Verify the completion of the tender documentation.
It is crucial to double-check the received tender documents to make sure they are comprehensive and contain all the pages, sections, and illustrations. I frequently get documents that are missing pages or sections. There have been times when pictures in the drawing list were either missing or had different revision numbers.
When a tender is submitted, the customer expects it is based on all the information provided and the documentation they have provided.
If a crucial specification or drawing wasn't received and taken into account in the estimate, failing to review the documentation could result in costly mistakes.
Read the essay.
The Estimator should go over the tender documentation in detail and take notes as they go.
It's crucial to be aware of the tender specifications, such as: 1. The deadline for submitting the tender. Typically, late submissions are rejected.
2. The location where the bid should be sent. The tender may need to be ready the day before if the site is far enough so that it may be couriered there. I've heard of instances when bids were delivered to the wrong address and were not taken into account by the client.
3. The quantity of copies needed. 4. The submission's format.
5. Particularly necessary attachments or documents, such as: 1. safety information 2. quality documentation 3. timetables
4. method assertions
5. Financial records of the company 6. assurances
(7) Insurance coverage
(The creation of some of these documents, which sometimes required involvement from other departments, may take days or even weeks. Assign a responsible individual the task of completing the various documents, and monitor their work to make sure they are completed in time for the deadline.)
6. Highlight key points like: 1. the customer's name
2. the designers and agents for the client 3. the conditions of payment 4. Requirements for insurance
5. Standard Contract Terms 6. Unique circumstances
7. Reimbursable harms 8. Important dates
9. The tender's foundation, such as a lump sum or re-measurable terms
10. The project's anticipated cost or a concise list of the crucial metrics
11. a succinct overview of the project 7. What the customer will provide.
8. What the contractor must make provisions for.
9. Particular project guidelines and requirements, such as project labour agreements. 10. Additional criteria and requirements that could impact the price of the work. 11. Any inconsistencies or points that need to be clarified in the document.
Creating a template that can be utilised for this summary is helpful.
Base of the offer
There are several ways that projects are placed out to bid.
1. On a cost recovery basis, the contractor produces a schedule of resource rates and receives payment for the time that their employees and machinery are used on the project. These projects provide relatively little risk to the contractor as long as all costs associated with performing the job are included in the rates presented and as long as the contractor keeps track of every hour spent working on the project.
2. A re-measurable contract in which the contractor charges a schedule or bill of quantities that the client submits as an estimate of the quantities in the tender. The quantities specified and the amount of work completed by the contractor may change as the project develops, and the ultimate contract price may change as a result. The timetable and the contractor's overheads may be impacted by the quantity fluctuations. It's critical that the estimator considers potential adjustments and guarantees the contractor will receive fair compensation.
3. A lump sum contract, which requires the contractor to estimate all of the quantities needed to complete the project during the tender phase. The risk of calculating these amounts erroneously belongs to the contractor. The contractor may decide in some circumstances to include a contingency to cover any inaccuracies in their calculations.
4. A design-build agreement, where the contractor is in charge of both the project's design and construction. It goes without saying that most contractors won't want to spend money or have enough time to create a detailed design during the tendering process. To enable a basic pricing to be estimated, typically only a preliminary design is done. In order to account for the design's shortcomings, the contractor then includes a contingency in their quote. The contingency can be smaller the more intricate the design is.
Recognize the project
The scope of the project must be understood by the estimator. The scope of work is typically included in tenders, and this should be compared to the drawings, the client's timetable, and the client-supplied bill of numbers. If the scope of the project is unclear or if there are discrepancies between the scope, drawings, and timetable, it may be required to discuss specifics with the customer or to ask for more information. The Estimator may need to make certain assumptions in order to price the tender if the customer is reluctant or unable to respond to some of these questions. Any presumptions must be disclosed in the list of qualifications provided with the tender.
Recognize the deal
The estimator should make a note of any specific clauses in the contract and how the risks are divided between the contractor and the client. Verify the terms to see if they are normal or if the client included any additional terms, some of which the contractor may find undesirable. Senior management may need to discuss some of the terms to determine whether they are appropriate and whether they will subject the business to unneeded or undesirable risks. In rare circumstances, it can even be wise to obtain specialised legal counsel.
laws that apply to the contract
Understanding the laws that apply to the tender documents is crucial. These laws are frequently those of another nation, which the contractor might not be familiar with. The contract may also provide that disagreements must be resolved in a foreign nation, which would increase the contractor's costs and risks should a dispute emerge. If at all practicable, the tender should be qualified to ensure that any disagreements are settled in the contractor's country of residence, or if that is not possible, in a nation with a similar legal system.
Site visits and inspections The project site should, whenever possible, be seen throughout the tendering process. This frequently takes the shape of a client-organized official inspection that is required, however it could also be an unofficial optional visit. In either case, the visit is significant and can yield a wealth of insightful data. The person in charge of the tender should, if at all possible, go to the project site, but this isn't always feasible because they might be too busy or the project might be far away.
A young engineer was dispatched by us to a site assessment. We invited the engineer in to describe the location to us when we arrived to assess the tender. The engineer's inability to provide us with any helpful information on the site was the most annoying part. Although we could have given her a better briefing and detailed instructions on what to look for and take note of during the site visit, I was rather irritated at the time.
When someone other than the Estimator participates in a site inspection, it's critical to keep in mind that they are serving as the tenderer's eyes and ears and must record as much useful information as they can about the project site and its surroundings, as well as the identities of the other attendees and the client's representatives. The tender's completion process could be significantly influenced by the calibre of the information submitted, which could ultimately help the bidder win or lose. Potential issues that are missed during the site inspection may wind up costing the business money in the long run because they weren't considered while determining the tender price or creating the tender timetable.
It is crucial to be organised for the visit.
1. Identify the location of the visit and get directions.
2. Make sure you have a contact phone number and know who you are meeting so you can call if you get lost or are running late. Nevertheless, keep in mind that if the contact person is leading the visit, they will likely turn off their phone as the meeting starts and won't be reachable.
3. Since first impressions count, the client will conclude that the contractor's representative is typical of the company's staff if they appear disorganised, arrive late, or get lost.
4. It's best to arrive early so that you can speak with the client or their staff. Informal conversations frequently turn up useful extra details that other contractors might not be aware of. Arriving early also gives you the chance to speak with other people.
contractors, who might also disclose their level of interest in the project, their level of concern, and whether they are currently operating in the region.
5. Be prepared, as it would be awkward to arrive without the proper personal protective equipment and have to borrow from the customer. If there is no equipment available, it can be hard to access some portions of the project or, in the worst case scenario, it might prevent access to the project site altogether. You should appear tidy and the safety equipment should be in good working order. If there are any questions about the requirements, ask the customer. In fact, it can be a good idea to call the client's representative before the visit to ask some questions because it gives you an opportunity to introduce yourself and allows the client's representative to remember the contractor's name.
6. The visitor may frequently be required to show some sort of identity in order to use the website. In some cases, the customer may need to know your information in advance.
7. Gather a pen and notebook. Even if the client promises to send official minutes of the site visit meeting, I still advise taking notes of what is mentioned at the meeting because formal minutes are frequently brief and don't cover everything and are typically distributed several days after the meeting.
8. If the visit is a formal, required one, the client will likely need to sign a form in the tender document; bring this with you.
9. Examining the text and drawings as part of your preparation can help you comprehend what the project includes. Making sure of things beforehand can lead to inquiries being made during the inspection. To aid in orientation, it is a good idea to have a copy of the general plan drawing with you.
10. If it's possible, and if it's permitted, take pictures of the project site.
While there, take note of the following:
1. How far away from headquarters (or the company's closest office) the project is.
2. The infrastructure and nearby towns.
3. The names of the other contracting firms in attendance, as it's important to know who is bidding on the project. The quantity and seniority of their representatives can sometimes give an indicator of how important the tender is to them, so take note of who they are.
4. The titles and responsibilities of the client's representatives.
5. The names of any specialised subcontractors who will be present because the estimators may need to get in touch with them to get quotes for specific project components.
6. The environment on the property, including: 1. Is it accessible or not? 2. Are there any other contractors there? The following questions should be answered: 3. Is the site level or sloping steeply? 4. Is the ground soft or hard, and if there is rock, how deep is it? 5. Is there ground water present and how deep is it? 6. Are there any existing structures that will affect construction?
7. The site's security and any necessary levels of security 8. is the area enclosed?
9. Are there restrictions on how individuals and vehicles can enter the area? 10. where the laydown areas are located
11. the accessibility of utilities and services, their location, how other contractors are utilising them, and any usage limitations
12. Site access factors include road conditions, gradients, weight restrictions, and other constraints
13. Local traffic conditions
14. where the waste and spoil areas are located
15. If your project involves earthworks, the location, ease of extraction, and quality of the fill material.
16. the state of the site's roads and any limitations
7. The other contractors active on the property or nearby, as well as the machinery and tools they use.
8. Questions posed and responses provided during the meeting.
9. Take note of the topics that the client representative emphasises because it is typically crucial to take these into consideration and emphasise them in the tender submission.
