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IJISET - International Journal of Innovative Science, Engineering & Technology, Vol. 3 Issue 3, March 2016.
www.ijiset.com
ISSN 2348 – 7968
Tender and Bidding Process in Construction Projects
1 2
Tejas C. PatilP P, Ashish P. WaghmareP P, P.S.Gawande3
1
P PPost Graduation Student Civil Engineering Department, Savetribai Phule Pune University
Dr. D Y Patil School of Engineering & Technology, Lohegaon
Pune, Maharashtra 412105, India.
2
P P Assistant Professor Civil Engineering Departments, Savetribai Phule Pune University
Dr. D Y Patil School of Engineering & Technology, Lohegaon
Pune, Maharashtra 412105, India.
3
P P Assistant Professor Civil Engineering Departments, Rashtrasant Tukadoji Maharaj Nagpur University0T
Jawaharlal Darda Institute of Engineering and Technology,
Yavatmal, Maharashtra 445002, India.
Abstract The rapid evolution of e-commerce in the past
Construction Industry plays a key role in the process of economic few years has introduced new ways for organizations to
transformation and growth. Export of projects and services perform tendering processes and participate in biddings.
indicate a country's progress in technology and export The term tendering is used to describe all the actions
performed by the awarding authority to produce, publish
performance. Most of the companies are versed only with and manage tendering documents, while bidding
engineering and technology. The decision to bid is a major incorporates the effort of interested organizations to win
financial decision because of two reasons. First, the contractor contracts by responding to tenders. In this context, the
value adding functionalities related to e-commerce
assumes substantial costs for the preparations of the estimates technologies include for example electronic publication of
and the tender at the risk of not recovering them if he is not tenders, electronic search of tenders as well for partners
awarded the job. Second, and most importantly, the contractor and suppliers, electronic submission of biddings,
electronic notification of award and so on.
commits himself to investment in the construction of the project Those abilities are especially important for industries,
if he wins the bid. where business is performed on a project-by-project basis
and in many cases by consortia formed especially for the
Keywords: bid, estimate, funds, tender notice, pre-qualification. project. This is the case of the construction sector, where
timely opportunity identification and adequate consortium
formation are the key factors for winning a contract. As a
1. Introduction result the main actors of the sector, i.e. Tendering
authorities, construction companies, suppliers of
. Tendering is defined as the ‘The process of preparing and materials, and manufacturers can gain substantial
submitting for acceptance a conforming offer to carry out benefits, by using these new electronic mechanisms.
work for a price, thus converting the estimate to a bid’. Most persons, at one time or the other, have to
The following the aims and procedural nature of tendering; buy or sell goods, Buying goods or services, or engaging a
• To select a contractor for a construction project. contractor for civil works like building roads, houses,
• To test the current market, especially where factories is an important activity. This activity brings
existing contracts are of a long-term nature. together buyers and sellers who are keen to find common
• To comply with regulations pertaining free and meeting points in their dealings with one another.
open competition. Rapid advances in technology have made it unwise to rely
Tendering is a means to an end usually a means on the proverb old is gold. A buyer may no longer find it a
for a contractor to win the right to deliver a construction good policy to ignore the recent developments and to
project. However, tendering could also happen between continue to use the models of equipment, others used in
the interface of contractor and sub-contractor; contractor the past. It is always good to know what the market has to
and supplier, client and consultant, etc. It often, but not offer to meet the buyers' requirements. This is what brings
always, involves some form of price competition. the buyers and sellers into contact. A buyer wants good
value for money; a supplier seeks to sell goods at a
reasonable price.
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IJISET - International Journal of Innovative Science, Engineering & Technology, Vol. 3 Issue 3, March 2016.
www.ijiset.com
ISSN 2348 – 7968
2. Objectives sought. By this, the contractors would have a clear idea of
the conditions of the contract and they will also be free to
• Time & cost saving process. ask for clarification on any of the job requirements, design
• To reduce the inventory cost of tender process. specifications etc. and the various contract clauses
• The security process. including their legal implications. A summary record of
• Detail study & analysis of E-tendering process. the conference will be prepared and sent to all the
• To free from corruption. intending bidders, to whom the contract documents would
• To differentiate private & public tender process. have been sent, along with amendments to the contract
• The use all type of tender process by using E- documents resulting from this conference.
tender process.
