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Page 1: Tender Procedure

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CC202

CONTRACT PROCEDURE

CHAPTER 2

TENDER PROCEDURE

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TENDER PROCEDURE

Definition of Tender

o Tender is a statement issued to invite a party to perform a job/work for the construction or supply works with the permissionfrom the parties involved.Tender prepared by the developer while the recipient is a

contractor or supplier.

Definition of Quotations

o Quotation is a process to call and select a qualified contractor tobuild and complete construction works value between RM 0001 toRM 50 000.

o Quotation usually practised to fullfill immediate work, maintenance

work and indent works. Quotation process usually for bumiputracontractors only.

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a) Immediate work

Work should be done immediately, usually selected contractor is acontractor who is already known skills and ability to work. Example -an example of work involved, such as pipeline repair or repair a leakingroof and repair of public toilets.

b) Maintenance work

Maintenance work usually based on schedules of rates. Basiclly typesof the works is basic maintenance and maintenance of governmentbuildings. Maintenance works usually open for one week by Public WorkDepartment or other government body. BY this actions, usually prices

by contractor usually the same.

c) Indent work

This type of work is notified to the contractor work after they submittheir quotation - respectively. Only a successful contractor is required

to perform the work. The types of works involved is office renovation,cleaning of building and painting.

TENDER PROCEDURE

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TYPES OF TENDER

• For works that exceeds the valueof RM 50 000.00, selection of contractors are madethrough tender process.. Basiclly, there isseveral common types of tender being used andpractised in our country.

The types of tender is :-

a. Open Tenderb. Limited Tender

• c. Selected Tenderd. Pre-qualification Tendere. Negotiable tender

TENDER PROCEDURE

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Open Tender• Open tender is an

offer by the government's customary and statutory bodies. Thistypes of tender is open to all contractor that fullfill the criteria.This type of tender is open to all qualified contractors. Thenumber or tenderers is unlimited. This types of tenderused to get a good price by the big number ofcontractors who enter this type of tender.

• This allows the employer to make the right choice based

on appropriate and reasonable price.The employer will publishedtender notice in local newspapers or display on the employer noticeboard.

Benefits of Open Offer• Provide opportunities for new contractors(less experience).• The employer can choose the lowest price from a large number

of contractors.• This offer is suitable for the simple construction and requires

no special experience and qualifications.

TENDER PROCEDURE

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Disadvantages of the open offer• Need a lot of time to process the tenders

submitted by contractors which is not suitablefor the project to be completed immediately

• The selection of the lowest price of tender had arisk because of the possibility of contractors willproduce low quality building due to the use of poorquality materials to gain profit.

• This types of tender is not encouragingcontractors to use modern equipment and newtechniques due to highly cost.

• The difficulty in selecting a qualified contractorand be wasted in the process of preparation andselection.

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Limited Tender

• This offer is limited to certain contractors. Usually for bumiputracontractors only. Only qualified and registrate bumi-contractors canparticipate in this offer and the numbers are limited. This is a step by thegovernment's by DEB to make sure at least 30% of the total annualcontract give to the bumiputra. Usually this types of tender(limitedtender)advertised through local newspapers or display on the employernotice board.

Limited Offer Advantages

• Provide opportunities for bumiputra contractors to participate in theconstruction industry, without competition from non-bumiputracontractors.

• Fulfill our country(government) obligation to encourage the 30% bumiputra

involved in construction industry.• The process of time this type of tender can be reduced.

Disadvantages Limited Offer

• Only limited only to certain contractors• Tender offered higher prices due to a lack of competition

TENDER PROCEDURE

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Selected Tender

This types of tender, employer(owner,clients) will offer theconstructions project to selected and qualified contractor.Bid is submitted by the contractor which is selected bythe employer.

• Competition isbetween the selected contractor(tenderers). This offeris implemented based on the following requirements:

Special projects that require specific expertise. The project should be completed soon which is

only capable contractors are allowed to participatein the offer.

The employer will get a listof qualified contractors and invited them toenter bids.Contractor selection are based onorganization, capabilities, experience and number ofprojects being implemented. Letters will be sent tothe contractor selected to participate in the offer. Theletter was disclosed about related projects and tender.

TENDER PROCEDURE

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Selected tender Advantages Employers in the end will have a good quality of

construction works due to selected contractor which isskilled and have a good track record.

The less time taken to analyse of the bidsbecause all tender requirements provided by theemployer based on the number of contractors choosen.

The selection of a contractor who is skilled can bedone quickly because of all contractors(tenderers) havetheir own expertise and ability.