Include your signature and the lead Estimator's contact information on the attendance list. Young engineers who attended site visits in the past and provided their email addresses. Then they received all the correspondence related to the bids, which they occasionally didn't forward to the estimating team.)
Stay behind after the official portion of the visit is over to hear what the other contractors are saying or asking, or to hear any potential ideas they may have. Sometimes another contractor has an established rapport with the client, and it's important to take note of this.
Explore the neighbourhood after visiting the site and look for:
1. Potential vendors and contractors, noting their size, apparatus, infrastructure, and contact information.
2. The type of lodging that is offered and, if important, the distance from the project.
3. The local transportation systems.
The estimating team should receive a brief report on the visit that includes all pertinent details and pictures.
When doing site visits, it's helpful if the business has a standard document or checklist that can be used and completed.
Additional bid documents
There may be references in the client's tender documents to supplemental materials that aren't actually part of the filings. This could, among other things, make mention of the client's insurance policies, general specifications, and geological studies. These documents are frequently crucial for the Estimator to read, thus it is vital to get copies of them or, if this is the only option, read them at the client's offices.
Scheduling of bids (program or programme)
This is one of the most crucial steps in creating a tender, but it is frequently skipped or performed incorrectly.
In the tender documents, the customer may occasionally provide a schedule. However, this schedule can be inaccurate or impossible to follow, and many of them are merely suggestions. It might even have been created by a member of the client's team who has no prior construction experience. These delicate timetables are frequently way overly optimistic. The contractor must therefore guarantee that they can adhere to the client's timeline and, if necessary, offer an alternative.
It's crucial to remember that the contractor is committing to the milestone dates or timetable provided by the client by accepting them in the tender. The contractor will undoubtedly incur penalties and additional costs if these deadlines are not met during construction. Unless the scope has altered, the contract timetable must fairly conform to the tender schedule.
Contractors frequently create and submit their own tender schedules, but they frequently do it quickly, with little consideration, and maybe by an untrained estimator or planner. It's possible that the schedule did not account for the site's requirements, regulations governing working hours, permitted equipment types, or available resources.
It is crucial that the schedule be carefully produced because an accurate schedule is typically a crucial aid in pricing the tender.
Knowing the amounts needed for each specific assignment is essential to accurately pricing the tender. The contract may be re-measurable if the client provides a bill of quantities; nonetheless, it is advisable to, whenever practical, examine the bigger quantities that may have an impact on the timetable or the total amount of the contract if they differ significantly from those provided.
In the event that the client requests a lump sum payment, it is the contractor's duty to measure the job and create a bill of quantities. It goes without saying that accuracy in these amounts is crucial if you want to get the right pricing. In order to price the things, the quantities should be broken down in appropriate detail.
There are numerous methods for calculating a project's anticipated cost. When a smaller contractor sees a project, they frequently assume that it will be similar to one of their earlier ones and set the price accordingly, making only minimal adjustments to account for any evident changes between the projects. This is obviously inaccurate and fails to adequately account for changes in the project's complexity or quantity variations.
A list or schedule of all the tasks or materials needed to complete the project should ideally be created by the estimator. Then, a price should be assigned to each task. The cost of building the entire project is then calculated by adding these sums together. The markup and contingency allowance are then applied, followed by the overhead costs (see below).
When pricing the things, many contractors have a tendency to use standard rates from earlier contracts, which isn't particularly desirable because these vary from project to project, much like their production rates do. The cost of materials varies from project to project as well. One cubic metre of concrete, for instance, will almost certainly not be placed at the same rate on two different projects. When pricing the items, it is possible to account for these changes by dividing them into labour, material, and equipment.
Pricing may be presented as a straightforward spread sheet or as a computerised tendering package. There are numerous alternative tender packages, some of which are superior to others. Many contractors choose the least expensive package, which may not always be the greatest choice for the business.
The hourly rate for each labour trade should be calculated for each bid. These rates must account for the base labour cost, estimated overtime hours, bonuses, unproductive time, retirement funding, public holiday provision, and other monetary allowances. They also must include leave pay, sick pay, bonuses, unproductive time, retirement funding, and other monetary allowances. Include the expenditures for protective gear, staff and workforce mobilisation, training, as well as transportation and lodging somewhere in the tender. (Some businesses decide to include this in the job labour costs.) The unproductive allowance on some projects may be fairly high to account for workers switching between activities, creating work method statements, attending safety and toolbox meetings, and being prevented from working because of client or other contractor operations.
It is easy to determine the labour cost to execute a task by calculating the number and composition of the team needed, the production that will be achieved per hour, and knowing the individual hourly rate (determined above).
finish each assignment.
It's crucial to factor in any waste, bulking and compaction, laps, transport and handling, as well as the price of fasteners, when calculating material expenses.
Calculating the costs requires diligence and accuracy because even small arithmetic mistakes can have negative effects.
Make sure the cost of each task includes all the steps necessary to perform it. When estimating the cost of an excavation, for instance, it's not only necessary to account for the expense of removing the structure's footprint; it's also frequently necessary to account for the costs of removing the working space, battering the excavation to make the sides safe, building access ramps into the excavation, protecting the excavation, and backfilling the excavation as well as the working space, batters, and ramps. Frequently, just a small portion of the total volume of dirt that must be excavated to build a structure is taken from its footprint.
determination of overhead
On a project, overhead expenses come in two different forms.
1. Those that have to do with how the business is run and the services it offers the project. These expenses include the price of the company's management and administrative staff as well as the cost of maintaining the company's headquarters. Many businesses charge a fee for each project to cover these costs, and this fee is occasionally included in the tender price. In order to ensure that the appropriate quantity is allowed for, the Estimator must be aware of corporate policy in this regard.
2. Next are the overhead expenses that are directly tied to managing and running the project. These costs, which may include expenses like the following: cannot be connected to a specific project component or job.
1. The project offices and facilities, as well as the transportation and setup of those facilities.
2. Management, supervisory employees, and support staff (administrators, planners, engineers, and safety and quality advisors). Their base salary as well as allowances for bonuses, leave, sick leave, retirement benefits, allowances, other benefits, and perhaps even the cost of their lodging and transportation would be included in these expenses.
3. Equipment and personnel mobilisation costs.
4. specialised machinery, including cranes, tools for gaining access, and site transportation
5. Services for cleaning and security. 6. Access to water and power.
7. Office supplies, phones, radios, and computers 8. The provision of bonds and insurance.
It is necessary to finish the project schedule and determine the resources needed to build the project in order to compute these costs. Check subcontractors' estimates carefully to see if they include overhead allowances that must be added to the contractor's overheads in the bid or if there are other costs that must be covered by the contractor and added to their overheads.
It's crucial to decide how the overhead costs will be included in the tender once the total costs have been computed. Some contractors choose to add the overhead costs to each item and distribute them proportionately across the different bill items. This might have negative effects if the quantities decline because the contractor would then receive less money for their overhead charges and wouldn't be able to recoup enough money to pay for the actual costs.
incurred. Naturally, if the quantities increased and the contrary occurred, the contractor would recover more overhead costs than anticipated and needed, increasing their profit.
There is less chance of getting underpaid if I show the overheads in the bill of quantities as separate line items. If a variation is submitted for more time and overheads when the project term is extended, it is also more transparent.
The overheads can be divided into the following categories when shown separately:
1. fixed overheads, which typically include the costs associated with establishing and setting up facilities, mobilising personnel, buying insurance and bonds, as well as the demobilisation costs
2. Time-related expenses that affect the project's monthly operating costs
3. Value-related overheads, which are closely correlated with the value of the completed task
It's crucial to specify how the overheads should be paid in the tender. A large portion of the overhead expenses are incurred early on in the project. However, the contractor may endure a protracted period of negative cash flow if the customer pays the overheads proportionally to the amount of time spent on the project or proportionally to the cost of the job accomplished.
You may choose to place a larger value in the fixed overheads, which are paid near the start of the contract, and a lower value in the time-related element on occasion to improve cash flow. If there is an extension of time variance, there is a chance that the contractor will base the value of their claim on these lower time-related overhead costs, which could result in their receiving less money than they need.
Verify the insurance requirements for the project. The client might have insurance in place in some circumstances. Check their documentation to make sure your job is fully covered. To cover situations that the client's insurance does not cover, supplementary insurance may be required. The client's insurance frequently has deductibles or excesses that are too high for the contractor, necessitating the purchase of additional insurance once more.
In light of the complexity of some insurance policies, it might be necessary to seek professional advice.
The cost of insurance on large projects can be quite high, especially if the insurer believes there are additional risks.
Bonds and surety
The contractor must be aware of the sureties and bonds they are required to offer and make sure they will be able to secure them if the project is awarded to them. If they are not given at the beginning of the project, it may be necessary to end it, which will be expensive and embarrassing.
The tender price should account for the expense of providing the sureties and bonds.
