The Hong Kong Institute of Surveyors Pre-Qualification Structured Learning (PQSL) “Examination of Tenders and Report Wri

1. The Hong Kong Institute of SurveyorsPre-Qualification Structured Learning(PQSL)“Examination of Tenders and Report Writing” By Victor Lau 26th June 2004

2. Before the Opening of Tender • Tender should not be opened until the time and date fixed • Record the return time for each tender (mark on the envelope) • Late tender will usually not be considered • Should be opened by client / architect • Prepare a Tender Opening Form for recording the tender results After the opening of Tender • Sign the form of recording the tender results by client and architect • Check the tender submissions as required in Conditions of Tendering i.e. construction programme, method statement, ISO & QA Plan, etc. • Check if there is any tender qualifications. (any marked-up amendment/ insertions as qualification. i.e. page-by-page checking) • Arithmetical check (check all tenders) & Pricing-error/ Patent error check (same rates for different units, item not priced at all, errors during copying) • i.e. 3mm Aluminum panel 71 m3 $100 = $710

3. After the opening of Tender (Cont’d) • Check the company profile (i.e. business registration certificate & address) • Examine the covering letter (legally binding) • Check if all tender addendum have been incorporated • Check all quantities and unit rates have been inserted • Scrutinize the rates to make sure that they are reasonable (not just comparing rates among the received tenders) • Check if lump sum pricing for preliminaries (request for breakdown) • Check if there is any under- or overpricing of the rates • The differences may be due to front-end loading or unbalancing the tender (Contractor can secure higher payments in the early valuations so as to avoid high cost of financing i.e. higher rates for excavation)

4. After the opening of Tender • Beware the quantities of expensive items that are likely to increase • Overpricing items might reflect the contract documents not being clear in some respects • To confirm that the tenderers’ pricing forms a consistent basis for the valuation of variations (no inconsistent rates) • Check if any lump sum adjustment on the summary page (the method of treating the adjustment should be agree with the contractor) • Lowest bid may be not accepted • Beware of options / alternatives in the tender • Check if sum in the summary page agrees with the Form of Tender • Tenderers’ standard exclusions, terms and conditions • Offer & Invitation to Tender ( will the tender not be an offer?)

5. Tender Query from the contractor • Any information and/or response to the tenderers’ queries must be communicated to all tenderers. (Acknowledge of receipt is required) • Tender Questionnaire should be sent to all tenderers Tender Qualification and Clarification • A tenderer who submits a qualified tender should be asked to withdraw the qualifications without amendment to his tender price. • Tender questionnaire may be issued (avoid doing so for minor issues) • Repeat the questionnaire to contractor to withdraw and state that qualified tender is a non-conforming tender (specifically inform the employer if matters still unresolved) • A conclusion in the tender report drawing attention to any unresolved matters • Example, limitation on Liquidated Damages in Sub-Contract

6. Revising the Original Tender Sum • The amendment/ post tender changes may be taken into account by the tenderer and the original tender sum may be revised • The amendment may be accepted by the employer as being the first post contract variations (this will not affect the original tender price and the ranking) • A revised Form of Tender must be submitted by the tenderer to ensure that there is a formal offer • A revised bill /schedule of rates is to be submitted if there are too many changes • Beware that the tenderer may take the opportunity of lifting his own prices when adjusting his price for amendments • Agreed the method of dealing with lump sum discount/ any amendment (i.e. cost saving for shorter contract period) for future valuation of payments and variations

7. Tender Interview • History & experience of contractor of similar contracts • Experience of contractor’s management team (check proposed organization charts) • Discussion on the proposed date of possession • Discussion on contractor’s programme, construction method, technical problems and transportation and access problems, etc • Current workload and cash flow (financial analysis) • Quantity surveyor to raise the contractual and financial matters • Availability of staff & direct labours • Discussion on NSC/ domestic sub-contractor and statutory undertakings • Discussion on understanding of the scope of work • Price negotiations (must be negotiated between employer and contractor)

8. Reporting Writing for Tenders The form of the report will vary according to the nature of the contracts/ tenders:- Key elements • Quality of pricing (pricing method/ policy) • Extent of errors and inconsistencies in pricing • Details of any qualifications • Opinion of the surveyor as to the price level • Comparing tenders with budgets i.e. cost reconciliation • Input from other consultants in selection of tender • Raise out elements of the total cost not included in the contract (i.e. furniture) • Likely total cost after amendments/ for different options • A recommendation as to acceptance or otherwise

9. Government Projects – Works Bureau Technical Circular • WBTC No. 24/98 – Examination of tenders and submission of tender reports • WBTC No. 22/2002 – Marking scheme in tender evaluation for works contracts • WBTC No. 23/2002 – A formula approach to tender evaluation for works contracts • WBTC No. 24/2002 – Contractors’ performance index system • Where quality of service or product is a major concern • Emphasize on the quality of tender & eliminating the time-consuming pre-qualification process • Use of standard marking scheme avoid the need of approval from tender board • A two-envelope approach (one for tender submission and one for tender price documents) • Technical submission are evaluated before the tender price documents • Assessment attributes 1) experience 2) past performance (i.e. workmanship, progress, site safety, conviction records ) 3) technical resources (i.e. staff, plant & equipment) 4) technical proposal (i.e. method statement, quality assurance plan, site safety policy)

10. Other importance issues • Conditions of tendering and contract provisions (use of words “tenderer” and “contractor”) • Communication / information flow before and after the return of the tenders (phone calls & receipt slip) • Opportunity for contractors to revise their tender price (I,e. omit provisional sum) • Confidentiality (both prices and negotiation details) • Contractors deliberately not submitting some information / cost breakdown • Contractor’s order for tender interview • Formal and informal checks on the contractors (do you know any friend’s friends working in the company) • Legal advice on possible remedy should be sought if a tenderer chooses not to abide by the tender. • Be prudent