FIDEI POLYTECHNIC GBOKO

DEPARTMENT OF QUANTITY SURVEYING

LECTURE NOTE

COURSE TITLE: TENDERING AND ESTIMATING

COURSE TITLE: QUS 104

LEVEL: ND I

SEMESTER: 2ND

SESSION: 2017/2018

COMPILED BY

TERNAM LUMO JUDE

COURSE LECTURER

2018
WHAT IS TENDERING

Tendering is an administrative way of sending out drawings and bill of quantities

or specification to contractors for them to state the prices for all items of one
contract. It is a process of choosing the best and cheapest company to supply goods
and service by asking several companies to make offer for supplying the goods and
services.

Tender is an offer which incorporate the sum of money, time and other conditions
required to carry out the contract obligations in other to complete a project or a part
of it consisting of specified work

PRINCIPLES OF TENDERING

The principles of tendering provide a framework for the effective, consistent and
efficient management of tendering practices throughout the construction project.
The basic principles of tendering process include:

1. All aspect of the tendering process must be conducted with honesty at all
levels of the industry
2. Parties must confirm to all legal obligations
3. Parties must clearly identify ownership
4. Parties must not submit tender without a firm goal
5. Parties must not engage in any practice which gives improper advantage
6. Condition of the tendering must be the same for tender on any particular
project
7. Clients must clearly specify their requirement in the tender documents and
indicate criteria for evaluation
8. All the information provided in course of tendering must be protected.

TYPES OF TENDERING

1. Open Tendering
An advert is placed in the press to invite any firm that wishes to do so to
submit tenders for a project, the advert will give a brief description of the
wok to be undertaken. Interested firms apply for the tender documents;
 collect them upon payment of money. Money deposited is usually non-
refundable. The deposit covers the cost of producing the tender documents
and also discourages non-serious bidders
Advantages of Open Tendering
i. Give opportunity for all firms including relatively unknown but
capable ones to tender
ii. Since there is no restriction there is no favorism in drawing up list of
tenders
iii. Prevent firms in area from forming a clique to keep up price
iv. Secure maximum competition for price

Disadvantages of Open Tendering

i. Increase the cost of tendering for greater number of firms likely to be

involved in tendering and only one of them successful
ii. A lot of time is taken and lost through placing of notice in press,
preparing drawings, bill of quantities, specification, sending out,
receiving the same volume of tender back, sorting out, checking errors
and analyzing.
iii. The lowest tender may not necessary be competent to handle the
project
iv. Many good firms avoid open tendering
2. Selective Tendering
This process draws a list of select limited firms and invites them to submit
tenders. A short list of 5-8 competent contractors usually drawn, with one or
two reserves firms to replace any one of the original list who fail to accept
invitation to tender.
The criteria for drawing up the list of tenders would depend on the character
of the project and size.
The following points have to be considered
1. The standard of workmanship required
2. The equipment such as plant and workshop owned by the firm
3. The business record and standard of the firm, completion date of previous
job, if project her brought within budget, claim policy of the firm.
4. Financial stability
 5. Capacity available in relation to the firm’s current workload
6. the real willingness to tender

Advantages of selective tendering

i. Shortlisted firm is usually prepared from the clients approved list of

contractors
ii. List of contractors are those with established scheme, integrity,
responsibility and proven competence for work
iii. Cost of tendering is reduced
iv. Time for tender evaluation is reduced
v. Allow only capable and approved firms to tender
vi. Provide limited competition and easy to screen

Disadvantages of Selective Tendering

i. Selective tenders might mean higher quotation than that obtainable from
open tendering partly because of less competition and standard of firm,
workmanship and performance
ii. Tenders can be rigged and inflated by collusion if the firms get to know the
probable limit of the list of tenderers in an area.
iii. Some firms are not interested in a particular job but do not consider it polite
to decline invitation to tender, they put high tenders so as to put them out of
the race.
iv. Prevent new, competent and unknown firms to tender
3. Negotiation
There may be times the client has satisfactory association with a particular
firm and is prepared to give them the contract on the recommendation that
their prices are reasonable. Also where work is of specialized nature or
requires a special skill which is possess but a particular agreement with that
particular firm without involving other firms.
In such cases the bill of quantity maybe prepared in the normal way and sent
to the contractor to price. When priced it is returned to the quantity surveyor
for examination and reporting.
 Advantages of Negotiation
i. Time saving
ii. More factors can be discussed between the parties during negotiation
such as construction method and procedure
iii. Competition no longer depends on price but competence