The term "nominated subcontractors" refers to those subcontractors who the client chooses to appoint. The contractor is expected to supervise and regulate these subcontractors as they carry out the project's tasks. These subcontractors may already have been selected by the client when the tender is released, and they will be identified in the paperwork. However, frequently the client will just specify the task that will be carried out by a designated subcontractor rather than choosing them. In some cases, the tenderer will need to include a tentative sum for these works in their bid price.
Since the tenderer will be held accountable for the work of the client's designated subcontractors, it is crucial that they are aware of the risks involved in doing so. The tenderer should make every effort to sway their choice. If the subcontractors are recognised at the time of the tender, the contractor should look into them to learn more about how simple or complicated the subcontractor is to handle and then price or qualify their bids properly.
A request for a quotation must be made as soon as feasible for any subcontractors who may be hired by the tenderer to perform some of the work so they have enough time to offer a reliable estimate.
A request for quotes must contain the following: 1. the extent of the work
2. the deadline for paying the payment 3. tender documents
4. unique project requirements 5. specifications
6. the timetable pertinent to the work covered under the subcontract 7. the project's overall schedule
8. the terms of the agreement
When the quotes from the subcontractors are received, they must be thoroughly analysed to confirm:
1. They thoroughly priced the scope.
2. they were aware of the project's requirements 3. Nothing has been excluded.
4. what they anticipate the principal contractor to provide (such as scaffolding, cranes, offices, storage and accommodation)
5. particular criteria that may influence how much a work is priced
It is necessary to contrast subcontractors' bids with other estimates for the same task. The adjudication may be difficult since, although the total costs are frequently comparable, the specific costs for the various items, the products offered, and the terms and circumstances of the subcontract tender may fluctuate significantly from one estimate to the next.
The subcontractor may have excluded services, facilities, and equipment from their price, but the contractor must still include these in their price as well as the management and supervision of the subcontractor.
Sometimes clients don't know exactly what they want in a certain location or don't provide enough details for the contractor to price a specific part of work. In the tender document, the client may then include a preliminary payment that must be included in the tender price. I've heard of several instances when contractors submitted bids that were too low because they neglected to include these interim fees in their tender sum.
The client should specify whether or not the tenderer's markup is included in these preliminary amounts. In many instances, the tenderer might need to set aside money for their profit on this work, which should also cover their overhead costs, administration costs, supervision costs, and any equipment, services, or facilities needed for the work.
Considering cost hikes
Calculating the cost of the job now is one thing, but what would happen if costs rise after the tender is submitted? We are aware that prices for fuel fluctuate monthly or perhaps even daily, wages rise yearly, and suppliers frequently raise the cost of raw goods. Of course, for a project that lasts only a month or two and gets underway quickly after the tender is submitted, this typically isn't an issue because the increases over this brief period should be relatively small.
Although they frequently last a year or even several years, larger projects frequently begin few months after the offer is submitted. There might be multiple pay rises throughout this time, and the cost of resources like petroleum could rise dramatically. It's important to comprehend and account for these potential increases, which could be substantial in nations with high inflation rates or unstable exchange rates.
Since increases are typically unknown, allowances will inevitably be estimates, though there are occasionally wage agreements that are locked in for a number of years. Petroleum prices, for example, are erratic and depend on supply and demand, currency exchange rates, and global events.
Unfortunately, contractors must sometimes plan for the worst-case scenario of the maximum possible increases because doing so would make their tenders less competitive. Therefore, using historical data as a guide, it is essential to adopt a realistic perspective of what increases can be anticipated.
Divide the tender into the various cost elements that may be impacted by price increases, such as the quantity of petroleum, labour, steel, and so on, in order to determine the allowance for these cost increases. Calculate the average increase that can be expected for the item based on when it will be used in accordance with the tender schedule. Calculate the extra cost that should be permitted by adding this increase to the item's value.
Sometimes it is possible to eliminate all or part of the risk by obtaining materials early in the project and storing them on or off site, by asking clients to take on some of the risk by paying escalation, or rise-and-fall, on the contract, or by requesting that suppliers provide prices fixed for the duration of the contract.
Scaling up and rising and falling
Sometimes clients allow contractors to ask for escalation, or rise-and-fall, on the contract price. This is particular common in countries with high inflation.
Escalation is a factor that’s added onto the contract price to compensate the contractor for price increases that occurred during the contract period. It’s calculated using the contract value and the assumed percentages of the various components, multiplied by the factor by which each item increased as the work proceeds. Escalation factors are usually calculated and published by the Department of Statistics or some similar government body in the country where the project is being undertaken.
Rise-and-fall is similar, and the contractor normally nominates in their tender which items in their contract will increase in cost. Each item would require an estimate of the quantity to be used as well as its starting cost. In the course of the project the contractor claims, and is reimbursed, for the difference in the final cost of the item relative to the cost at tender stage.
Many clients may accept escalation, or rise-and-fall, although generally they prefer fixed price contracts where the contractor has to allow for the risks of price increases.
When clients adjudicate tenders, comparing a fixed price tender to one with escalation, they’ll often apply their estimate of the increases and come up with their cost of how much the escalation will add to the price of the tender. The danger here is that clients will often be conservative and add a bigger value than necessary, which could make the tender with escalation more expensive than the one which is fixed.
There are other risks with these formulas in that they don’t always compensate the full portion of the increases. In addition, sometimes prices go down and the contract sum will then be adjusted accordingly.
The amount of profit or margin on a project will rely on various factors:
1. The procedure followed by the contractor when adding profit to bids.
2. how crucial it is that the contractor win the bid. To increase its chances of winning the contract, a company that needs the job may cut the level of profit, whilst a company that doesn't need the work as badly may increase profit.
3. the project's scope and nature. Contractors who outsource some of the job might only make a smaller profit on that work. Contractors could charge a higher margin for smaller projects and a lower profit for bigger ones.
4. the project's hazards and complexity. Complex high-risk projects could yield a larger profit to cover the contractor's losses if issues arise.
5. the project's client and setting. To offset the risks associated with working for specific clients or taking on projects in remote places, contractors may increase their profit margin.
6. the project's other bidders. It is possible to make predictions about the margin that these rivals will use in their tenders provided their identities are known and if their numbers are constrained. The volume of work rivals have on hand and the kind of project they like to take on may have an impact on their profits. The pricing they offered for recent projects can be used to estimate how competitive they are. Although obviously not an exact science, this can be used as a guide to determine potential profits.
7. Knowing the client's budget also reveals the tender price the client is anticipating, and in some situations, it is possible to change the profit to guarantee the tender comes in within their budget. Of course, the client's budget may not always be accurate, so it shouldn't be the primary element in choosing the contractor's price.
8. the tender's precision. A contractor can apply a smaller profit when they are confident that their price is accurate, however a less precise pricing may call for a greater profit to make up for any potential flaws and inaccuracies in the tender calculations. (However, it shouldn't be essential to boost the profit as well if you have previously incorporated a contingency to compensate the firm for any price problems.)
Senior management often decides on the level of profit.
throughout the business.
The selection of the profit level is followed by the choice of where the profit should be added. This is occasionally complicated and demands careful study. Applying the profit uniformly to each item in the schedule of quantities is the easiest option.
When the contract is re-measurable, the contractor may be able to compare the client's expected quantities with those they anticipate encountering on the project. There are frequently differences. The contractor will undoubtedly make a smaller profit than anticipated if the actual project quantities turn out to be lower than the quantities that were quoted and profit was deducted from these things. If the amount rises, the opposite occurs. I frequently allocated a larger profit to things whose quantity I predicted would rise and a lower profit to those whose, in my estimation, would fall. If these presumptions are false, this could be dangerous.
Always think about and offer alternate ideas, methods, timelines, and materials to maximise the tender profit.
alternative bids and further rewards
Most of the time, the client offers the project's design and construction process, and tenderers are asked to price it. Contractors may, however, suggest substitute designs, approaches, or materials that they believe to be more affordable choices. The majority of tenders state that the contractor, even if they intend to price alternatives, must price the original choice (a conforming bid).
I've occasionally won bids by coming up with alternative options. Frequently, we simply shared a portion of the cost savings brought about by the alternative option and kept the balance as additional profit. If the client must change their design, the savings offered should be enough to make the offer appealing and cover the extra costs the client must pay to change the design.
Contractors may also propose substitute materials that are more accessible or less expensive than those that have been specified. The bidder must persuade the customer of their suitability.
There are further strategies to improve the bid. Finance conditions, early payment discounts, or even providing different schedules are a few examples.
The cash flow of a project must be understood by contractors. Not because they are bad contractors or because they are losing money, but rather due to insufficient cash flow, many contractors fail. Contractors that accept unfavourable payment conditions or take on projects that are too big for them are often to blame for cash flow issues.
The contractor should take into account the payment terms they have with their suppliers and subcontractors in addition to the contract's payment terms and conditions. A deposit may occasionally be required from a supplier in order to secure the purchase of a large piece of equipment. Even if unfixed items could be present on the project site, the majority of clients don't pay for them.
