TENDERS and Contracts basic syllabus for engineering

Tenders syllabus

1. TENDER
Itisanofferinwritingbycontractor
toexecutecertainspecifiedwork,
ortosupplyspecifiedmaterials,or
transportofmaterialsatcertainrates,
withinafixedduration,subjectto
certainterms&conditions.

2. NECESSITY
Tofindwhetheranoffercanbe
receivedfrominterestedbuildersto
executetheworkwithinestimated
limitoftimeandfinance.

3. TYPES
OF
TENDERS

4. OPEN TENDER
•unlimited competition
•wide publicity
•open to all contractors
•low cost works

5. Dependingonnature,volume&
expertiseofwork,typesofOpen
tender:-
•Global tenders
•Local tenders

6. GLOBAL TENDERS
•published in international newspapers
•open for contractors around the world
•preferred for large projects
•works done for airport, tunnel, express
highway etc.
•avoids personal influence or favour

7. LOCAL TENDERS
•published in local newspapers
•publicity limited to the country
•used in all government departments
•not suitable for urgent works
•avoids personal influence or favour

8. LIMITED TENDER
•limited competition
•owner/architect invites the tenders
•used for specialized & private works
•competitors of specialized field enter
•selection as per knowledge, experience
& reputation by owner’s choice
•done as per specifications & time

9. NEGOTIATED TENDER
•payment negotiated with a single
contractor
•used when no choice besides onefirm
•done for urgent priority
•done when time valued more than cost
•competition is not free and fair

10. TENDER NOTICE
•an advertisement published in
newspaper
•client calls interested contractors
•includes ECP, TL, EMD, SD etc.
•document on which agreement with
the contractor is based

11. POINTS TO BE INCLUDED
WHILE DRAFTING A TENDER
NOTICE

12. •name & address of inviting authority
•mode of submitting tender (sealed)
•class of contractor
•nature of work & its location
•estimated cost of work
•amount of EMD (cheque)

13. •amount of security deposit
•duration of work
•type of tender form
•cost of blank tender form (cash)
•dates & time of issue
•dates & time of receipt

14. •mention holiday, if any
•postal procedure
•opening procedure of tenders
•reservation of rights
•validity period
•signature of competent authority

15. TENDER NOTICE

16. EARNEST MONEY
•only really interested contractors are
expected to enter the competition
•it is an amount -token of his sincere wish to
do the said work
•earnest intention amount paid with tender
•depends on ECP
•usually 1 to 2 % of ECP

17. •EMD carries no interest
•if tender is accepted, this EMD is adjusted as the
security deposit payable by contractor
•after submission/acceptance of tender if
contractor withdraws his offer/neglects to execute
work –forfeit EMD
•EMD is given as treasury challan or deposit at
call receipt with tender

18. SECURITY DEPOSIT
•security against failure to fulfill terms
•depends on type of work & ECP
•usually 2 to 5% of ECP
•submitted in cash with EE
•paid within 10 days of selection
•paid in parts –at agreement & RA bills 10%
•SD is refunded after DLP

19. VALIDITY PERIOD
•period within which rates quoted are valid
•contractor may or may not agree with
modification of rates
•it starts after submitting tender
•depends on importance of work,
completion time & the amount involved
•30 to 90 days (offer is valid)

20. RIGHT TO REJECT ONE OR ALL
TENDERS

21. REJECTION OF LOWEST
TENDER

22. •capacity is doubtful (tools/staff)
•unbalanced bid
•bad reputation/experience
•rates not workable
•lack of experience in particular work
•puts additional conditions

23. •tender filled partially
•not a registered one
•EMD is not submitted
•not used appropriate form
•tender not signed
•becomes bankrupt

24. REJECTION OF ALL
TENDERS

25. •minimum tenders not received (i.e., 3)
•ring formation
•major changes in design/drawings
•work gets cancelled due to unforeseen
circumstances

26. •rates quoted are very high than estimated
•collision suspected among contractors
•pages removed or replaced ?
•modifications not initialed ?

