Tender Reports in Construction

Tender report is an analysis or evaluation report that was prepared by a quantity surveyor about the tenders which submitted by the tenderers. This report was prepared to give suggestions to the public sector client, i.e. the government or the private sector employer about the best contractor for the project through evaluating the submitted tender documents in various aspects and to establish a price for the ensuing contract. After taking the recommendations from tender report and advice from the consultants into consideration, the client or employer will select his or her preferable choice of contractor. The throughout process and results of the tender evaluation are keep confidential.

Upon the submission of tenders from the tenderers, a Tender Board or a Tender Assessment Panel will be formed. Tender Board or Tender Assessment Panel is a group of independent officers which included the quantity surveyor, to carry out a tender receipt process for competitive tenders, revise and confirm best and final offers. The tender board meets on a set date at a specified time to open and process tender documents submitted which they then forwarded to acquisition teams for commercial, technical and financial evaluation. The Tender Board will ensure that tenders are opened and processed in an open and transparent way.

In addition, the tenders will be evaluated and recommendations will be made to the the client and the Tender Board. The approval and acceptance of a tender is made within the validity period of tender, which is normally 60 days as set in the tender document. To avoid the extension of one tender, tender should be evaluated and recommendation made within 30days from the date set in the handing over of tender. In case tender has to be extended due to unavoidable circumstances, agreement from the recommended tendering party should be obtained at least two weeks before the expiry of validity date.

Generally, the tender evaluation process can be divided into two stages, i.e. preliminary stage evaluation and final stage evaluation. The preliminary stage of tender evaluation or also known as Preliminary Analysis, comprises of analysis on completeness of tender, analysis on compulsory documents and analysis on minimum capital required for the project, whereas the final stage of tender evaluation comprises of analyses on technical and financial capabilities of the tenderers. Besides that, arithmetical check will also be carried out on the tenders along the tender evaluation process.

Before the tenders to be taken into consideration, the precondition of tender evaluation is the tender must be submitted before the tender closing date and time set out in the Letter of Invitation to Tender, i.e. usually before 12.00pm noon of the tender closing date. If the tender was submitted later than that, it is fall under the category of ‘late tender’. Late tender will not be accepted or of submitted, not opened for further consideration due to reasons of fairness and accountability. This is normally applied to public sector projects where the standards pertaining to transparency and accountability are especially high. However, the decision whether to open and consider such a tender is purely at the discretion of Tender Board and the private sector employer. Furthermore, tender amended by the tenderer on his or her own initiative whether in writing or other forms, without consent from the project client or employer will also be rejected for consideration.

After that, the Quantity Surveyor will conduct the preliminary or first stage of tender evaluation process, i.e. Preliminary Analysis. It is an assessment system based on a few precondition set to determine whether the tenderers are qualified to be considered for the next stage evaluation. Purposes of this assessment system are to ensure that the tenderers to be considered are reasonable in term of tender price, complete of required documents and have sufficient capital to commence works.

Firstly, the Quantity Surveyor will analyse the tenders whether the tenderers have offered the reasonable tender price. For government projects, if the number of tenderers is less than 10 persons, the department estimate or consultant’s estimate will be used for the comparison of tender prices. Usually, a variation price of 15% of department estimate or consultant’s estimate for tender prices offered by tenderers is assumed reasonable. If the number of tenderers is 10 persons or more than that, the Public Works Department will adopt the cut-off method to shortlist the tenderers for further evaluation. A cut-off price is established as the minimum tender price which is assumed feasible and reasonable to be accepted in accordance to market price through a statistical method. This is to avoid project implementation failure due to the contractor’s inability to undertake or complete the works caused by awarding contract to a tenderer’s with too low or unrealistic tender price. Therefore, usually only tenderers with tender price above or equal to the cut-off price will be considered and evaluated. In addition, completion period proposed must not exceed the range of estimated completion period.

Then, the Quantity Surveyor will check the aspect of Completeness of Offer or Tender submitted by the tenderers. Some elements of Completeness of Tender which taken into consideration are the Form of Tender must be signed, the signature must be the authorized person, tender price must be stated in the Form of Tender, registration with Contractor Services Center (PKK) or Construction Industry Development Board(CIDB) must be valid and have stated the proposed completion period. Only tenders that complete and free from any deficiency or mistakes which may affect the current contract practices in legal aspects, are qualified to be considered. Tenderers which failed to do so, their tenders will be mentioned as “INCOMPLETE” to the client and stated the reasons.

The following process is to check the aspect of Sufficiency of Compulsory Documents. All tenderers are obliged to submit all compulsory documents needed which stated in the Instructions to Tenderers for the tender evaluation purpose. The compulsory documents are the company auditor’s report, bank account’s monthly statement, bank’s report on company financial status and report on current project by resident architect or resident engineer or project manager. These documents are needed to prove whether the tenderers have sufficient financial capability, i.e. possess minimum sufficient capital to start the works. Without submitted the compulsory documents, especially for company financial documents, tender evaluation cannot be carried out and that tender is not qualify to be considered and can be rejected.

Besides, an analysis on minimum capital required for the project will be conducted. The analysis will be done on the company’s current assets, current liability, bank account statement, fixed deposit, bonds, credit facilities from bankers or suppliers, overdraft and bank loan. Hence, the company financial documents submitted by the tenderers will form a basis or proof for this evaluation aspect. For government projects, the minimum capital analysis is made through calculation of 3% of the Builder Works value based on department estimate.

Along the tender evaluation process, the Quantity Surveyor will carry out the arithmetical checks on the tender documents. It comprises of correcting arithmetical errors in extensions, casting, etc and isolating palpable errors on pricing, but the tender amount remains unaltered. This measure is to correct mistakes for the purpose of future variation. A detailed examination of Bills of Quantities including comparison of prices will also be carried out on all tenders submitted.

If the tenderers have fulfilled all the requirements in the preliminary stage’s evaluation, then the tenderers are considered or qualified for the final stage’s evaluation. The final stage’s evaluation is carried out based on a marking or scoring system which the marking are made objectively and quantitatively for each criterion assessed. Firstly, it will analyse the tenderer’s first aspect of technical capability, i.e. experience. Assessment is made based on the total value of same and similar nature of tendered works completed in the past five years. This is to get know that whether the tenderer is capable or have similar nature of works experiences for the tendered project.

Next, it will analyse the tenderer’s second aspect of technical capability, i.e. financial. It is based on the total annum value of project predicted to be provided from the tenderer’s various sources of finance. It is important to prove that the tenderer has the financial capability to execute the project. Marks are given according to their financial capability.

After this, it followed by the third aspect of tenderer’s technical capability assessment, i.e. the technical workers and possession of basic plant and machinery. Assessment is made based on their technical workers, such as architects, engineers, quantity surveyors, technician, and polytechnic and technical works assistants. The tenderers need to submit the KWSP statement and photocopies of Certificates of Workers Qualification to prove that they have qualified and enough number of technical workers to execute the tendered works. The lists of plant and machinery with supporting documents are also required to submit for the evaluation.

Lastly, it will analyse the tenderer’s current works performance. This analysis is aimed to ensure that the tenderers do not have “projek sakit”, i.e. projects lagged behind 30% or more from the schedule of works or works programme. In addition, it is important to ensure that the tenderers do not have problems of employment’s determination by other client or employers. After the both preliminary and final stages of tender evaluation have completed, the results, justification, recommendation, and tenderers’ necessary detail information and facts will arrange and compiled together in a systematically way to form a tender report and submit to the client or employer.

In conclusion, tender report is produced to assist the client or employer in decision making process in order to select most suitable and capable contractor to complete the project within specified time and quality.