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NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT &
Tendering, Bidding & Award of Contracts
The Winning Bid: a practical guide to successful bid
management by Emma Jaques-1st edition (2013).
Building and Engineering Contracts by B. S. Patil -
5th Edition (2005).
Bids, Tenders & Proposals (Winning business
through best practice) by Harold Lewis.
Estimation and Tendering of building works by R.C.
TENDER AS BASIS OF CONTRACT..
REQUISITES OF A VALID TENDER..
TENDERING : STEPS INVOLVED.
REQUIREMENTS TO BE FULLFILLED BEFORE
NOTICE INVITING TENDERS.
MODES OF INVITING TENDERS.
TYPES OF TENDER DOCUMENTS.
TENDER AS BASIS OF CONTRACT
Contract- A legally enforceable ‘Agreement’.
Agreement-An ‘offer’ made by one party and an
‘acceptance’ of that offer by the other party.
Tender-‘Offer’ by one party to another.
In construction terms it means an offer by contractor to
do a specified work in return of a sum of money.
• Offer for product &/or services in return of a sum.
• Generally submitted against specific requirement
from client in form of NIT/RFT.
• Less flexible& bound by client’s requirements.
• Immediate obligation for tenderer upon acceptance
REQUISITES OF A VALID
It must be unconditional.
Must be made at the proper place.
Must confirm to the place of obligations.
Must be made at the proper time.
Must be in the proper form.
Tender must be made to the proper person.
There must be reasonable opportunity for
TENDERING : STEPS INVOLVED
1) Finalisation of procurement strategy
2) Preparation of tender documents
3) Inviting Tender and issuing tender documents
4) Study of tender conditions
5) Pre-bid meeting and site survey
6) Bid/No bid analysis
7) Preparation of tender
8) Submission of tender
9) Opening of tender
10) Evaluation of tenders
12) Acceptance and award of contract.
Notice Inviting Tender (NIT)/Invitation for Bids (IFB)
Instruction to tenderers (ITT)/Instruction to Bidders (ITB)
Contract Form and Conditions of contract
Bills of quantities
List of additional information required from Bidders
Formats of bank guarantees for advance payment/performance
Checklist for of tenders submission
NOTICE INVITING TENDERS
•RFP(REQUEST FOR PROPOSAL)
•RFT(REQUEST FOR TENDERS)
•RFQ(REQUEST FOR QUOTATION)
•NIT (NOTICE INVITING TENDER)
•IFB(INVITATION FOR BID)
NIT – INFORMATION TO BE
1 . Name of the Project.
2 . Name & Address of the Company floating the tender.
3. Name of work, materials or services.
4. Place of work location.
5. Approximate estimated cost of work.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender Document sale starts.
9. Date and time up to which tender documents can be obtained.
10. The cost of tender documents.
11. The date and time up to which the tenders to be submitted and
are to be opened.
13. Eligibility Criterion
MODES OF INVITING TENDERS
In this method, client negotiates with one contractor &then
awards job to him.
Client’s comfort level with a particular
contractor/Secrecy/Urgency/Technology may be the reason.
Early involvement of the contractor & his expertise.
Less cost and time for the client
Can’t be used in public sector due to accountability issues.
Not best way to get lowest price.
Instead of inviting tenders openly, an employer may invite
tenders from few selected contractors by inviting them to
submit the tenders in limited competition.
This method also recommends itself when there are only few
recognized firms or companies capable of executing the
Reduces time, effort& cost of tendering.
Less possibility of any firm quoting unrealistic price, Fair
Competition (not as high as open tendering)
Few good contractor may not get the chance.
Higher prices due to big contractors & limited competition
By far the most common mode of inviting tenders for major
works is by inserting an advertisement in newspapers,
periodicals, or trade journals, inviting all interested
contractors to participate in the invitation.
Useful for new
Resource & time to
New player may quote
too low to get access.
No idea of competition.
Good contractors may
REQUIREMENTS TO BE FULLFILLED
BEFORE INVITING TENDERS
The person inviting tenders needs to exercise care that all
necessary requirements prior to the invitations are fulfilled
so that the tenderers are not put to unnecessary trouble
and expense, if lack of preparedness requires revoking the
Sanction to be obtained to a detailed estimate showing the
quantities, rates and amount of various items of work and
also the specifications to be adopted in respect of each
In the case of urgent works, with no time to prepare a
detailed estimate, rough quantities and rates for the main
items covering the major part Of the cost the should be
worked out to facilitate comparison.