3. Scope 4.2 Evaluation of Bids
The first step in the evaluation of tenders is rejection of all
The contract management process includes contract conditional tenders and those without earnest money
planning, creation, and administration. In the process, deposit. The acceptable tenders are thereafter evaluated.
departments are primarily responsible for the first step Apart from arithmetical checking, the tendered rates for
department planning, second step contract creation and the individual items are compared with the estimated rates to
third step contract administration. The Branch manages the spot out those with exceptionally high or low rates. The
second step Contract Creation for open tenders and issues employer reserves the right to accept or reject any offer
purchase orders for all contracts. This second step was the without assigning any reason and hence he is free to reject
focus of our review. We excluded low-value purchase any tender with exceptionally high or low rates for
orders, cheque requisitions, corporate credit card individual items. At the same timer it is also not obligatory
transactions, and sign-off payments, all of which are to reject all the tenders. The impact of such items rates to
generally of lower transaction value, from the scope of this spot out those with exceptionally high or low rates. The
project. We excluded contract tendering activities relating employer reserves the right to accept or reject any offer
to the Edmonton public library and Edmonton police without assigning any reason and hence he is free to reject
service from this review. any tender with exceptionally high or low rates for
individual items. At the same timer it is also not obligatory
4. Methodology to reject all the tenders. The impact of such items on the
The study is primarily based on secondary data. The overall costs of work can be assessed and if the variation
secondary data has been collected from various sources in the total cost is marginal, such tenders can be
like internet, books on International contracting and annual considered for comparison.
reports of World Bank, Asian Development Bank, EXIM
Bank, Reserve Bank of India’s regulations, regulations and 4.3. E- Tender
criteria of OCCI, which is now called as PEPC [Project
Promotion Council of India]. Details regarding regulatory The traditional systems of procurement in government
Frame-Work of project exports have been collected from departments through manual modes suffered from various
EXIM Bank and Reserve Bank of India. problems such as inordinate delays (approximately 4 to 6
months) in tender/order processing, heavy work, multi-
4.1. Pre-Bid Conference level scrutiny that consumes a lot of time, physical threats
After the tender documents are issued to shortlisted to bidders, cartel formation by the contractors to suppress
contractors and sufficiently ahead of the date of competition, human interface at every stage, inadequate
submission of tenders, a pre-bid conference is held by the transparency, discretionary treatment in the entire tender
employer/to which all the intending bidders are invited. process, etc. Though it is known to the departments that
Before this conference, the intending bidders are also their traditional processes are inefficient, hardly any effort
encouraged to visit the site and see for themselves the site was taken to improve the system for obvious reasons.
conditions, the facilities available at the site and its E-Tendering is a process of carrying out entire
vicinity and examine all data on investigations etc. that is Tendering Cycle Online, including submission of Price
available with project authority so that the contractors Bid to harness Efficiency, Economy and Speed of Internet.
have a clear picture of what is expected of them and the Despite the apparent benefits of information technology
conditions under which the works are to be executed. In (IT), many organizations have been slow to adopt e-
the conference, the job requirements will be clarified and construction and in particular e-tendering. Many
contract conditions explained wherever an explanation is companies are approaching the use of e-tendering with
493
IJISET - International Journal of Innovative Science, Engineering & Technology, Vol. 3 Issue 3, March 2016.
www.ijiset.com
ISSN 2348 – 7968
caution in order to test its practical advantages and senior official connected with the bid process usually
encourage age confidence amongst staff before chairs the meeting. Minutes of this meeting are prepared
implementation to a general concern over security and along with clarifications to the bidders to respond to their
legality issues. Tendering is a practice involving a queries. In case there are amendments to the bid conditions
complex web of legal issues, which must be known before proposed at this stage ensuing from the suggestions made
tendering. The unguarded use of electronic technology in by the bidders or otherwise, the same are issued in the
electronic tendering and post-tendering project form of Common Set of Deviations (CSD) to the bidders.
management has created contradictory effects, such as the The minutes of the Pre Bid Meeting, Clarifications and the
trade of between effciency and security. The people are CSD as above need to be supplied to the bidders without
unsure of the legal impact of using the existing e-tendering delay. A minimum gap of about ten to fifteen days is
project management system. For this reason, industry is usually allowed between the Issue of these minutes and the
reluctant to conduct contracting activities. Business has clarifications/CSD and the last date of sale of the bid
traditionally incorporated many elaborate procedures into documents primarily with a view to enable bidders who
their regular business processes to seek legal protections. are attracted to the bid process on account of these
E-tendering systems should also include appropriate deviations, to purchase the bid documents and participate
security mechanisms for increasing the system’s in the bid.
reliability.
Submission and Opening of Bids
FIDIC Forms 4.6.
4.4.