The selection of the lowest price was fair.

Selected tender disadvantages The price offer is high because

of less competition and competing contractors

consists of skilled and experienced among them. Possible alliances occur between the contractor byoffering the same price..

Due to the ability of the contractor is constantlychanging, so there arerisks in taking and selecting a contractor that its worksquality decreased currently.

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Pre-Qualification Tender

• Offer only open to contractors who are selected through apre-qualification process. Usually for specific project andrequire special expertise and high-class standard..Projectowner/client will advertise the notice of pre-qualificationtender in local newspapers to determine the ability of a

contractor who wants to participate in theoffer. Contractors who wish to participate in this offershould fill in form that based on information about financial,management and experience of the contractor and returnedit to the developer. Employers will review the informationprovided and will make a selection to select the contractorto participate in the offer as a tenderers. The successful

contractor usually appointed based on experience, skills,work skills, working capital and modern techniques beingused.

TENDER PROCEDURE

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Advantages of Pre-Qualification Tender Quality construction is produced through the use of high

technology and experience of the contractor. Only contractors who have experience and good

management and sufficient capital be eligible for this offer To save time, effort and cost to prepare and review theterms of the offer document for the number of contractorsthat are not public.

secured project will be completed in the stipulated period.

Disadvantages of Pre-Qualification Tender This offer is only eligible to contractors who have expertise

only. construction costs would be higher due to the use of new

technologies that are rarely owned by other contractors. Only suitable for large projects and are not suitable for

small projects.

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Negotiate Tender

• This tender is carried out for some reason according withcertain parties. This type of tender are not advertised.Employer sent a letters to the selected contractor to makethe discussion about the project that will be implemented.Among the matters discussed are aspects of design, costestimates, schedule of rates, management and

profitability. Basically, negotiate tender between employerand contractors are made first before prepare of drawingsand materials list.

• The offer is practiced for the following reasons: Projects which require immediate completion Project work requires expertise. Ongoing project and by the phase. Project financing made by the contractor The project basicaly the same

TENDER PROCEDURE

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Advantages of Negotiate Tender• The cost of process is low.• The contractor can advise and recommendations to the

architect and engineer early stages of project design.• Employers can estimate the costs each element based on

previous rates of the same projects.

Disadvantages Negotiate Tender• Tender prices is high.• Only certain contractors to be selected.• As the offer price is too high, control of wastage and time

not so good.• the planning stage of deviation caused losses to the

employer

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TENDER DOCUMENT CONTENTS

The tender document is divided into two types:

The tender document for contract based on the bills ofquantities (BQ)

o Usually used for large projects

o Preparation requires a relatively long time

o It can provide as a foundation for assessing the work done forinterim payment and work changes.

The tender document for contract based on

drawings and specifications.o The use to the project to be completed soon due to limited

time for Quantity Surveyor had to prepare Bills of Quantities.

o Suitable for low and moderate project costs.

o The contractor must include the total price for work in

bulk only (Lump Sum)

TENDER PROCEDURE

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TENDER PROCEDURE

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Table Tender Dokument(TTD)

o This document is very similar to the tender document, but usually more completethan the tender document that is sold to contractors.

o Prepared before tender being offer to contractors or advertised(tender notice).Documents place at a special special desk@place in the PWD @ residence office.The tender document is used to enable the contractor get a clear picture of theproject and briefly describe tender contents.

o Usually published during tender notice re-opens until closing date submissions oftender.

TENDER PROCEDURE

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DEFINITION OF TENDER NOTICE

• Statement issued by the developer to invite contractors to enter tender for theproposed project

• Tender notice is to inform the contractors who are interested with importantdetails of a tender.

TENDER NOTICE ELEMENTS

• Must be attractive and offer complete information about the project so that manyqualified contractors participate to the tender.

• Tender shall be advertised in the local newspapers or posted on the notice board atthe employer's/owner office.

TENDER PROCEDURE

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INFORMATION AND CONDITIONS OF TENDER NOTICE

Important information that should be included in tender notice :-

• Logo and name of employer/owner• Work title• Type of tender• Classes to invited contractors•

The head and sub heads• Payment of the tender document• Places to take the tender document• Place and time of the tender documents returned• Date of site visit, the time and location• Location for checking TTD• Time and date to check TTD• The closing date for tender

TENDER PROCEDURE

Tender Notice

Click here

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DURATION OF TENDER NOTICE PROCESS

• Usually the tender offer published in localnewspapers or by notice posted at the ownernotice board two weeks before site visit.

The tender statement(for tender notice) shouldbe sent to the press at - least two weeks before

the advertised date.