27. CORRIGENDUM TO
TENDER NOTICE
•to inform about extension of date & time
•regarding issue & receipt of forms
•advertisement is published

28. NECESSITY
•if the duration for preparing tender is short
•tender papers not ready
•enough forms not available
•important changes in design/drawing

29. DRAFT CORRIGENDUM
TO TENDER NOTICE

30. TENDER DOCUMENTS
•it is a set of blank standard forms &
details related to the project
•prepared in the office of EE
•tender documents –contract documents

31. •brief tender notice
•conditions of contract
•schedule A, B, C
•tender agreement
•bill of quantities
•income tax clearance

32. •challan of EMD
•previous & current work details
•details of tools & equipments available
•details of technical staff
•specifications
•copy of registration certificate
•working drawing

33. SCHEDULE A
•list of materials to be supplied by owner
•includes the rates charged for materials &
place of their delivery
•overleaf has conditions –return of
unused, checking of received, charging
extra for wastage, maintaining account,
storing arrangement

34. PARTICULARS RATES PLACE OF
DELIVERYUNIT RUPEES
CONTACTOR EE

35. SCHEDULE B
•list of items of work
•contains quantities & rates in figures &
words
•EE fills rates & amounts for PRC -
contractor’s job
•contractor fills rates & amounts for each
item for IRC

36. ITEM
NO.
DESCRIPTIONESTIMATED
QUANTITY
TENDER RATE UNITAMOUNT
FIGURES WORDS
CONTACTOR EE

37. SCHEDULE C
•list of items with their serial numbers,
page number of specification booklet,
specification number & specifications.

38. SERIAL
NUMBER
ITEM PAGE
NUMBER
SPECIFICATION
NUMBER
ADDITIONAL,
IF ANY
SPECIFICATION
SITE OF WORK _________________ PLACE ___________

39. TERMS IN TENDER
DOCUMENTS
CONTRACT CONDITIONS

40. TIME LIMIT
•total duration of work
•if TL is crossed, owner loses returns
from property, which is then recovered
from contractor as penalty

41. TIME EXTENSION
•work can be delayed due to many
unavoidable reasons (natural
calamities/beyond our control)
•contractor can apply for extension to EE
•if owner delays work, suitable extension

42. PENALTY
•fine for not following terms of contract
•if allotted work is incomplete or
•progress not in proportion to time passed or
•contractor does not follow specifications
•SE decides amount of penalty
•maximum 10% of EPC

43. DEFECTIVE MATERIAL &
WORKMANSHIP
•if unsound/defective material is used
•if imperfect/unskilled workmanship exists
•contractor should remove defects at his own
expenses
•if contractors fails to do so, he should then pay
compensation for it.

44. SUSPENSION OF WORK
•if contractor does not follow specification,
drawing, design then
•work is suspended and contractor is informed
in writing
•for remaining work, new tenders can be called

45. SUBLETTING OF CONTRACT
•sub contract is done among two contractors
with the consent of owner
•main contractor takes the work from owner
•main contractor appoints sub contractor for
doing different parts of work
•specialized works –air conditioning, lift
erection, plumbing, fabrication etc.
•main contractor is responsible for conditions of
contract & payment to sub contractor

46. EXTRA ITEMS
•unforeseen difficulties, negligence while
preparing drawings raises concern for EI
•primary EI (part of contract)
•secondary EI (supplementary to contract)
•contractor is bound to execute as per revised
drawings all EI, necessary TE is given
•EI payment done as per DSR or as per contract
or as per mutually agreed rates to avoid disputes

47. ESCALATION
•rates of engineering materials are
mentioned in the tender form
•during construction, rates may rise
•the owner is liable to pay the difference to
contractor, after construction is over
•common clause due to swelling of prices

48. PRICE VARIATION CLAUSE
•due to inflation, prices –wages rise
•if PVC is not there, contractor abandons work
•to stop this, PVC should exist
•considered materials may be steel, cement,
sand, teakwood etc. whose prices may fluctuate

49. DEFECT LIABILITY PERIOD
•contractor is liable to carry out proper work
during execution and also do needful
maintenance for some time after the construction
•DLP is normally 6 months –1 year
•all DLP works are done at contractor’s expenses
•if not done by him, his SD is used for it and
done through other contractor

50. LIQUIDATED DAMAGES
•compensation paid by contractor due to delay
•has no relation with actual loss
•can be recovered from RA bill or SD
•usually `100 per day
•not applicable if delay is due to EI, late
possession of site from owner

51. UNLIQUIDATED DAMAGES
•damages having relation with actual loss
•for breach of contract, one party has to pay
for the loss suffered by the other

52. ARBITRATION
•civil engineering contract includes wide
operations with high index of legal conditions
•each one wants to earn max profit in min efforts
•due to uncertainties, disputes arise
•if every dispute is taken to court -time is lost,
work is suspended till decision comes &
investment of parties remains yield less
•through alternative (arbitration), disputes are
settled outside court

53. An arbitrator should –
•possess confidence of both parties
•be impartial
•be a panel member
•have experience & knowledge of field
(law)

54. Causes of disputes –
•measurement of items
•difference in specification & drawing
•different interpretation
•extra items
•workmanship
•payment
•subletting of contract