Therefore, creating a precise cash flow estimate is essential during the tendering process. This should take into account the contractor's payment from the client and any money deducted for retention. Compare this to the dates on which suppliers, subcontractors, employees, and other service providers will be paid. The contractor must make sure they can sustain this negative cash flow because most projects have one until they are almost finished.
The Estimator could increase the project's cash flow in a number of ways, including: 1. urging the client to make a payment in advance
2. ask the client to pay the monthly valuations in advance
3. demanding that the client waive the retention fee or replace it with a guarantee
4. the tender being front loaded (which is where the work done near the beginning of the contract has a higher value, or a higher profit than the balance of the works)
5. establishing milestones for when the contractor will be paid a percentage of the contract amount (this is frequently used by contractors building houses who demand that a certain percentage of the total project price be paid when the foundations are complete, a further percentage when the walls reach roof height, and so on). Typically, these payments are set at a value higher than the actual value of the works completed, so many clients are reluctant to accept these terms as it exposes them to risk.
6. Negotiating to pay suppliers and subcontractors later 7. keeping subcontractor cash retention
8. demanding payment for unfixed materials from the client
Clients that pay valuations later than expected may negatively impact cash flow. Therefore, it's crucial to take into account the client's capacity to make full and timely progress valuation payments.
Some customers want the contractor to offer a value plan in their proposal so they can calculate their own expected cash flow. This plan, or the customer's cash flow estimate, must be precise in order for the client to accurately predict their financial needs. If it is incorrect, the customer might not have enough money on hand to cover specific monthly payment claims made by the contractor.
Daytime employment and supplemental pay
The majority of tenders ask the contractor to submit a list of day-work prices. Typically, this section's preface outlines what the rates must cover. For instance, compensation rates typically comprise the base wage rate plus perks like incentives, paid time off for holidays and sick days, leave provisions, protective gear, lodging, transportation, and minor equipment. However, many contracts also stipulate that supervision and other overheads should be included, which are typically challenging to estimate and rely on the type and scope of the job to be done in accordance with these rates. Define a distinct rate for supervision and, whenever possible, exclude it from the labour rate.
Make sure the plant and equipment rates include all of the requested costs, including the initial hire, maintenance (including the provision of service and refuelling vehicles, technicians, oils, grease, cutting edges, and spare parts), fuel, and, in most cases, the operator's salaries) (again the wages would take into account all of the costs mentioned above). In some circumstances, the contract stipulates that the rate must also include equipment mobilisation and demobilisation. Wherever it is feasible, nominate to exclude these costs although doing so is often challenging.
The majority of contracts typically state that the real cost of the items used in day-work activities must be increased by a markup or profit margin. It's crucial to add in the real cost of the material as well as any wastage and bulking costs, as well as transport, storage, offloading, and handling costs if certain materials are specified.
When using subcontractors, be sure that the prices presented in the tender take into account their day-works rates. If the subcontractor works on day-works, the contractor will frequently lose money because the subcontractor's rates are frequently greater than the rates agreed upon with the customer.
Understanding and taking into account the predicted weather at the project site throughout the construction phase is crucial. The productivity of workers and equipment can be greatly affected by rain, winds, and periods of excessive heat or cold, which can have an impact on the project's timeline and construction costs. If necessary, additional time and money may need to be included to the tender budget to account for these potential delays' costs as well as the costs associated with the reduced productivity.
The possible effects of any client delays in receiving the contract or gaining access to the project site should also be considered. These delays can move the contract into a bad weather season that wasn't perhaps anticipated in the tender. If there are any worries about these potential effects, they should be mentioned in the tender proposal to guarantee that the contractor will be fairly compensated for the altered circumstances if there are delays.
both opportunity and risks
Most bids come with some risk. Risks can be managed in a variety of ways. For example, the contractor could:
1. By employing alternate construction techniques, for example, the danger can be eliminated while potentially incurring more expenditures.
2. Price the risk at its full cost by assuming the worst-case scenario 3. Ignore the threat and pray that it never materialises
4. passing the risk to the client after qualifying it
In a perfect world, the contractor would like to completely eliminate all risks, but this obviously isn't always feasible because the extra money needed to make up for the risk will make the tender uncompetitive. Additionally, it might be challenging to transfer all of the risk to the client because they frequently refuse to do so. Therefore, the solution is typically a mix of the four previously mentioned choices.
The Estimators should record the risks on a schedule while they are creating the tender, indicating how they have been handled. To ensure that the risks have been properly handled and taken into account in the final tender value, the risk schedule should be evaluated once the tender has been finalised.
Here are a few common risks to think about: 1. negative weather
2. terms of payment, including the possibility of non-payment
3. contract provisions that put the contractor at greater risk or that are unclear
4. commercial unrest
5. probable resource shortages for essential items 6. the accessibility of personnel and resources 7. particular engineering issues
8. the project's timeline
9. Liquidated damages or severe penalties 10. bad ground circumstances
11. lack of knowledge 12. political turbulence
Sort the risks into the financial, commercial, and engineering categories.
Assign a percentage representing the likelihood of each risk materialising for each risk (with one hundred per cent being a risk that will definitely occur).
Assign a price to the danger in case it materialises.
It's crucial to avoid adding risks that are improbable to happen or might even not exist while creating the risk schedule.
Opportunities are just as plentiful as risks. These possibilities could be:
1. the project's scope expands, potentially allowing the contractor to better utilise their resources and boost project profitability.
2. further job opportunities
3. Because the client is disorganised, there may be room for claims and deviations.
4. the potential to re-engineer the project to make it simpler to complete
Include the potential positive cost impacts for the project along with the opportunities in an opportunities schedule. According to the chance that the opportunity will materialise, assign a percentage to it.
Consider the potential additional profit from opportunities that the project may have as well as the additional costs that will need to be added to the tender for potential risks, and try to balance them out.
Tender (or bid) bonds
Some tenders call for the contractor to submit a bid bond, which is typically equivalent to 10% of the tender amount, along with the tender. The tender will be deemed null if the bond is not submitted. The bank must be asked for these bonds at the beginning of the tender process because they may take several weeks to arrange. Frequently, the wording of the bond is predetermined.
Because the bond depends on the tender value, it's crucial to estimate the value accurately as soon as possible and to keep the bank informed of any substantial changes as they happen.
type of offer
The standard form of offer that is attached to the majority of tenders must be filled out by the tenderer. Contractors have been known to forget to finish the paperwork or enter the wrong price. The client has the right to accept the value specified on the form of tender because it is a legally binding document.
covering letter for a bid
It's recommended to attach a covering letter with the tender, which should: 1. thank you to the client for the chance to submit a bid
2. briefly describe the tender submission 3. provide any credentials
4. emphasise the reasons the contractor is most qualified to handle the project 5. provide priority to addressing the client's priorities and problems
The letter shouldn't be longer than a few paragraphs, should be concise, and should address the issue at hand.
qualifications and clarifications for tenders
The majority of contractors will have some requirements for their bid. These would consist of the terms they are prepared to accept in order to carry out the work. The contractor could also want to elaborate on their actual pricing. More clarifications are required the more unclear the client's information and tender details are. The contractor is responsible for making sure that everything they have priced has been clearly specified in the bidding documents, and if not, they are required to provide clarification.
In some cases, I've highlighted in the clarifications a price-listed item that I think some other tenderers could have overlooked. The client will become aware of it as a result, and they will either ask you to remove the item from your pricing (if it is superfluous) or ask the other tenderers to make sure they have priced for it (which may mean their prices increase).
Exclusions and clarifications that are typical may include: 1. unanticipated or unexpected ground conditions
2. dealing with hazardous materials and artefacts 3. unexpected or out-of-season weather
4. the accuracy of current buildings and ground elevations 5. the location and quantity of the facilities that the client provides 6. the timeline for bids
7. where services are currently provided 8. terms and conditions for payments
9. cap on fines and liquidated damages, as well as how often they are applied 10. substitute components or designs
11. Laydown and office requirements
12. dates by which information, drawings, and materials provided by the client are due
13. a payment bond is offered in place of retention money. presumed hours of work
15. the length of the bid's validity
I've come across contractors that included pages of qualifications in their tender, some of which were really unimportant. I think this method might make it less likely that their tender will be accepted, so caution needs to be used to make sure that only the elements that are truly crucial are mentioned.
Verify the final cost to be sure of the following: 1. It comprises every demand from the client, including:
1. offices, facilities, services, and security are provided.
2. their site limits, such as their mobilisation and induction procedures and working hours
3. quality controls and evaluations 4. staffing
6. specific prerequisites 7. spare parts
8. 9. Insurances warranties
10. limits on connecting to current services 2. The computations are accurate.
3. Each item has a price and is reflected in the total tender price. It contains all tentative amounts.
5. It has made it possible for clients to supply goods and supplies.
6. It permits commissioning, including the potential need for power, water, and chemicals for this procedure.
7. it takes into account all taxes and charges.
Submission of a bid
Don't undervalue the significance of the tender submission. We need to act as professionally as we can. I've frequently been present for tender clarification meetings where the client has praised our bid and may have been persuaded to award the project to us.