Disadvantages of Negotiation

i. Negotiation contract lead to higher price

ii. Condition for public accountability are rarely satisfied

TENDERING PROCEDURE/ PROCESS

STAGE 1 STAGE 2 STAGE 3

PREPARATION APPROVAL TO DOCUMENTATION

TENDER

STAGE 6 STAGE 5 STAGE 4

AWARD PROCESSING INVITATION TO

CONTRACT TENDER

STAGE 1: Preparation

i. Final completion of drawings, specification, measurement/taking-off

process
ii. Choose condition for contract.
iii. parties involved: Architect, Quantity Surveyor, client, Project manager

STAGE 2: Approval of Tender

i. Discussion and decision on type of tender

ii. Selection of type of tender
 open
  selective
 negotiation
iii. Parties involved: client, consultant, project manager

STAGE 3: Tender Documentation

i. Letter of invitation to tender

ii. Letter of acceptance
iii. Bill of quantities
iv. Relevant drawings
v. Schedule of rate

STAGE 4: Invitation

Base on the selection of type of tendering

i. Open/competitive/bid tender- produce tender notice

ii. selective- short listed contractors will be invited to tender if they wish
iii. negotiation- only one contractor is approached-direct entry to project

STAGE 5: Processing

i. Received tender submitted by contractors

ii. Tender assessment/evaluation
iii. Completed tenders are received
iv. Arithmetical check
v. Reasonable tender sum
vi. Reasonable completion time
vii. Capabilities of tenderers under consideration
viii. Tender recommendation/report by tender board

STAGE 6: Award Contract

i. Pre-award meeting with contractors- validation of lower complying bid

ii. Pre- contract meeting with contractor for contract signing
iii. Approval by tender board-an acceptance of tender form is issued to tenderer,
signed by the authorized officer.
TENDER DOCUMENTS

Tender documents are prepared to seek tenders and also help to maintain and
protect the relationship between client and contractors.

Document of Tender

1. Invitation to tender/bid
2. Instruction to bidder
3. Standard forms of contract
4. Condition of contract
5. Form of tender
6. Bidding data
7. Contract data
8. Specification/ general and special
9. Bill of quantities with pricing preambles
10.Drawings
11.Schedule of additional information
 Sample copy of letter of acceptance
 Sample copy of bank guarantee for performance bond
 Schedule of day work rate
 Sample copy of bank agreement for advance payment
 Subsoil investigation report
 Special/particular specification

Bonds

A bond may be thought of as a guarantee of performance

Types of Bond

1. Advance Payment Bond: in the event that the contractor required an advance
payment from the employee prior to work commencing on site, an advanced
payment bond must guarantee to repay the advance in the case of default by
the contractor
2. for off-site materials and/goods: there may be reasons where, for example it
may be necessary to purchase in advance material and good and store them
off site. The goods and material may be expensive or delicate and therefore
inappropriate to store then on site, nevertheless the contractor applies for
 payment and in these circumstances a bond to cover the cost of the material
or good should they be damaged or lost.
3. Retention bond: retention normally at 3% is deducted from all interim
payment made to the contractor and held by the employer until practical
completion and final account stage. if the contractor provides a retention
bond then the retention deduction may be waived.
4. Performance Bond: a performance bond is required to guarantee the
performance of the contractor during the work. In value terms it is usually
equal for up to 10% of the value of the contract. The purpose of the
performance bond is to reimburse the client in the event that the contractor
does not proceed diligently.
5. Tender bond: a bond may be required by a client to ensure those contractors
who express an interest in submitting a bid for a project are bona fide. The
bond may be used in the event that a contractor fails either to submit a bid o
to enter into a contract after been selected.

Notice to Tenderers

The document contains a project summary, a listing of tender documents, key

dates, validity period, contract details, number of copies required and details of
tender submission location and timing

Conditions of tendering

This document details the overall process including the delivery method, probity
issues, communication issues, the criteria for selection and the evaluation process.

