may be made in two stages:
a. Letter of Intent (Letter of Intent)
The contents of the letter including the intention by owner/client to accept the
tender submitted by contractor complied with conditions and requirements. This
letter is not bindthe Government/ owner/client and contractor
b. Letter of Acceptance (Letter of Acceptance)
That is a letter based on the condition that the offer was associated with the
contract. This is a valid legal document/letter and be part of the contract
document. This letter is issued to the successful contractors on all mattersno further consultation/negotition is needed (all matters resolved)

TENDER PROCEDURE
Tender Rejection

Some of the reasons why a tender was not accepted:


the offer price is too high or too low
too low?If the project given to the contractor-had a risks not
completed.
works conducted by the contractor too manyand exceeds the limit
of financial registration.
record of previous employment is not satisfactory
failure to comply with any conditions of the tender.
the details of the tender is not completed correctly
not enough financial for the project.

TENDER PROCEDURE

RE-TENDERING
Occured based on the following :

prices offered is low or too high.


There are errors in the tender document, for example
through the method of calculation or the details of
drawings.
There is no provision or insufficient fund for the project.

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