The tender proposal could include some or all of the following: 1. a listing
2. the covering letter or transmittal 2. the final cost or tender format
4. Clarifications and qualifications in business and technology 5. the timeline for bids
6. an explanation of the cost
7. The suggested project management organisation chart and senior personnel curriculum vitae from the contractor
8. a list of the tools and suppliers
9. the client's required deliverables (which may include proof of insurances, cash flow and histograms)
10. daytime wages
11. a description of the business and a list of comparable jobs the contractor has finished
12. documentation and safety data
13. When creating documentation, be sure to keep it pertinent to the project and show that your organisation understands the client's expectations and will go above and beyond to fulfil them.
14. information and documentation on environmental management if required, traffic management strategies
16. the project strategy, work procedures, and factors considered in the tender
17. business brochures (which may include financial statements and safety statistics)
Include as much information as you can to show that the company is capable of completing the project effectively, has considered the construction process, and has the necessary staff and resources.
Many bids are evaluated on more than simply price; they also take into account the submission's quality documents, safety measures, methodology, and timetable.
Verify the submission to confirm:
1. The client's specified documentation has all been prepared and is provided.
2. ensure each page has been printed and is present (sometimes in the binding process pages get inadvertently left out, or during printing, errors occur resulting in blank pages)
3. I've occasionally had clients ask for documentation that we had included in our submission but that they couldn't find. This is frustrating for the person adjudicating the tender and can lead to them assuming it isn't available, resulting in the tender being disqualified. The documentation is presented in a logical and easy-to-read format. The specific documents the client has requested should be highlighted and easy to find.
Make sure that topics like safety and quality are contained in their own distinct divisions and are not dispersed over other parts of the submission. As a result, the reviewer might only get and look at a subset of the pertinent information.
Keep in mind that the client's organisation frequently has multiple departments or individuals review tenders. Frequently, the tender is divided into the pertinent components, which are then distributed to various individuals who aren't even directly involved with the project but may be asked, for example, to check all the tenderers' safety documents. The contractor's chances of winning the project may suffer if they don't receive the whole submission from a tenderer since they'll believe it wasn't included and will give the tender a low rating.
In most cases, two or more contractors form joint ventures to share risk, pool resources for a significant project that they individually couldn't complete, or when one of the partners has experience in a field that the other partner doesn't (for instance one of the partners may do the mechanical works and the other the civil works).
Make sure that the client will accept a joint venture's tender before submitting one.
I used to work for a contractor who, in partnership with another contractor, presented a bid for several hundred million dollars. However, neither business had requested permission from the client to submit the bid as a joint venture. The bid was rejected as a result, and we spent a lot of time and effort.
In the letter asking approval, it should be made clear why the joint venture is being formed and what advantages it will have for the client and their project.
The majority of clients will demand that the joint venture partners be held accountable for completing the project jointly and severally.
Additionally, the parties to the joint venture should have a heads-of-agreement that outlines the parameters of the joint venture signed before submitting the tender.
The parties ought to concur:
1. each party's share of the joint venture's percentages 2. who will serve as the lead partner
3. the assets each side will provide 3. the joint venture's name
5. where the joint venture is located
6. Who will cover the tender's expenses?
7. who will handle the submission and how the tender will be conducted 8. a timetable (planned) for putting together the tender
9. the rates at which each partner will provide resources for the project
The rates that will be used to price the job and what they comprise should be agreed upon before the tender process begins. For instance, the pay scales for the various levels of staff, whether these pay scales cover all expenses like sick and holiday pay as well as bonuses, whether the costs of the equipment cover spare parts and maintenance, and whether there are minimum hours the personnel must work.
You should pay for the products.
1. People who are knowledgeable about the company's resources and capabilities as well as the construction process, expenses, and techniques should be the ones that create tenders.
2. To confirm that all of the sections and pages have been received, the tender documents should be examined.
3. A comprehensive reading and understanding of the paper is required, and any inconsistencies or problematic clauses should be recorded.
4. The contractor should tour the site and make note of everything that could affect how the project is built.
5. A tender timetable needs to be prepared and resourced. 6. Calculate the quantities for each task or item as necessary.
7. Request quotations for the supplies and the work that will be done by subcontractors.
8. All objects, or tasks, should be valued based on fundamental principles, taking into account the circumstances unique to the project and the place.
9. Cost the overheads required to complete the work and include any necessary corporate overheads.
10. Select a reasonable and pertinent profit margin and specify where it will be added.
11. Check the cash flow of the project to make sure the contractor has the resources necessary to cover times when it will be negative.
12. Make a list of potential hazards and rewards, and if necessary, include some of these in the price or qualify others.
13. The tender price's inclusions, exclusions, and assumptions should be listed in a schedule of qualifications and explanations that you provide.
14. If at all possible, offer the client alternate costs or building techniques that might be more appealing.
15. Make sure the tender submission is thorough and contains every piece of information the client wants.
16. Verify the tender calculations to make sure the submission contains the right numbers.
17. Verify if the tender took the project's expected weather conditions into account. 18. Be sure to have the client's approval before filing a joint venture tender.
Securing the Project, Module 4
It's one thing to make a bid, but even if you offer the project at the lowest price, your chances of getting the job are sometimes less than 50%. In fact, since you will receive a bigger payment, it is frequently preferable to be given a project from the second or third place. Many clients want a contractor who produces a quality product on time, without any safety or environmental events, with minimal hassle, without any labour relations issues, and without making unjustified additional claims. They don't just care about pricing. Experienced clients are aware that paying a little bit extra to work with a good contractor more than makes up for any delays or issues that may arise on their project if a less expensive contractor is hired. Unfortunately, some clients merely care about acquiring the assignment for the lowest price; in these cases, it is sometimes advisable to avoid working for them.
It's crucial to provide the best possible bid, persuade the client of the company's expertise, and show that you're a professional. This is accomplished by presenting a thorough and attractive tender. Be completely prepared and responsive at post-tender meetings, as well as react to all post-tender correspondence completely and promptly.
unlock the door and charge
Price is crucial; no client will speak with a contractor whose tender price is significantly more than the other bidders' or whose price is outside of their price range. As was covered in the previous Module , it's critical to set a price that ensures both that the contractor won't lose money on the project and that it's competitive with those of the other bidders.
Sometimes, estimators can overthink and complicate a project, pricing items that might not materialise and resulting in an excessively high price. It's crucial to thoroughly consider the likelihood of an event occurring during the tender process. In some circumstances, instead of pricing for the event, the contractor can opt to accept the risk that it will happen or omit it by qualifying their bids accordingly (Refer to Module 3 for more details on assessing and dealing with risks in tenders). The contractor will typically be invited to a tender clarification meeting when the qualification will likely be discussed if the client finds the tender pricing to be of interest. The client has the option of accepting the qualification or raising a potential problem, which frequently clarifies it for the contractor. If it turns out to be less serious than first believed, the contractor may remove their qualification without incurring any additional fees. In the worst instance, the contractor can be forced to revoke the qualification and pay more money to make up for the incident. The contractor has, however, had the chance to network with the client and present themselves.
This is not to say that the tender price should be ridiculously low with a long list of requirements, as very few clients will accept this. (Take note that some client bodies won't accept tenders with qualifications, and a non-conforming bid may need to be submitted along with outlining savings or suggested alternative supplies.) The price should represent a reasonable evaluation of the work, taking into account reasonable hazards, and the contractor must assume some risk.
Savings and discounts
It is feasible to offer the client discounts and savings in order to further lower the price and increase the appeal of the proposal.
1. pay the monthly assessments sooner
2. decrease the amount of retained funds held, or release them sooner
3. enabling the contractor to use a surety bond in place of the retention cash
4. Allow the contractor to supply a surety from an insurer rather than a bank if you've specified the surety must be given by a bank (which is often cheaper for the contractor)
However, if the contractor is interested in building a few of them, there may be an opportunity to give a discount if the customer awards the contractor two or more projects. Clients occasionally divide their projects into smaller separate tenders. Utilizing shared resources typically results in cost savings for the contractor, which can then be passed along to the client. Additionally, the benefit of breaking up a huge job into smaller ones rather to just doing one little one may be so alluring that the profit might be decreased and the savings can be given as a discount to the client.
Knowing the client's priorities and needs
The contractor can make sure their bid takes these criteria into account by understanding the client's priorities. The ability of the contractor to meet these criteria and priorities should be highlighted in the bidding application. For instance, if the client is concerned about safety, the contractor may need to factor in additional safety personnel into the project price. Additionally, as part of the tenderer's presentation, they could highlight their past projects' successes in terms of safety as well as the steps they'll take to ensure the project is built safely.
Even though the alternative offer is more affordable, it may be preferred if the first one responds to the client's wants and concerns.
The priorities of the client are frequently emphasised in the documentation or discussed during the site inspections for the tender. Additionally, if the contractor is friendly with a member of the client's staff, it may be feasible to learn about their priorities.