Splitting of work for the purpose of inviting tenders is to be
discouraged and where necessary prior approval of the
competent authority must be obtained.
REQUIREMENTS TO BE
FULLFILLED BEFORE INVITING
Before tenders are invited the following tender
documents should be ready:
a) Notice inviting tenders in appropriate form
briefly known as NIT.
b) Standard form of tender to be used along
with general and special conditions, if any.
c) The Schedule of Quantities of works.
d) A complete set of drawings referred to in
the schedule of quantities.
e) A complete set of specifications of the work
to be done.
TYPES OF TENDER DOCUMENTS
In this form, the intending tenderers are required to quote
a lump sum figure or completing the works in accordance
with the given drawings, designs, specifications etc.
ITEM RATE TENDER:
In this form the intending tenderers are supplied detailed
bill of quantities showing various items of work to be
executed, the approximate quantity under each item, and
the unit in which the work done will be measured.
PERCENTAGE RATE TENDER:
This form is similar to an item rate with the modification
that the bill of quantities supplied is filled with rate per unit
and cost of each item including total cost.
TYPES OF TENDER DOCUMENTS
COST PLUS: This form is of comparatively recent
origin and provides for the basis of payments to be
made to the contractor for work done on actual
"prime cost" plus fee to cover his overheads and
Types of Cost Plus:
Cost Plus fixed fee
Cost Plus percentage
Cost Plus Fluctuating Fee Contract
TYPES OF TENDER DOCUMENTS
PACKAGE DEAL:In the "package deal" or "industrialized
building" or "turn key" contracts, the necessity on the part of
the owner to employ professional staff is eliminated. By
broad outline specifications, the owner's requirements are
made known to the intending tenderers and it is for the
tenderers to produce designs, drawings, and specifications
and quote the price for completion of the work.
STANDING OFFER:An offer which is submitted in response to
an invitation to tender, unit prices for the supply, as required
from time to time and on order, of goods or materials and/or
labour , over a fixed period of time is called 'standing offer'.
LABOUR CONTRACT:The special feature of this type of
contract is that the owner agrees to supply all the requisite
materials to the contractor and the latter agrees to supply all
the labour and workmanship necessary to complete the work
according to the drawings and specifications.
TYPES OF TENDER DOCUMENTS
• SUPPLY OF MATERIALS:
The P.W.D. has a special form for use where the purchase
of materials is involved. The material suppliers are required
to quote rates for supply of the required materials
For small works in which it is necessary to start the work in
anticipation bf formal acceptance or for running contracts
such as laying of pipes for water supply or sewerage, this
form is adopted. In the second case, above, the piecework is
cancelled as soon as regular contract is signed. In this form,
the agreement is in respect of payment at stipulated or
agreed rates without specific quantity or time being agreed
upon. When the quantity and time limit are mentioned, it
contains a provision entitling the engineer to put an end to
the agreement at his option at any time.
METHODS OF BIDDING..
SIGNIFICANCE OF PRE-BID MEETING.
KEY ASPECTS OF BIDDING DOCUMENTS.
Construction bidding is a process of submitting a
proposal(tender) to undertake or manage the undertaking od
Starts with a cost estimate from a blueprint and material
Parties competent to each other based on their past
experience and with the aid of BOQ, specification prepare an
estimate of cost for which they are willing to undertake
The bidding document (invitation to bid) specifies the last date
and time of submission of respective to bids
METHODS OF BIDDING
• The single-stage single-envelope is the most common
method of procurement.
• A purchaser invites bids indicating the kind of goods
• The bidders submit bids stating prices, quality and
performance characteristics of goods offered and
commercial terms for the sale of goods.
• There is no prequalification, the bidding document
spells out the qualification criteria for bidders.
• This method has the advantage of simplicity.
• Bids are invited quickly and a decision taken promptly.
• This method is normally used for standardised goods,
when specifications and performance characteristics
METHODS OF BIDDING
• In the single-stage two-envelope method a purchaser asks
the prospective bidders to submit bids in two envelopes.
• One envelope contains the technical specifications and
performance parameters of the goods to be purchased or
the plant or equipment to be installed.
• It also spells out the qualification criteria for bidders, and all
the other commercial terms except the price bid.
• The second envelope contains the price details.