Tender Forms and Schedule

This document request specific information from the tenderers concerning the
work. Example tenderers are required to provide an overall cost, a breakdown of
his cost, a program of work, details of manpower, plant and equipment, personnel,
subcontractors and methodologies. The tender form is a formal statement of the
tenderers offer to supply services in accordance with the tender document.
Conditions of Contract

This document contains the general conditions of contract which sets out the
contractual basis for carrying out the work. In addition, the special conditions are
sometimes included which are unique to the client and/or project.

Specification

Depending on the type of delivery method chosen, the document may be a project
brief, or a detail specification of work. These document set out the performance set
out the performance and technical criteria for the project.

Drawings

The number and standard of drawing provided

The Bill of Quantity

Item No. Description Unit Quantity Rate Amount

ESTIMATING

Estimating is the calculation and assessment, and both technical data and human
judgment of circumstances and probabilities must be brought together in its
production. Estimating is the technical process of predicting cost of construction

UNIT RATE
Unit rates are the major items in bills which consist of element of labor, plant and
materials. Each element is estimated separately so that total element cost for
labour, plant and materials can be provided.
Ingredients of Rate

Rates are ingredients of plant, materials, over head and profit combined for the
purpose of inserting against each item of work in a given project so as to arrive at a
tender figure.

Plant Material Labour

UNIT RATE

Overheads Profit

Unit rates may be calculated in one of two ways

 Net Rate (exclude overheads and profit)

 Gross Rate (includes overheads and profit)

Labour

This is refers to contractors men working on site. Labour includes tested and non
tested artisans, foremen and general labourers. All these men are paid and the
resultant cost will be Labour cost for the given unit of work.

In calculating all-in rate for labour consideration are given for the prevailing basic
rates, statutory approved allowances, allowances such as holiday, wet weather,
annual leave, absenteeism, sick leave, Saturdays and Sundays so as to arrive at
effective working days in a year. labour may be paid daily, weekly or price work
basis

Materials

This are varying component delivered to the site which when properly combined
result to a functional element of a building project.
the calculation for material cost usually consider the cost of delivery to site, cost of
unloading, the cost of transportation to site, waste or breakage, cutting,
depreciation, bulk compaction and shrinkage.

Plants

Plants are equipment employed on a building site in order to save money labour or
time. Plant includes mechanical and non-mechanical items. mechanical items like
bulldozer, concrete mixers, vibratos, cranes, dumpers, excavators while non-
mechanical plants include tool taken care of in the preliminaries and are normally
calculated on a percentage basis. Non-mechanical tools include water tank, work
bench, pulley and re-sharpening tool.

The cost of mechanical plant is calculated base on the work item to be executed.
Consideration is usually given to hiring or purchase, running cost, depreciation,
insurance, license among other in arriving at the cost to be inserted.

Overhead
Overheads may be defined as the cost of maintaining (running) the contractors
organization. They include cost of staff salaries, expenses, rents, gas, water,
electricity, telephone, office equipment, postage, insurance, maintenance of
building and equipment etc. all the cost of these items are expressed as a
percentage and included in the tender.
Profit
Profit of a contractor is determined by a number of factors. Factors affecting profit
level include
- Market force of supply and demand
- Amount of competition
- Size/value of project
- Risk involved in contract
- Interest rate

Methods of Estimating

The primary function of preliminary estimating by a quantity surveyor during the

design state is to produce a forecast of probable cost of a building and also enable
the architect and the other engineering consultant to know the cost limit by the
client which will enable the design team.

Methods of approximation estimating

1. Unit method
2. Cubic method
3. Superficial floor method
4. Storey enclosure method
5. Approximate quantity method

UNIT METHOD

This is base on the cost per unit or person to be accommodated i.e. the cost of
accommodation and the number of functional unit it can accommodate.

Types of Project Unit Rate

School cost/student
Hospital accommodation cost/bed space
Hostel cost/bed space
Cinema cost/sit
Hotel cost/room
Stadium cost/sit
Mosque cost/space

Example:
300 units of hotel block are to be constructed, if the realistic cost per room is N2500. Calculate the total estimate/cost. Assume
35% for items not included.

