TENDERS

A tender is an offer in writing to contractors to execute the some specified works or to supply
specified materials within a fixed time frame and as per conditions of contract and agreement
between the contractor and the owner or the department or the party. The tender documents contains
the bill of quantities (BOQ), specifications of the works to be carried out, time frame for the
completion of the work, conditions of the contract and plans and drawings. These documents are
provided to the contractor on the payment of certain fees. The contractor who quotes the lowest
rates for the overall works are offer the contract to execute the work.
CLASSIFICATION OF TENDERS:
1. Open tender: An oral talk or written document between the Engineer and the Contractor for
certain small jobs to be performed. Sometimes it is advertised.
2. Sealed tender: Invited for important or huge projects; wide publicity is given; always written
documents are made. 3. Limited tender: Only a selected no. of contractors are invited to quote their
rates 4. Single tender: Invitation is given to only one firm to render a service by quoting their rates.
If the quoted rates are high, it will be negotiated prior to the agreement of the contract.
5. Rate contract: usually adopted for supply of materials, machine, tools & plant, etc. (items to the
store). It specifies the supply at a fixed rate during the period of contract. The quantities are not
mentioned in type of contract and the contractor is bound to accept any order which would be
placed before him.
TYPES OF TENDERS
 Item rate tender- Offer based on the rates of different items of work
- In this item of work are fully described with their quantities
- The contractor is supposed to fill in the rates in tender form
- Payment to contractor: based on the measurement of the work executed at the rates quoted by him
in the tender - Balanced method of execution- Minimized chances of extra work- Reasonable
variation in plan and in quantities during execution of work - Types of work-buildings, bridges,
sewer lines, road etc.
 Schedule of rates with % up & down - Modified form of item rate tender - In this case, bill of
quantities are duly priced - Tenderers has to quote only the % above or below the priced schedule -
For repair work, new buildings as well as maintenance work
 Lump sum tender - The Contractor needs to complete the work with his materials and labour for a
fixed lump sum amount or at a fixed rate. • Contractor will check all architectural details and
specifications and time of completion of work. • The payment for the contractor will be done
initially, periodically or at the end of the work. • Suitable for all works with exceptional cases
where nature of the soil and type of foundation cannot be ascertained in advance and, additions and
alterations are required in buildings after the tender is accepted.
 Lump sum plus % tender - Same as lump sum tender except that if the contractor completes the
work before the specified rate, he is usually granted a certain bonus in terms of percentage of the
cost of the project
 Cost plus % tender Contractor will carry out the entire labour work with required tools,
scaffoldings etc. for all items of the work at his rates. • Client will supply all materials – he need to
keep it safely. • Good for works like – standard quality of material is desired and where additions
and alterations of existing work is required
 Labor tender - Contractor agrees to carry out the complete labor work based on the rate quoted by
him - The contractor has to supply all tools and planks, scaffolding, centering materials, nails etc
and the owner supplies only the material required - Contractor is responsible for level and setting
out of the work - The owner has to keep a close watch as the material used by the contractor as he is
least concerned about the wastage - Material and workmanship will be of standard quality &
disputes are minimized - Works: additions, alterations and repair to the existing buildings
 GUIDELINES AND PRINCIPLES OF TENDER:
• Conditions of the Client as a party inviting / receiving tenders should be clearly defined. •
Conditions of the Contractor as a party submitting the tender also should be clearly defined. • Both
their expectations and responsibilities should be clearly mentioned. • All aspects of tendering
should be clearly written and conducted with honesty and fairness at all levels. • Parties must
confirm all legal obligations. • Parties must not seek or submit tenders without a firm intention to
proceed.
TENDER NOTICE
- Notice invite tenders Characteristics - Clear and brief - Work brief - Estimated cost
- Earnest money deposit - Cost of tender documents - Eligibility criteria for tendering - Documents
for obtaining blank tender documents - Last date for receipt of application for issue of blank tender
documents - Place and period of issue of tender documents - Last date for receipt of tenders & place
of submission - Date, time, & place of opening of tenders
INVITING TENDERS
Procedure for inviting tender:
1. Preparation of tender documents 2. Issue of notice inviting tender or tender call notice 3.
Submission and opening of tenders and their scrutiny 4. Acceptance of tender and award of contract
Information to be given in a tender notice:
1. Name of the department inviting tender 2. Name of work and location 3. Designation of officer
inviting tender 4. Last date and time of receipt of tender 5. Period of availability of tender
document 6. Cost of tender document 7. Time of completion and type of contract 8. Earnest
Money Deposit to be paid 9. Date, time and place of opening the tender 10. Designation of the
officer opening the tender
Information to be given
- The notice inviting tender in specified form like PWD 6 -Layout plan, location of work
- Division in which location is situated - Schedule of quantities of work - Nearest road/railway link
- Set of drawings including working drawings - Availability of materials in the vicinity - Detailed
specifications or reference to standard specifications for each item of work - Complete architectural
and structural drawings - Schedule of stores to be issued by the owner of the project indicating the
rates and their place of supply - Schedule of tools & plant and other facilities to be made available
by the owner, indicating the the conditions, hire charges and place of delivery - Rate of supply of
power and the point of supply. - Location of water supply point - Time for completion and the
progress to be made at intervals of time - Conditions regarding employment of technical
personnel .- Weather conditions in the area - Amount of EMD and the form in which it is to be
paid.- Insistence on Income tax and sales tax clearance certificate .- Amount of Security deposit to
be paid/ deducted from running bills of contractors should be notified in the tender call notice -
Mode of payment for work done - Power to reject tenders without assigning reasons.- Penalty
conditions for slow progress and delay in the completion of work . - Designation of arbitration
authority in case of disputes
 There are three ways:
1- Private invitation 2 - Public notice 3- Negotiation
- Selection depends on private or public works, work of additions and alterations etc
- Special clause: schools, hospitals, and cooperative housing societies requires the tender by public
notice only
1. PRIVATE INVITATION - Selected/limited invitation.- Architects / engineers do maintain a panel
of contractors and from panel a few are invited to quote for a particular job - Architects knows the
contractor- he is sure of the type of work he will get from him - It prevents the inexperienced
persons from entering the contract line. - Suitable for private works - This require invitation letter
along with the tender notice should be sent to the contractors concerned
 2. PUBLIC NOTICE
- All public works are required to be advertised in the newspapers - Any contractors can quote for
the same - Chances of getting tenders at a cheaper rate - Tenders are not free from agreements
- Tenders are so low that it will not be possible to imagine whether the contractors will be able to
complete the work - Such tenders end in dispute, poor quality of work and a lot headaches for the
architects - The architects/engineers may come in contact with new and intelligent contractors
- The work is given to the contractor quoting the lowest amount provided, he is otherwise equally
qualified
3. NEGOTIATION- In this case the architects / engineers do possess some base or datum for
negotiations - With this datum negotiations are done with one or two contractors and given to right
contractors - Most popular with developers and for repair jobs with schedule of rates as the base
WORK ORDER LETTER- This is a letter for the contractor by architects, engineers and
surveyors to inform him that the client has accepted the tender and appointment of contractor is
confirmed. - The letter also shows the date of commencement of work
TENDER DOCUMENT
Notice inviting tenders (NIT): elaborate form.
It includes:
 Availability of site
 Mode of deposit of earnest money . Copies of drawings and documents will be open for Inspection
by the tenderer at the office of Architects, consultants, or owners
 Advice to tenderers to inspect the site
 Validity of tenders
- Schedule of quantities - Tender drawings
- Specifications
- Form of agreement: to be signed by both the parties
- Formats and documents
- Drawings - Network chart
TENDER ACCEPTANCE
 By architects . Before accepting- written confirmation to that effect from his client
 Made clear to the contractor that the tender is accepted subjected to the conditions that he will sign
the necessary contract for the same with the owner
 Once accepted he cannot withdraw from the same
Essential aspects before selecting a contractor
 Contractors financial stability depending upon the estimated cost of the proposed work
 Intelligence, capacity to organize and credit in the market
 Previous works executed and certificates to that effect from the previous architects
 Works at present in hand
 General behaviour and temperament
Special features for acceptance
 Acceptance within prescribed time limit
 No such time limit then within reasonable time
 Tender must be accepted as an absolute without making any counter offer as otherwise the original
offer does not stand
 The contractor can alter or withdraw the tender at any time before acceptance and he will forfeit his
deposit in case of withdrawal
The offer of tender will become ineffective if
 the tender is not accepted within the specified time limit or within a reasonable time
 Due to death of either party
 If counter offer is made by the client
 If it is expressly withdrawn
TENDER FOR DEMOLITION WORK
 Tender called for the demolition of the existing building up to ground floor and removal of all
materials including the debris
 The tender usually takes away all the materials that are there in the old buildings and in turn they
pays specified amount to owner
 The highest and not the lowest tender should be approved
 The whole of the tender amount should be taken in advance before the position of the building is
given for demolition
 The contractor should be asked to take out insurance for accidents, workman’s compensation and
other
 The contractor has to make necessary arrangements for cutting of the existing water supply,
drainage, electric supply etc
EARNEST MONEY DEPOSIT
 It is the amount of money to be deposited along with the tender document to the department by the
contractors quoting a tender.
 This money is a guarantee against the refusal of any contractor to take up the work after the
acceptance of his tender.
 In case of refusal, this amount is forfeited.
 EMD of contractors whose tenders are not accepted will be refunded.
 1% - 2% of the estimated cost of work is the Earnest Money Deposit.
SECURITY DEPOSIT
 Security deposit is the amount the contractor has to deposit with the owner before awarding a work,
after his tender is with the owner before awarding a work, after his tender is accepted.
 This amounts to generally 5% to 10% of estimated cost of the project and is inclusive of the EMD
already cost of the project and is inclusive of the EMD already deposited by the contractor along
with the tender
 Check or safeguard for the owner to ensure that contractor fulfils all terms and conditions of the
contract
 If there is any fault in the construction and the contractor refuses to demolish and construction and
the contractor refuses to demolish and reconstruct then the department will carry out that work
using reconstruct then the department will carry out that work using the SD.
 Rate: 2-5% of estimated cost
 Mode: cash, fixed deposit
 Forfeiture: in full or in parts
 Refund: completion of work after expiry of defect liability period
 On obtaining labor clearance certificate  On finalization of final bills and work accounts
RETENTION AMOUNT
 Contractor deposit specified amount as security deposit with the owner.
 Since there may be financial constraint for the contractor to deposit such amount at one time, an
alternative of deduction from running bills is given to contractor.
 The amount of deductions made from running bills towards SD is known as retention amount
 50 % of the said amount is paid after the virtual completion of the work
 Final instalment of 50 % is paid after the defect liability period has passed and after issue of final
certificate by architect
 RF doesn’t carry any interest