• The bidders submit both the envelopes to the buyer at the
• The purchaser first opens the technical envelopes of all the
• It critically analyses the technical competence of bidders,
their financial viability, and their track record in fulfilling
obligations under contracts in time. In addition, the goods
offered are evaluated with reference to the bidding
documents to see if these fulfil the purpose of purchase.
METHODS OF BIDDING
Two stage single envelope
• This type of procedure is adopted in large and complex
contracts where technically unequal proposals are likely
to be encountered or where the purchaser is aware of
its options in the market but, for a given set of
performance requirements, there are two or more
equally acceptable technical solutions available to the
• At first bidder shall submit only technical proposals
• Technical details are discussed between the bidders
and the technical solution for the work is finally agreed
• At second stage bidders are given a choice to revise and
submit price proposal to confirm to the standards
agreed along with the revised technical proposal
METHODS OF BIDDING
The two-stage two-envelope method first asks the bidders
to send envelopes with the technical specifications of goods
their performance characteristics, evidence of technical
competence and financial soundness of the bidder.
The qualification criteria for the bidders and other
commercial terms of bids except the price.
This is called the first stage.
It is used to qualify the bidders before asking them for price
This method is followed in the WB and the ADB for the
complex projects and equipment.
In the first stage, the purchaser discusses with the bidders
details of the specifications and the performance data.
The purchaser also satisfies itself about the comparative
consumption of raw materials, power and fuel.
SIGNIFICANCE OF PRE-BID
Pre-bid meetings are usually held, if previously
mentioned in the solicitation documents, during the
bid/proposal preparation period.
Purpose is to clarify any concerns bidders may have
with the solicitation documents, scope of work and
other details of the requirement.
some buyers promise to answer questions from
bidders, and also hold a pre-bid conference to answer
These documents help in obtaining uniformity of
knowledge as both the parties have the same set of
It essentially consists of:-
1.Invitation for bid
2.Instruction to bidders
3.General Conditions of Contract
4.Special Conditions of contract
Bid Form & Price Schedule
Language of the bid
Bid security -
Bid validity period.-
Signature on Bids-
Secrecy of Bids
Deadline for Submission of
Withdrawal of bids.
Bid opening and evaluation
KEY ASPECTS OF
• In international competitive bidding, instructions to
bidders have a clause on bid currencies.
• It states how bids in different currencies will be
converted into the domestic currency.
• A bidder may choose to ask for bids in its own currency;
in such a case, the prices may be higher as the supplier
will have to accept the risk of exchange rate variations.
• For example, if a bid is accepted for, say, US dollars
1000, and the rate of exchange on the date of opening
bids is Rs. 61 to one US dollar, the purchase transaction
is valued at Rs. 61,000.
• However, when the buyer pays for the goods, it may
have to buy US dollars for a higher amount of, say, Rs.
64,000 if the US dollar is quoted at Rs. 64 to a dollar
• In private trade, and for domestic bids, language
may, perhaps, not be a very important clause.
• However, in international trade, it is important to
specify the language of bids as the bids may be
from several countries with different languages.
• If bids are received in many languages, the buyer
may find it difficult to get them translated properly.
• Moreover, as the contract will be governed by the
language of the offer, the buyer's unfamiliarity with
it may give use to difficulties and disputes.
SECRECY OF BIDS
• Opening any bid before the
deadline for opening bids
violates the sanctity of the bid
• The need for secrecy arises
because it is essential that the
bidders should not come to
know the bid price of their
• Suppliers, when they come to
know of it, may decline to bid for
buyers who violate this principle-
• Therefore, a buyer instructs
bidders to seal their bids
carefully; and offers the
assurance that the bids will be
opened publicly, only at a given
time and place
DEADLINE FOR SUBMISSION OF
• A buyer cannot keep the
date of receiving bids
• The last date of receiving
bids is also linked to the bid
• A good practice is to refuse
to consider bids that are
received late, whatever the
• If a buyer thinks that the
time allowed for preparing
bids is not sufficient, it may
extend the deadline for bid
submission, instead of
considering late bids.
• The law of contract
allows a bidder to
withdraw its bid
• In competitive
bidding, a bidder
may withdraw or
modify its bid
action does not
result in the loss of
• If a bidder
withdraws its bid
after the bid
opening, then the
buyer may forfeit
the bid security
• Keep it simple, yet
• Address exactly what the
Buyer asks for, and ONLY what
the Buyer asks for!