TENDER PROCEDURE

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STANDARD FORM FOR TENDER PROCESS

The standard form used during the tendering process are:

Form of Quantity Surveyor appointment

This form is a confirmation between developer and quantitysurveyor to carry out work related to the management ofQuantity Surveyors in a construction project.

Bond of Performance Form

Is a letter of guarantee issued by a particular bank or financialinstitution about the financial position of the contractor, so thatowner & consultant will have more confidence in contractorabilities to construct/handle a works.

TENDER PROCEDURE

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STANDARD FORM FOR TENDER PROCESS

Form of Contract

Form of agreement between the contractors and developers tocarry out a project. It contains the terms of agreements andcontracts that must be followed by both parties. Form of contract

used is whether JKR203/203A or PAM (equivalent contract)

Contractor Pre-Qualification Form

This form is used by the contractors who wants to enter the Pre-qualification tender. This form practised to observed contractororganization to handle a project..Assessment is based on the

number of workers, the number of machines used and theexperience of handling previous projects.

Forms for Small Contractors and Material Suppliers

To appoint an organization as of small contractor or materialssupplier for the construction project.

TENDER PROCEDURE

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STANDARD FORM FOR TENDER PROCESS

Summary of Tenderer

This form is used to list the capabilities in terms of financial, capital, plant, personneland experience of each participating tenderer.

Form of Current Projects

This form provides an explanation about ongoing construction projects by tenderers.

Form of Tender Error

This form is used to record all the errors made by the tenderers. The error of eachelement in the BQ or tender document will be recorded for the make corrections.

Form of Tender Results

Which is the last form being used where QS will recommended the suitable/qualifiedcontractor to the owner/client to carried out works

TENDER PROCEDURE

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TENDER CLOSING PROCESS

• The closure means the tender closing date as stated in tender notice. When theclosing date of the tender, the completed tender documents by tenderers will putinside provided tendering box. The tender box will be closed and kept in a engineeroffice. Committee of opening tender will open the box after meeting/discussion.

THE USE OF TENDER BOX

• Box used to keep the tender documents prepared/submitted by contractor. Tenderbox is a locked box which is marked with project no., project name, date and timeof tender opening and date of submission based on tender notice.After the closing date of tender, the tender box will be locked and kept inthe engineer office. Tender box will be reopen once Committee of opening tender had

a meeting/discussion.

TENDER PROCEDURE

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OPENING OF TENDER PROCESS AND DUTIES OF COMMITTEE OPENINGTENDER

• As we have explained the process of opening tender box will be done by members ofthe tender opening. Members of this committee usually consists of three officers whowere appointed by the employer. Any documents submitted will be recorded in serialnumber based on the amount of the tender documents.

• For example, 1/10, 2/10, 3/10, 4/10 ... 9/10 and 10/10, if there are 10 tendererssubmit their tender respectively. This serial number will be listed together in aspecial form together with tender prices being submitted. This form is known as aForm of Tender Schedule.

• Form of Tender Schedule will be handed over to the other committee to make atender evaluation or analysis. The committee must consist of not less than twopersons either Quantity Surveyor or Technical Officer in the relevant field of work.

TENDER PROCEDURE

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TENDER ANALYSIS

Assessment of tenders carried out in two stages of assessment and evaluation whichis First Stage and Second Stage.

First Stage Assessment

The first assessment on the lowest tender for a few tender within a reasonable priceto meet the following conditions :-

Tender PerfectionTender must be complete and free from any legal local authorities regulation andreasonable contract to determine eligibility based on common practice.

Satisfactory Financial PositionTenderers must submitting their evidence/proof or assessment officer satisfied withfinancial condition to constuct a project. During the Satisfactory Performance,tenderers who do not have a project or defined as 'sick' or getting a bad report from

the supervisor or the officer have a possibility facing a termination of work becauseof unsatisfactory job performance.

Tenders which is not meet above conditions shall not being considerated tofurther assessment in Second Stage.

TENDER PROCEDURE

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TENDER ANALYSIS

Second Stage Assessment

The second stage of assessment is made on a number of tenders that pass theevaluation of the first stage begins with the lowest to the highest tender prices. Thisfollowing criteria were used to determine the most advantageous/profitable tenderfor consideration.

Tender PriceTender prices submitted by the tenderer will be compared with thedepartment/client budget. Department/client budget should ensure first theirreasonableness.