The Organization/ULB (Employer) needs to fix a place
FIDIC i.e. FEDERTION INTERNATIONALE DE and a specific date and time as the deadline for the
INGENIEURS-CONSEILS (International Federation of submission of tenders. The Employer may, prior to the
Consulting Engineers) is an international organization deadline for the submission of tenders; extend the
based in Geneva that has been instrumental in the deadline, if necessary on account of reasons e.g. to afford
evolution of various standard forms of contracts used bidders reasonable time to take the clarification or
worldwide in civil engineering works. The World Bank modification of the minutes of Pre Bid Meeting into
has also adopted the FIDIC standard forms with suitable account in their tender. The Employer may, in its absolute
modifications for applications in the works carried out discretion, prior to the deadline for the submission of
with its assistance. The key differentiator of the FIDIC tenders extend the deadline, if it is not possible for one or
based contract is the role assigned to the “Engineer” who more suppliers or contractors to submit their tenders by
is an impartial and independent expert who administers the deadline owing to any circumstance beyond their control.
contract between the parties viz. the “Employer” (i.e. the Notice of any extension of the deadline needs to be given
public body e.g. ULB) and the “Contractor”. The promptly to each bidder. The tender must be submitted in
conventional PWD forms used in our country did not writing, signed and in a sealed envelope as per stipulations
adequately provide for the role of project management and contained in the Bid documents. The employer may
supervision to be carried out by a consultant. The FIDIC provide to the bidders a receipt showing the date and time
form is eminently suitable for adoption in cases where the when its tender was received, especially when asked for.
project management of the work is to be entrusted to an The tender received after the deadline for the submission
expert consultant, who functions as the “Engineer” to of tender, shall be returned unopened to the bidders who
administer the contract. FIDIC has developed the submitted the same. On the due date and appointed time,
following forms10 Conditions of Contract for as mentioned in the bid document, the Employer needs to
Construction: These are forms used for construction open the bids in the presence of the intending bidders or
contracts and are usually item rate type of contracts, their representative. The bidder’s name, the bid prices and
although the form can also be used for lump sum contracts. discount, if any will be announced by the procuring entity
during opening of bids. A record of opening of bids is to
4.5. Pre Bid Meeting be maintained. Where the bidding follows a two envelope
bid submission, the first envelope of the bidders
Pre Bid Meeting is held at a specified place and time, in containing the documents to ascertain
respect of relatively large works to enable prospective eligibility/qualification of the bidders and/ or technical
bidders to seek clarifications about the provisions of the proposals is opened on the bid submission date. The
bid and make suggestions to the organization/ULB documents in the first envelope are scrutinized in due
(Employer) about the work and the bidding conditions. It course. The financial bids in respect of those bidders who
is to be noted that non-attendance at the Pre Bid Meeting qualify and whose technical proposal meets the
does not constitute a disqualification of the bidder. A requirements in the bid documents are opened. The
494
IJISET - International Journal of Innovative Science, Engineering & Technology, Vol. 3 Issue 3, March 2016.
www.ijiset.com
ISSN 2348 – 7968
qualifying bidders are intimated about the date on which Depends
the financial bids are to be opened. upon the Depends upon
Engineer in the Engineer
charge. in charge.
4.7. Difference between the Public and Private 16 Penalty for delay But it But it penalty
Tender Process penalty up to up to 500 to
500 to 2000 5000 /- Rs.
Sr. Public Private /- Rs. Per Per day.
No. Description Tender Tender day.
Process Process Strictly
1 EMD Deposit Yes Yes 17 Environmental No any follows the
2 Envelope system Yes No protection provision environmental
Evolution and rules
3 comparison of No Yes Wastage of
bids material
Performance After 24 After 18 18 Cement Nil Nil
4 Security months months Steel 10-12% 5%
5 Bank guarantee No 5% of total 19 Safety provision No Yes
contract price. Not
Form of contract 20 Canteen available Available
6 agreement Yes Yes Temporary
Details of 21 electric supply Available Available
7 technical and No Yes 22 Housing for Not Available
administrative for labours available
work 23 Explosive material Not permit Strictly
8 Rejection of all Yes Yes to site prohibited
tenders 24 Bonus to before No provision 2.5% of cost
9 Settlement of No any Arbitrator complete the work of project
disputes provision appointed 25 Complete the 2-3 months 1months
10 Avoidance of No any Third Agency process and above
delay provision Appointed 26 Description of Yes given Yes given
No. material
Extension of Work should Strictly fire
11 complete projects Yes be completed 27 Fire prevention No provision prevention
in time. material
Strictly check available
12 Quality control Not check by company Its available
properly engineers 28 Transport for Not provided for all
Depend upon labours engineers and
5% of contactor at labours
13 Advance payment project cost the interest of 29 Manpower for More Less required
12% p.a. complete process required
14 Insurance Not provided Provided 30 Buaracacy Possible in Not possible
process
15 Currencies All payment All payment 31 Transference to Less More
in Rupees in Rupees process
Less quality Accurate
32 Quality of work work done quality work
done
33 Political It’s possible It’s not
interference possible
495
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