The client can be worried about the following: 1. the milestone dates being met
2. generating the proper quality 3. a positive working relationship
4. The ability of the contractor to operate around client activity 5. Knowledge and skill of the Contractor
6. the contractor's availability of necessary resources
7. Ability of the contractor to collaborate with other contractors in prohibited regions 8. that the contractor is aware of the complexity of the job
One project was too big for us to take on alone, so we priced it in partnership with another contractor. We learned during the bidding process that the customer disliked working with joint ventures, so we made sure to address all of the client's worries about joint ventures and highlight the benefits our joint venture would bring to the project in our tender response.
Clients frequently set deadlines and benchmarks that are challenging or impossible to meet. However, the customer may be more concerned with gaining advantageous access to certain areas of the building during the construction period so they may begin installing their equipment than with the project's ultimate completion. It may be possible to provide the client with access on the appropriate dates if the tenderer is aware of the access needs rather than committing to what would be an impossible undertaking of giving over the entire
facility as a benchmark
The scoring and decision-making procedure for tenders
The client frequently has a predetermined process they will follow to evaluate and score the proposals, which typically takes into account a variety of aspects, including the price. This procedure frequently adheres to a predetermined formula that is described in the tender document. The contractor must be aware of how this formula functions in order to maximise their results. The client's needs must be met and the elements that will be reviewed by the client should be clearly indicated.
For instance, some clients might give the contractor's price 90% of the final grade, with the remaining 10%, let's say, being made up of various factors like the company's local ownership, the proportion of native workers, the amount of money that will be invested in the neighbourhood, the expertise of the proposed construction team, the project's resources, and the contractor's safety record.
Because there are frequently consequences if they later fail to fulfil their pledges, the contractor shouldn't overestimate what they will accomplish.
By allocating more funds to certain items, the contractor can frequently raise their scores for those items. The additional expenses, meanwhile, might eventually outweigh any benefits from maximising the scores. For instance, employing local suppliers may raise expenses, pushing up the tender price, or using more local materials may boost the tender score but raise costs, pushing up the tender price and cancelling out this gain.
Alternative approaches and strategies to enhance the scoring of the tender can occasionally be found. Making sure the tender receives the highest realistic scoring is worth the time and effort.
It's also beneficial to think about how competitors will be graded because this could affect your price and how you choose to maximise your scoring opportunities.
I've talked about the value of a well-presented tender application and the necessity of projecting expertise and professionalism during post-tender discussions and negotiations. In order to win the project, the contractor must be able to sell the business, set it apart from rival firms, and persuade the client that they are the right choice for the job. In order to accomplish this, the contractor should emphasise:
1. a track record of completing similar projects effectively 2. expertise and experience
3. the accessibility of resources
4. suitable employees, emphasising their tenure with the organisation and their experience on projects similar to yours.
5. trustworthy suppliers and subcontractors 6. outstanding record of safety
7. excellent work on other projects, as well as their quality methods and practises
8. knowledge of the project
9. dedication to provide for the client's needs 10. financial resources
11. proactive strategy for preventing and resolving issues 12. the capacity to collaborate with the client's team
13. Their successful environmental management (their "green credentials")
Don't unnecessarily disparage rival businesses, but do bring up points or factors that you may have considered but that other contractors may not have.
After the tender is submitted, the client frequently contacts you with communication that needs a quick response. It is crucial that the bid submission explicitly state the name and telephone number of the contractor's representative so that the client can get in touch with them (particularly when the tender is submitted just before a holiday period or when the Estimator is going on leave). If a client sends mail that is not responded to because the person it is written to is unavailable, it is embarrassing and could cost the contractor a possible project.
Customer correspondence should be forwarded to the representative of the chosen contractor, who will then organise the responses from the pertinent experts within the organisation and reply to the client as necessary. It will be important to ask for more time if the customer hasn't given enough time to gather all the facts needed for an insightful response. The contractor may have to give their best estimate if the customer is unable or unwilling to request an extension, making sure the client is aware it is merely an estimate and a more exact response would come.
Assure the following responses when the client has inquiries about the tender: 1. Answer these inquiries
2. have considered all potential effects, such as alterations to the timetable, higher expenses, additional overheads, delayed access, additional mobilisation costs, and effects on the remainder of the project (for example, even what appears to be a small change in specification could have a major impact on the schedule if an item has to now be imported)
3. are delivered on schedule 4. are clear-cut
5. Considering previous responses 6. are presented in a favourable light
7. the justifications for some of the responses, if necessary
8. In the event that the contractor is unable to meet the client's demands, suggest alternate solutions.
9. give a revised bid price that takes into account the impact of the earlier responses.
10. are sent in a formal letter (a letter should be issued after a verbal response at a meeting) written to the client's designated representative.
11. you should review the original tender materials, terms, and
qualifications and exclusions 12. are carefully considered
13. containing all justifications and calculations, are kept in the tender file so that it will be easy to see how the updated tender amount was calculated later.
Typically, the responses will be included in the final contract price and document.
One of my projects ran into financial difficulties when the client contacted the person who created the estimate after the tender was submitted and requested a quote for the supply and installation of 300 metres of underground electric cable. The Estimator determined the cost of the additional cable to be $87,000 after examining what he believed to be a comparable item in the tender. Despite the fact that we lacked any details about the cable or its installation, he sent the client the price in an unqualified, one-line email.
Even though the installation cost over $500,000 when fully estimated, the client required we complete the work for this amount when we were awarded the project. Because the Estimator was pushed into providing an answer at the last minute, we were going to lose more than $400,000 before the contract even got underway.
(Incidentally, I have to question the client as well because it should have been evident that $87k was way too little for a job in that area!)
Continuing with the previous scenario, another adjustment was later requested, further exacerbating our issue, and the Estimator was asked to update the project pricing to reflect it. The cost of the additional cable was not factored into this new tender price when the amended price was submitted. The client accepted the updated pricing and awarded the contract for this new value, presuming it covered all of their earlier concerns and price adjustments, including the $87,000 for the delivery and installation of the cable.
It is evident from the foregoing that each time a revised pricing is submitted, it must be explicit regarding what is included and what is excluded, and it must take into account the earlier queries and responses.
Because the Estimator has gone on to other tenders or it has been weeks or months since the offer was issued, it is regrettable that inquiries are frequently sent.
projects. It's crucial that the estimator takes the time to consider the topic and provide a solution, consulting and reviewing the original tender proposal to jog their memory. Costly mistakes could arise from failing to accomplish this.
I worked on a project where the initial bid filed for the contract was for around twelve million dollars. A six million eight hundred thousand dollar contract was awarded. Over five million dollars had been subtracted from the tender price between the time of tender submission and the time of the final contract award. The client accepting alternative materials and doing some of the work themselves helped achieve this. The tender team also reduced the cost of their bid. However, we were only able to locate records for the origin of 50% of these savings. Nobody could recall how or why the remaining savings were distributed. It was expected that we would lose two million dollars on the endeavour.
It's critical to consult any subcontractors or suppliers who may be impacted by these inquiries so they can adjust their prices as necessary. They must understand, however, that this cannot be viewed as a chance to arbitrarily raise their quote, which would make the contractor's tender price unreasonably high.
So that the other bidders are unaware of this, it should be kept secret that the client is speaking with the contractor. If they are aware that the client is speaking with you, they might devise a plan to win the client over. It is important to warn any suppliers or subcontractors involved in these inquiries to keep their answers private.
It's best practise to get in touch with the client to inquire about the status of your tender and the project if you haven't heard back from them after a week or two. This demonstrates to the client your interest in the task. Additionally, you might learn some insider secrets that could give you an edge over other contractors.
Find out why the client didn't like your price or tender if it didn't meet their expectations so you can tweak your procedures for the next tender.
The sooner you realise your bid was unacceptable, the sooner you can try to find alternative employment.
meetings with the client after the tender
Many clients ask the lowest tenderer to attend a tender clarification meeting, or perhaps even the lowest three. Typically, the client will send out an agenda before the meeting.
In advance of the meeting:
1. Check the schedule and make sure you're ready.
2. read the tender once more to review the specifics.
3. make sure everyone in attendance is knowledgeable about the project and can contribute to the discussion (often senior managers or executives from the contractor attend, many of whom are unfamiliar with the tender and the project constraints, leading them to make inappropriate comments, promises and commitments – ensure they are fully briefed and understand the risks and constraints of the project)
4. Make sure you are aware of the meeting's date, time, and location as well as the contact person and their information (it's also helpful to be aware of the meeting room's name since I have frequently arrived for meetings at large organisations only to discover that the contact person is busy meeting with another contractor and the receptionist is unable to locate them).
5. There is nothing worse than being asked a question in a meeting and having to page through file after file looking for the pertinent documentation. Take a complete copy of the tender submission, filed correctly, along with the calculations and the post-tender correspondence.
6. bring enough business cards, a notepad, and a pen.
The number of members on the contractor's team that will attend the meeting will depend on a variety of factors, including:
1. the scope of the undertaking
2. the client's agenda; for instance, if a quality-related item is on the agenda, it may be wise for the proposed project's quality advisor to attend, or even the company's quality manager.