• Writing Style
• Format and Presentation
• Other Information
Writing a successful
A buyer does not wish to receive bids from firms who have
no intention to meet their obligations.
A supplier/contractor may make a bid with the idea of
seeing the market trend; it may refuse to accept the
Such frivolous or speculative bids do arise when there is
no bid security, particularly for large value contracts.
Therefore, buyers insist on a suitable amount from bidders
as bid security
Bid security gets forfeited if a bidder refuses to honour the
contract when its bid gets accepted. A very high bid
security amount may discourage bidders as their money
gets blocked and a poor response will mean not receiving
BID VALIDITY PERIOD
• A buyer assures suppliers about
the period within which it will
decide on the bids.
• After all, a supplier invests money
in bid security on the chance of
getting its bid accepted.
• The investment can be made only
for a reasonable period, Moreover,
a supplier takes into account the
likely increase in prices by the
time a contract is awarded and the
goods are delivered.
• In an inflationary economy, the
risk of inflation is built into the
• If the bid validity period is not
indicated, suppliers may not bid at
SIGNATURES ON BIDS
• The law of contract recognises a
contract between legally competent
• A minor is not competent to enter into
a valid contract.
• Many suppliers may be firms in the
nature of partnerships, joint ventures,
or incorporated companies.
• The laws of partnership, joint ventures,
or companies have a legal framework
as to who is competent to bind them.
• Only persons having this authority can
bind their firms.
• A buyer has to check the authority
letters, on the basis of which bids are
signed, Therefore, a buyer instructs
bidders to seal their bids carefully; and
offers the assurance that the bids will
be opened publicly, only at a given
time and place.
• Opening of bids. Bidders or
their representatives are
invited to be present at the
bid opening ceremony.
• At the bid opening, a buyer
announces the major details
of bids, like bid price,
discounts offered, whether
bid security is there, etc.
• The public opening of bids in
stills confidence in the
bidding process; otherwise,
some suppliers may decline
• Preliminary Examination: The
preliminary examination of bids
means checking that the bids
are complete, there is bid
security, and that the bids meet
all the essential conditions of
eligibility laid down in the
Instructions to Bidders.
• The bids, which meet all these
criteria, are then taken up for
further examination. These bids
are called 'substantive
AWARD OF CONTRACT
AWARD OF CONTRACT DEFINED..
STAGES OF CONTRACT..
WEIGHTED RATING SYSTEM.
AWARD OF CONTARCT.
Contract awarding is the method used during a
procurement in order to evaluate the proposals (tender
offers) taking part and award the relevant contract.
Preparation of contract documents
Advertising the tender, tender notice
Submitting tender by contractor
Study of the tender by owner
Clarification regarding conditions or specifications
Preparing comparative list
Awarding of contract
STAGES OF CONTRACT
1. Least price
This method is the simplest and oldest of all.
Under this the procurement contract is awarded to the best price.
2. Most economically advantageous
This is applicable to proposals of different quality within the limits
Under this the proposals are graded according to their price for
value and the contract is awarded to the one with the best grade.
The contract is awarded to a bid closer to the mean
value of the proposals.
4.Exclusion of the extremes
Under this method the proposals that are deviating
the most from the mass of the proposals are
excluded and then the procedure continues with one
of the above methods.
EXP PROFIT STAFF
11.33% 200 4 4 15
9% 180 2 3 20
WEIGHTED RATING SYSTEM
0.32 0.16 0.16 0.16 0.16 0.32
0.16 0.48 0.32 0.32 0.16 0.16
0.16 0.32 0.48 0.48 0.32 0.16
WEIGHTED RATING SYSTEM
COMPANY PROFIT EXP
• Instructions to Bidders
make it known that a
buyer has the right to
accept or reject any bid.
• The bidders cannot force
a buyer to accept a
• A buyer awards a
contract after the
evaluation of bids.
• He or she also has a right
to increase or decrease
the quantity of items to
be purchased within the
range given in the
Instructions to Bidder.
• The bidder, whose bid is
accepted, is asked to sign
a contract to formalise
the acceptance of the
Thank You !!!
Shiva Prasad (AP16017)
Utkarsh Kumar Singh (AP16018)
Saylee Patil (AP16019)
Sachin Amane (AP16020)
Nikhil Kulkarni (AP16021)
Muneesh Methwani (AP16022)
Karan Pawar (AP16025)