55. Advantages of arbitration –
•consumes less time & money
•simple procedure
•hearing may be arranged as per parties
convenience
•decision may be fair as it is given by expert of
the concerned field

56. TERMINATION OF CONTRACT
(the end)
•due to any of the following reasons, a contract may
end :-
•completion of work –work completed as per
agreement, DLP is over (happiest reason)
•mutual agreement –based on some unavoidable
reasons, parties together decide to stop working –
contractor paid for past work & remaining can be done
with fresh agreement

57. •breach of contract conditions –if a party violates
one or more conditions, other party can end the
contract after giving warning -payment claim can be
made
•impossibility to complete –if work does not
progress –neighbor puts legal complication, issue on
ownership, due to flood funds transferred elsewhere
for relief works
Work stops indefinitely –later terminated

58. •by operation of law –if contractor files a request
in court to end the work due to no funds –court
gives stay order, work may end
•EMD
•SD
•rates quoted should include tax
•labor wages to be paid as per minimum wages act

59. FILLING THE TENDER BY
CONTRACTOR & POINTS TO BE
OBSERVED BY HIM
A clever contractor properly plans his work after
reading the tender notice for –
•Pre –tender planning
•Post –tender planning

60. PROCEDURE OF SUBMITTING
TENDER
•check whether required things are mentioned like
certificates, resources data, schedule B, challan of
EMD
•challan, registration certificate, forwarding letter
–envelope 1
•tender documents set –envelope 2
•seal envelope 1 & 2 in one packet

61. PRE –TENDER PLANNING
•study of tender documents
•check availability of required resources
•visit the site, check soil, water table, access,
quarry location, lead & lift, water availability
•reasonable rates shall be pre-determined
•find different alternatives of doing a work
•analysis of bidding trend
•time study
•possibility of appointing sub-contractors

62. PROCEDURE OF OPENING
TENDER
•committee for opening, scrutiny & acceptance
•competent authority –chairperson
•attendance of present ones
•tenders placed in order –serially
•envelopes opened –check signature, EMD, rates
quoted or not, calculations
•announce the quoted rates to all

63. COMPARATIVE STATEMENT
•table showing rates quoted by all
•it has name of firm, rates quoted, total amount
•useful to compare firms based on rates, tax,
other charges
•it helps in deciding the tender award

64. Sr.
no.
Name of firmTender amountRemark
1 A ` 25,15,000/- 2
nd
2 B ` 25,10,000/-LOWEST
3 C ` 25,25,000/- 3
rd
4 D ` 25,50,000/- 4
th

65. SCRUTINY OF TENDERS
•list of tenders received with EMD
•duly signed
•contract conditions are same & not altered
•rates in words and figures –if difference in the
two –select lowest of it
•check calculations
•check whether unbalanced
•very low rates –bad quality –justify with rate
analysis

66. AWARD OF CONTRACT
•after proper scrutiny and study of comparative
statement, tender is awarded
•usually lowest is selected
•if lowest seems not workable, go for second
lowest

67. ACCEPTANCE LETTER
•lowest rate is encircled in red ink in the
comparative statement by the chairman
•selected bidder is informed
•a letter is addressed to him asking him to visit
the office for further formalities, within 7 days
of receiving the letter

68. WORK ORDER
•after award and acceptance letter, contract is
signed by both the parties
•last date for paying SD is specified
•order to start the work is given
•TL starts with work order
•possession of site can then be taken

69. UNBALANCED TENDER
(bid)
•under-estimated quantity –more rate &
over-estimated quantity –less rate
•for item rate contract, rates per item are given
•through visit, under-estimated & over-estimated
items can be known to experienced ones
•proper judgement –excess profit to contractor

70. DescriptionQuantity
(cu-m)
Tendered rates ( `per cu-m )
X Y Z
Earthwork
(loose soil)
10000 10 9 14
Excavation
(soft rock)
4000 20 20 16
Excavation
(hard rock)
2000 40 50 20
Total
Position
` 2,60,000
2
nd
` 2,70,000
3
rd
` 2,44,000
lowest
Excavationfor community well (proposed quantity)

71. DescriptionQuantity
(cu-m)
Tendered rates ( `per cu-m )
X Y Z
Earthwork
(loose soil)
15000 10 9 14
Excavation
(soft rock)
6000 20 20 16
Excavation
(hard rock)
500 40 50 20
Total
Position
` 2,90,000
?
` 2,80,000
?
` 3,16,000
?
Excavationfor community well (actual quantity)

72. RING FORMATION
•group of contractors come together & decide,
who among them should get the tender
•based on this decision, they quote the rates
•intended winner bids the lowest rate & other
group members quote higher rates than him
•this way they are assured of the job