3. who will be present for the client
4. what the client's known priorities are (for example, if safety is important, include both the company's safety manager and the project's safety advisor)
It should go without saying that everyone should be properly attired and on time for the meeting. Arriving early is frequently beneficial as it may
offer a chance to observe the other contractors being interviewed or a chance to speak casually with some of the client team before the meeting, which may give you some insight into how they feel about the project and your bid.
When we arrived for a meeting to clarify a tender, we were apologetically informed that we wouldn't be starting on time because the prior contractor had been late for their meeting. However, the other contractor left the meeting after five minutes with a look of embarrassment, and we were almost on time for our meeting.
When I asked the other contractor why their meeting had been so brief later, they responded that they believed it had been for another tender they had submitted to the same client. When the client started asking questions, they responded with information about the incorrect project because they had the documentation for that tender and were ready to talk about that project. The client eventually understood the confusion when they couldn't make the client understand what they were talking about. Naturally, the client was not amused and abruptly called an end to the meeting. They obviously did not receive either of the projects.
During the meeting
1. introduce the team and describe each member's responsibility for the project.
2. Make sure the contractor's team is led by a single individual who can designate other team members to respond to specific questions.
3. even if the client confirms they will send out formal minutes, take notes during the meeting.
4. Spend time responding to the client's inquiries; if unsure, ask if a response can be provided later.
5. Pay close attention to the client's concerns and make an effort to address them both during the meeting and in the follow-up correspondence.
6. Summarize the questions that need to be answered, when they will be answered, and who should receive the answer at the conclusion of the meeting (make sure there is enough time to get the answers to the client).
7. Present a positive image, and if the client asks for something that can't be done, explain why and provide alternatives.
8. Avoid making improbable commitments and promises 9. I appreciate the client inviting me to the meeting.
I've won jobs by persuading the client that we were the best contractor to handle their project during the tender clarification meeting. One specific instance was a sizable project that the client split into two separate bids. Although the client had already made up their mind to award one portion to us and the other to a rival, we really wanted both. I persuaded them during the tender clarification meeting that if they gave us the go-ahead for the entire project, it would be a sizable and crucial undertaking for us, and we would devote our best team to it and treat it with the respect it deserved. This was obviously a risky proposal because the client might have decided that they shouldn't have given us the project at all if we weren't going to dedicate our best team to it if we were only awarded one portion. However, I was able to make such a strong case that the client accepted both of our bids.
A few months later, our rival questioned how we had managed to win the entire project since they had been convinced they would only receive a portion of it.
At the tender clarification meetings, I'm sure I also lost some projects as a result of errors made or incorrect responses given.
returning to the office after the meeting:
1. Allocate the questions to the appropriate staff, who will then combine their responses into a single response for the client.
2. Verify the tender meeting minutes upon receipt to ensure they accurately reflect the discussions and decisions made at the meeting (if there is anything that you disagree with, address this in a formal letter to the client)
3. If necessary, follow up the meeting with a letter confirming the discussions and any changes to the tender offer that were made.
4. Make sure to respond to the client's inquiries within the predetermined timeframe.
5. send a letter expressing gratitude to the client for the meeting opportunity and extending the offer to address any additional queries they may have.
The contractor might be required to prepare a presentation as part of the meeting's agenda.
Recognize the topics that must be covered in the presentation and the time allotted. Call or email the client if more information is required.
Preferably, the presentation should be in PowerPoint or a comparable programme. Make sure the client will have the necessary equipment, or bring your own and make sure someone can operate it.
Presentations ought to
1. the company name and the names of the presenters should be included.
2. Thank you for giving me the chance to do the presentation, Client
3. briefly describe the business, highlighting its safety records, accomplishments, and policies.
4. cover the things the client asked for
5. Give examples of prior experience that is pertinent to the project, with pictures if at all possible.
6. Explain why the business would be a good fit for the project and what strengths it would bring to it.
7. a proposed organisational chart for the project with staff names and a summary of their responsibilities, training, and experience
8. show that the contractor has considered the project and is familiar with its construction
9. run through the project schedule quickly
10. Indicate any worries or dangers the contractor may have 11. respond to any issues the client may be having
12. List potential major suppliers and subcontractors and explain why they are suitable.
13. enumerate the main machinery that will be utilised and the method of procurement 14. inquire if there are any inquiries.
A copy of the presentation can occasionally be given to the client.
The client may query the contractor during the various conversations and correspondence by asking:
1. to update specific rates as well as the overall tender amount 2. adjust the timetable
3. altering their construction techniques
4. remove some of their qualification or tender exclusions
5. to alter the project's parameters and cost the changes
The contractor must review their proposal to determine whether the client's requests can be met. It might be possible to accommodate some of them in some circumstances. Where they cannot be met, the contractor must provide justification for why their bid is valid and why it cannot be altered. To help the contractor accommodate some of the client's demands, it might also be possible to suggest alternative approaches or costs.
In some circumstances, it may be possible to contact the original suppliers and subcontractors and request that they reevaluate their quotes in light of the client's demands.
All of this is a part of negotiating, and it's crucial to try and ascertain the client's ultimate position. Obviously, it is frequently possible to learn inside information about the client's real concerns if the contractor has a good relationship with one of the client's team members.
Make sure to include any new information the client may have released regarding their requests in the tender file, along with copies of all letters and calculations related to these negotiations.
Warning: avoid securing the tender at all costs.
Unfortunately, some contractors can develop an obsession with getting a job. After going through the process of preparing the tender, the client is now calling them in for meetings and asking them questions. The contractor can almost smell the success of winning the project as the negotiations are going well, but the client keeps asking for a price reduction on the tender or rejecting some of the contractor's qualifications. It's simple to cave to the client's demands in a crisis, offer a lower price, and accept a contract that forgoes some or all of the qualifications. Occasionally, senior management will act in this way because they are only interested in returning to the office to announce that they have been given a new project as a result of their timely intervention and don't fully understand the project or their team's concerns.
In order to win the project, I'm aware that some contractors will agree to almost anything during these tender negotiations. They may even think that they can find a way to back out of their commitments or get their money back during the course of the project. This frequently results in projects that fail, cost money, and damage the contractor's reputation.
I don't mean to imply that the tender price is unchangeable or that the requirements are unalterable. However, it's crucial to conduct a reality check, determine the minimal cost and profit that justifies the project, and weigh the expense and risk of eliminating the problematic qualifications. I mean, I'm assuming the initial tender price was calculated carefully and logically, and the qualifications were added for a reason, so why should any of this change?
Clients will occasionally put pressure on contractors in a meeting to decide something right away that will have an impact on the negotiation's outcome. In this situation, I advise the contractor to ask for a break so they can talk to their coworkers and consider the effects of their choices, or, preferably, to ask for twenty-four hours to respond. The client might lose interest and contact another contractor if you don't respond as soon as you can.
Whatever the outcome of the discussions, avoid making hasty or foolish decisions only to win the project—decisions that you might come to regret.
By paying bribes to the client's representatives or otherwise wooing them in a way that would give the impression that the contractor is attempting to sway the adjudication process, the contractor must never attempt to influence the client's tender adjudication. This can cause the contractor to be disqualified from the tendering process, and in some circumstances, it might even lead to legal action.
storing and filing bid materials
The whole tender documents must be filed in a systematic way. This should cover all client-provided material, the tender submission, all communications, meeting minutes, and meeting notes. Documentation in the master file shouldn't be deleted.
Quotes from suppliers and subcontractors, along with any correspondence related to those quotes, must be filed with the suppliers' assessments and adjudication. So that project workers can understand the reasoning behind why a given pricing was chosen, it should be transparent and traceable.
The precise tender computations need to be kept. These ought to be transparent about the underlying presumptions and the tools, manpower, rates, and productivities employed in the price calculation. Additionally, they must to include the rationale behind any modifications made during the tender negotiation stage.
A copy of the entire set of tender documents and correspondence should be sent to the project team if the contractor is chosen to complete the project. The original master copy needs to be kept, filed, and carefully preserved.
1. Having the lowest price isn't the sole factor in winning the bid, yet it's crucial to think of creative ways to appeal to the client, such as:
1. providing specials
2. Outlining potential solutions 3. providing discounts
4. by not complicating the project excessively or overcharging for all potential risks and outcomes
2. Typically, it also depends on
Having the ability to stand out from the competition, proving why the organisation is the greatest fit for the project, and considering the client's adjudication procedure
4. Addressing the client's interests and concerns 3. The following is a crucial step in the tendering process:
1. Post-tender communication 2. Meetings to clarify bids 3. bid exhibits; 4. contract discussions
4. Throughout these procedures, the contractor should: 1. act professionally; 2. make sure their responses are unambiguous and clear, taking into account the tender and any prior correspondence; and 3. make it apparent what was taken into account and included in the updated quotation.
3. Offer alternatives or explanations as to why the contractor might not be able to fully satisfy the client's demands.
4. Consider all questions carefully, taking into account the effects and implications of any adjustments.
5. write formal letters to the client to confirm all conversations.