Solution
No of person/ unit to be constructed 300
Realistic cost of per room 2500
Sub Total N750,000
Adjustment for items not included 35% N 262,500
Total estimate N1,012,500

Items not included such as varying site condition, specification changes and market condition.
Advantage of unit method

1. It is simple and quick to use

Disadvantages of unit method

1. It lacks precision
2. It is advisable to express cost within a range of prices

The unit method lack precision, the difficulty of making allowance for whole range
of factors such as shape, size, construction method, materials, finishing. A lot of
skills are required in selecting an appropriate rate. Rate can be obtained from
careful analysis of the number of recently completed project of similar type, size
and constructional method.

CUBIC METHOD

A single rate of approximation uses extensively between walls; the external plan
area is multiplied by the height to get the volume of the building. The height is
measure from the top of the foundation to half way of the roof if pitched or 600mm
above roof if flat.

Example
Find the total cost of a building dimension 30.00m×20.00m×6.00m. The unit rate from similar project is N600. Assume 35% for
items not included.
SOLUTION

Length of building 30.00m

Width of building 20.00m

Overall height of building 6.00m

Volume of building 3600.00m2

Assessment of unit rate from similar project N600

Sub-total N2160000

Adjustment for items not included 35% N756000

Total estimate N2916000

Items not included such as inflation, design risk, external works

Advantages
 1. Useful for estimating the cost of heating and air- condition

Disadvantages

1. Building cost relate better in floor area than volume

2. Does not give client an indication of the amount of the usable floor area.
3. It takes no account for stories or plan shape which is known to affect cost
4. It produces a large quantity that will increase the possibility of further
inaccuracy in estimating.

SUPERFICIAL FLOOR AREA METHOD

This is the most popular method of cost prediction. This method relates the unit
cost to floor area and is more appreciated. The area of the floor is measured and
then multiplied by cost/m2. The superficial area is measure to the inside faces of
the external wall and with no deduction for opening and staircase and lift. The rate
to be used is obtained from cost analysis of similar completed building with similar
plan shape, storey height, and level of finishing, method of construction

Example
Find the total cost of a building dimension 30.00m×20.00m, the unit rate from similar project is N1500. Assume 20% for
items not included.

SOLUTION

Length of building 30.00m

Width of building 20.00m

Gross floor area 600.00m2

Assessment of unit rate from similar project N1500

Sub-total N900, 000

Adjustment for items not included 20% N180, 000

Total estimate N1, 080,000

Items not included such as inflation, design risk, external works

Advantages

1. Ease to calculate
2. Cost are calculated in way understood by the average client
 3. Majority of items in the building and the cost impact are related more to
floor area than the volume.
4. Rates can be easily calculated from existing projects.

Disadvantages

1. Does not take account of changes in plan or total height of building which
also have cost impacts.

STOREY ENCLOSURE METHOD

Rules of measurement

 Basement floor: weighing factor 3

 Ground floor: weighing factor 2
 Upper floor: weighing factor increasing with 0.15
1st floor =2.15
2nd floor = 2.30
3rd floor = 2.45
 Roof area measured on plan to the extremes of eves
 External walls no reduction
 Basement wall: weighing factor 2

Example

Element Dimension
Basement 34.00m×13.00m×3m
Floor
34.00m×13.00m×3m
Ground Floor
34.00m×18.00m×3m
1st Floor
34.00m×18.00m×3m
2nd Floor
 SOLUTION
FLOOR
Basement Floor Area 34.00
13.00
442.00m2 × 3 (weighing factor) = 1326m2

Ground Floor Area 34.00

13.00
442.00m2 × 2 (weighing factor) = 884m2

First Floor Area 34.00

18.00
612.00m2 × 2.15 (weighing factor) = 1315.8 m2

Second Floor Area 34.00

18.00
612.00m2 × 2.30 (weighing factor) = 1407.6 m2

ROOF AREA 34.00 × 18.00

Add 2/0.6 (Eves) 1.20 1.20
35.20 × 19.20 (no weighing factor) = 675.84m2
WALLS
Area of basement wall 2/34. 00 68.00
2/13.00 26.00
1768
× 3 (height of wall)
5304 × 2 (weighing factor) = 10608 m2