ExperienceEvaluation based of experience is important especially for the contractors whooffered low prices of tender. To enable the lowest or lower tender prices to beconsidered, contractors(tenderer) should have a good record in two similir projectswithin five years. (as a proof to clients that although offered the lower/lowest pricescontractors have the ability for the construction works)

TENDER PROCEDURE

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TENDER ANALYSIS

Second Stage Assessment

Current Performance

Current work/present work is a project still under construction/not completed duringthe closing date of tender. Job performance of tenderers will be categorized asfollows:

Excellence - exceed the actual percentage of progress schedule.Satisfactory - the same percentage of the actual progress or backward from

schedule of less than 30%.

Current job performance evaluation shall be based on a report from theSuperintendent or Engineer Officer who observed the project.

Technical Staff

These factors are evaluated based on the number of technical staff, compared withtechnical staff minimum estimates requirement(Anggaran Keperluan Minimum-AKM) tocarry out the tendered project in a great shape.

TENDER PROCEDURE

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TENDER ANALYSIS

Second Stage Assessment

Plant, Quarry and Factories

If the technical technical less than AKM requirement bu the tenderer(contractor)have a quary, factories and etc, or other relevent factors that can support theirtender prices respectively-can be considered

All the analysis and evaluation will be entered into the tender report forsubmitted to the Tender Board to be considered. ThenTender Board will makeselection of the successful contractors to implement the project.

TENDER PROCEDURE

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TENDER REPORT 

Tender Board prepared tender report to facilitate the selection of contractor

a. A summary of the scope of work to be undertaken as the project name,determination and etc.

b. Explain how to invite tenders for the project anddescribes when the tender is opened and closed, and the conduct of the

tender isover.

c. Lists the tenderer - the price of the tender and the

tenderer including the completion of the tender of the lowest prices first.

TENDER PROCEDURE

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d. Review of the mistakes that occurred in the tender andlists the errors tenderer. In the list of the latest bid price shall be recorded,

including errors that occurred if any.

e. Departments to submit budget estimates and the differences with each tenderer.

f. The background of the contractor as the company's name, class, and the list ofprojects the contractor has been and is being implemented.

g. Suggestions and support to institutions to accept the offer to eligible contractors

upon the matters above are analyzed and studied.

TENDER PROCEDURE

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DUTIES AND RESPONBILITIES OF THE BOARD OF OFFER

Duties and powers of the board of the tender depends on the stagesrespectively

.1. Federal Tender Board

It is represented by the Director-General of the Public WorksDepartment, Treasury,Ministry of Economic Planning RayaUnit / State / UPEN or any

body / unit concerned.Offer - This offer is designed to work - work the federal level alone. The Board isauthorized to confirm the tender of more than RM 250,000.00.

2. State Tender BoardThe Board is represented by the secretary of state / Secretary, State FinancialOfficer, Director of JKR and others. The Board is authorized tocertify deals financed by the state government alone.

3. District Tender Board

The Board is represented by the secretary of state, finance officer for which he is amember of the committee and the authorities acknowledge the quotation of smalldeals that do not exceed RM 10,000.00 only.

TENDER PROCEDURE

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TENDER AWARDS

Means the the offer made to the contractors, which is their tender being selectedand accepted for the work/supply(s)

Owner/Client will issue a letter of acceptance of tender to the selectedcontractor. The Contractor shallnot withdraw or had a risks to se sued if the offer byowner/client being rejected. This is because as soon as the contractorreceived the letter of acceptance of tender, contractual relations exist between theowner/Client and contractor.

Letter of acceptance of the offer may be made in two stages:

a. Letter of Intent (Letter of Intent)

The contents of the letter including the intention by owner/client to accept thetender submitted by contractor complied with conditions and requirements. Thisletter is not bindthe Government/ owner/client and contractor

b. Letter of Acceptance (Letter of Acceptance)

That is a letter based on the condition that the offer was associated with thecontract. This is a valid legal document/letter and be part of the contractdocument. This letter is issued to the successful contractors on all matters-no further consultation/negotition is needed (all matters resolved)

TENDER PROCEDURE

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Tender Rejection

Some of the reasons why a tender was not accepted:

the offer price is too high or too low

too low?If the project given to the contractor-had a risks notcompleted.

works conducted by the contractor too manyand exceeds the limitof financial registration.

record of previous employment is not satisfactory

failure to comply with any conditions of the tender.

the details of the tender is not completed correctly

not enough financial for the project.

TENDER PROCEDURE

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RE-TENDERING

Occured based on the following :

prices offered is low or too high.

There are errors in the tender document, for examplethrough the method of calculation or the details ofdrawings.

There is no provision or insufficient fund for the project.

TENDER PROCEDURE