5. The contractor should be careful during the negotiation process not to accept terms or a price that would result in issues later on in the contract.
6. A tender file containing all correspondence and material related to the tender must be organised.
Delivering the Project, Module 5
Finding the suitable projects, making sure the tender is accurately prepared taking into account all costs and risks, and lastly making sure the project has been secured were all topics covered in earlier Module s. It is now time to launch the project and effectively manage it so that it is profitable.
Since much of Module 6—which is about cutting costs and overheads—is pertinent to managing the project, it should be read in combination with this one.
Some readers might be the owner, estimator, or project manager of a small business. Since you prepared the tender, why should you meet with yourself to discuss the tender process, you may believe that some of the procedures listed below do not apply to you. However, even if you completed the tender, it is frequently just as crucial to evaluate it before beginning the job because you are likely working on multiple tenders at once and it is simple to forget how you arrived at the specific pricing. It's equally crucial to adhere to some of the other stages listed below, such as scheduling the project, meeting with the client, and so forth.
Organize the project.
The more time available to complete a thorough planning process before beginning work on the project, the better. The preparation entails:
1. Considering the construction methodology and guaranteeing that the techniques used will be the most effective and affordable
Creating the project schedule, step two 3. obtaining sufficient insurance
4. Selecting the tasks that will be performed on-site against those that will be outsourced 5. making sure the necessary resources are obtainable and purchased
6. placing a long-lead item order
7. placing an order for the necessary materials to begin the project 8. locating equipment, and 9. securing the required licences
10. assembling and delivering to the client the necessary papers, which may include:
1. Good plans 2. safety strategies
Plan for the environment 3.
4. strategies for traffic management 5. method statements
6. Workplace risk evaluations
The manner of building needs to be carefully considered. The Estimator would typically have suggested one in the tender, but the Client may frequently have advocated or even stipulated a methodology. However, it's frequently easy to suggest alternative construction techniques that might be better appropriate. There are always multiple ways to build a building or facility, but depending on the project and the area, some methods will always be more effective and suited.
When planning the construction approach, some things to keep in mind are: 1. the safety of the workforce
3. the project timetable; 2. the facility or structure to be constructed
4. expenses (for instance, high labour prices in some regions make it prudent to propose precast solutions or increase the use of machinery to reduce the quantity of labour necessary).
5. The customer's creation
6. The client's restrictions, such as: 1. their access needs
2. the services' accessibility
3. working with their additional contractors 4. entry to working spaces
5. tying into and affecting current services, procedures, and traffic 6. Importation limitations
7. Making use of regional resources 7. the presence of:
1. Resources 2. Expert labour 3. personnel; 4. supplies; 5. lodging
6. amenities like water and electricity 8. site circumstances like:
first, topography (for example steeply sloped sites may make it difficult to set-up cranes)
2. Terrain circumstances (for example unstable ground or rock may dictate the rate of progress, the schedule and the type of equipment)
3. site access (for example the roads may have load limitations which limits the size of equipment or items which can be brought to site)
4. traffic on the site and nearby, which could delay delivery or reduce the number of hours of labour
5. traffic jams on and around the site (for example cranes required to place heavy equipment might not be able to be set-up close to structures)
6. where the work area is located (for example it may be elevated which would restrict access for personnel and materials)
9. The techniques that the contractor's employees are accustomed to using and their level of expertise
10. anticipated weather during construction 11. the project's location
12. Accessible resources close to the project site 13. The project's complexity; 14. The project's degree of recurrence
15. The level of precision needed for the final product 16. the necessary finishing; 17. the use of resources 18. reducing dangers
It's crucial to create a schedule that should:
1. Make it possible for the project to be built as quickly as possible while utilising the resources at hand without compromising the project's quality, safety, or integrity.
2. consider any constraints imposed by the client, such as those involving working with other contractors, access dates, working in or near existing facilities, and the availability of information.
3. adhere to the contract's specified completion dates (unless the project has changed from the one that was in the tender submission)
4. Provide enough time for project planning and mobilisation (on some projects it can take four weeks or more to get personnel through the mobilisation process and on to site)
5. clearly demonstrate the resources that are needed and when they will be needed. 6. be approved as quickly as possible in writing by the customer (without an approved schedule, it is challenging for the contractor to request changes, late information, late access, and additional time).
7. Clearly indicate when access to the various work areas is necessary.
8. specify the time that information is required (a separate "information required list" should be prepared, which can be updated weekly and discussed with the client at the progress meetings, so the client can be informed of what information is required in the next two weeks and notified when information is issued late or when it is inadequate or incomplete for construction purposes).
9. be frequently updated (the update must be done correctly, focusing on the critical path activities rather than the overall percentage complete)
10. be shared with the appropriate staff so they are aware of the important dates and milestones (Supervisors frequently only care about their area of responsibility and what they need to complete in the coming weeks, so it is useless to give them the entire schedule to the project's conclusion as it is likely that they won't read it and will only confuse them - Instead, provide Supervisors with a summary of the schedule that is relevant to their work, perhaps even in a form that can be read visually and put on their office wall.
11. If necessary, be reviewed with Supervisors to ensure that they are aware of the tasks at hand and why they should be completed in the order and with the resources indicated.
Don't begin before a contract has been signed.
Without a contract, there is no agreement, the contractor is not protected, and there is no assurance that they will be paid for the service they perform. Therefore, be sure that an agreement is in place and signed before beginning work.
Furthermore, if the contract terms and conditions aren't agreed upon before work begins, the contractor typically incurs costs on the project and isn't in a position to convince the client to change the terms and conditions to ones that are more appropriate or acceptable when they are ultimately reviewed.
Payment guarantees, insurances, and bonds
Before work starts, it's crucial that these are established. They are covered in more detail in Module 9.
The complete collection of all tender documents, which must include the following:
the bid submission; the correspondence related to the bid; and
3. the bid documents, plans, and requirements 4. Post-tender communications
5. copies of all supplier and subcontractor estimates used to determine the project's cost 6. the tendering timeline
7. price-making calculations for the tender, including any post-tender adjustments
A tender handover meeting should be held for every project, and the Estimator, Project Manager, and any necessary company support departments should present.
Included in the tender handover meeting should be:
The estimator reviewing the bid submission 3. a discussion of the tendering methodology 2. an analysis of the project's risks and prospects
4. a discussion of correspondence and post-tender changes 5. examining the construction approach
6. comprehending the client's issues and objectives
7. letting the support divisions of the business know what is expected of them
8. examining the urgent deliverables that must be completed before work can continue.
Meeting to transfer clients
The contractor has the chance to meet the client and learn about the project's guidelines at this meeting, which is frequently referred to as the kick-off meeting.
Normally, the client would supply a meeting agenda. Some topics that need to be discussed are:
1. Introducing the teams of the contractor and the client (their names and responsibilities)
2. how drawings are issued and received
3. verifying the deadlines for submitting project deliverables like: Sureties and bonds, first
2. evidence of insurance the project timetable, third 4. A good plan
5. safety strategy
6. a plan for environmental management 7. traffic control strategy
8. The mobilisation timetable
5. who is authorised to issue and receive instructions and variations 6. the requirements for submitting monthly valuations, including when it's necessary, the format, and where it should be submitted 6. Who should get correspondence; 7. accessibility and placement of services and utilities; 8. where the laydown areas are located
9. Requirements for permits 10. The customer's limitations
11. Conditions for site security
12. Project meeting times, dates, and locations 13. Quality assurance practises
14. security measures
15. evidence that the project is progressing in line with the tender timeline 16. a statement confirming site access
The project manager for the contractor, team members such as the safety advisor, quality assurance advisor, planner, and, if possible, senior management like the project director, as well as the estimator in charge of the bid, should all be present at this meeting.
the project's personnel
Senior managers need to guarantee that the project manager has the assistance they require. Additional training, such as educating them on corporate policies and processes, might be part of this.
Additionally, it is advisable for representatives from the various departments (such as quality, safety, and human resources) to routinely visit the project, spend time with the project manager, and offer advice on how to manage the project more effectively. I frequently observe head office personnel dropping by a project for a small period of time and giving the project manager minimal comment, encouragement, or guidance. When they get back to headquarters, though, they circulate a report to senior management that is unfavourable to the project's results. Project Manager isn't helped by this at all!
Inexperienced project personnel should, if possible, be paired with experienced personnel. Staff members with a shorter term should be paired with recently hired employees.
A former Supervisor who was handed his first project in the position of Project Manager. He directly reported to the divisional General Manager, who was obviously preoccupied with other initiatives and finding employment. Without any prior experience or training, the project manager was allowed to manage the project on his own without assistance or direction. The project wasn't properly staffed, having only a few unskilled support personnel who weren't aware with the company's protocols, which compounded the issues. It goes without saying that the project and its project manager immediately encountered problems.
The General Manager rarely paid the project any attention, but when he did, he was critical of how it was being run and offered little support. Eventually, the project manager had to be fired after suffering