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CONSTRUCTION MANAGEMENT FOR ENTREPRENEURS , OWNERS AND BUILDERS AND PROFESSIONALS BHADANIS (PART 5)


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.

Instance study

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.




Quantities

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.




calculating bids

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.




Insurances

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.

Subcontractors

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.

Preliminary amounts

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.