Area of Ground floor wall 2/34. 00 68.00

2/13.00 26.00
1768 × 3 (height of wall) = 5304 m2

Area of 1st floor and 2nd floor wall 2/34. 00 68.00

2/18.00 36.00
2448 × 6 (height of wall) = 14688 m2

Total storey enclosure unit 36209.24 m2

Unit rates from previous similar project N1200
Sub Total 43,451,088
Adjustment for items not included 30% 130,352.64
Total estimate 44,754,620.64

Advantages

1. Most accurate method, once composite rate is complied it is easier to

estimate the cost of building rapidly with minor adjustment to the rates
Disadvantages

1. Involves many calculations

2. Required more and detailed information

APPROXIMATE QUANTITIES

This method is probably the most favored by quantity surveyor because it used the
idea which is similar to those used in preparing bill of quantities. It provides a
more detailed estimate than the other method described. Quantities are measured
from the drawings and similar description given to this measurement which are
associated the drawings

Advantages

1. It is the most reliable method of approximate estimating

Disadvantages

1. Contains more calculations than every other method of estimation

 NO. ELEMENT TOTAL COST OF ELEMENT (N)
1.0 SUBSTRUCTURE 1029904.23

2.0 SUPERSTRUCTURE
2.1 Frame 427010.70
2.2 Upper Floor 2187015.21
2.3 Roof 618666.67
2.4 Stairs 85385.92
2.5 External walls 1392013.52
2.6 Windows and external doors 73440.56
2.7 Internal walls and partition 128099.15
2.8 Internal doors 52083.38

3.0 INTERNAL FINISHES

3.1 Wall finishes 314976.12
3.2 Floor finishes 1622535.21
3.3 Ceiling finishes 298911.53

4.0 FITTINGS AND FURNISHING 1280991.55

5.0 SERVICES 1772011.27

6.0 EXTERNAL WORKS 4056338.02

SUBTOTAL 16000383.05

Preliminaries 5% 800019.15
Contingency 5% 800019.15
VAT 5% 800019.15

TOTAL SUM 18400440.5

ITEMS OF BILL OF QUANTITY

Bill of Quantity contains the following

- Instruction to tender
- Forms of tender
- Preambles (specification)
- Condition of contracts
 - Preliminaries
- Measured works
- List of basic labour and materials prices.
Preliminaries

Preliminaries are temporary work items that service all races and activities on
building construction site. Preliminaries items are items of cost which do not
related to any particular work section and is usually listed first in the bill of
quantity. Many estimators prefer to insert a lump sum for all the preliminaries
usually worked out as a percentage of the total measured work. It is a good practice
however to put a price to each of the item. Therefore all items must be enumerated
and clearly stated. Any omission of the item must result to claim of variation.
Some principal items of preliminaries include scaffolding, water for works,
lighting power, electrical supply, temporary roads, temporary telephone, control of
traffic, welfare and safety, temporary fencing, site security, site meeting, setting
out etc.

DOMESTIC AND NOMINATED SUBCONTRACTORS

Sub contractors are defined from the mode of selection and also the type of
services they are required to render in a given project. Therefore subcontractors are
individuals or firm who enter into legal contract with the main contractor to
complete an agreed part of the contract.

Subcontractor’s definition is divided into

1. Domestic: this refers to as the main contractors own sub-contractors

2. Nominated: this arises where the designed team/client required control in the
selection of a specialist

Nominated subcontractors undertake works included in the bills as provisional or

prime cost sum.

Nominated Suppliers
Nominated suppliers are involved when good and materials expected to be used in
a given project are covered by the inclusion of a provisional or prime cost sum in
the bill.

Provisional and Prime Cost (PC) Sum

In a typical bill of quantity where the contract is with quantities and specification
where contract is without quantities, some part of the work remains unmeasured
and/or specified in details.

A prime cost sum is a sum provided for work or service to be executed by

nominated subcontractor, a statutory authority or a public undertaking or for
material or goods to be obtained from a nominated supplier.

A provisional sum is a sum provided for either defined or undertaken work, it is

defined when work is not completed designed at the time of tender documents are
issued but for which certain specified information can be given, on the other hand
undefined related to work for which such information is not given.