Construction tender bidding procedure and process

In construction industry, the prominent words is "PROJECT" and "TENDER". There are few ways in securing  projects on construction. Among them are "direct Negotiation project", "Direct award project" and the most popular is "Tender Bidding".

Here the discussion will only focus on the construction project that need to be secure through the "TENDER BIDDING". In this procedure or process, client usually will applied few steps of filtering in order to select the best contractor  to do their construction work.

The first step will be the process of "call for tender". In this steps they will specifies what is their requirement, where is the exact location for the construction site, who can or allow to participate in this tender and etc.

The second steps will be the tender submission by tenderer. For all contractor that involve in construction industry, this is crucial steps to ensure their advancement to the next steps of this tendering process. In this process, client will review the tender document submitted. They will check for the "completeness of the tender document". At this stage client will ensure that all information required had been submitted by contractor together in their tender document. usually the required documents are financial background, resources capability, contractor background, current work load and also comments from third party with regards to the contractor performance in their past or present construction work that they undertake. All of these requirement actually spell-out under the section namely " instruction to tenderer". This is to be fair to contractor to eneable them prepare their tender document accordingly.

The third steps will be "reviewing the submitted information". During this procedure, client will read and examine whether the contractor is capable to carried the construction works. Client will rate all the information starting from contractor financial capability, Availabilities of their technical and supporting staff , machineries, plant and equipment that they have for the construction works, contractor past experience and also their current experience. This process will help client to estimate if the contractor will be able to carried out the construction work successfully. Let say  even-though Contractor A having vast experience in the similar project and having good performance and tract record in the past, however after weighing the financial capacity against their current work load, client found out that Contractor A is now overloaded, the construction work will not be awarded to Contractor A. This is mainly due to higher chances that Contractor A will not be able to deliver the project within the time frame required.

The final stage of this tender evaluation process is " tender offered price". In actual fact, before call for a tender, client already complete their own estimation cost. Hence in this process it is about choosing the most close offered price with their own estimate.This stage will determine which contractor will be offered the construction work.

To wrap up this discussion and if you are contractor that always fail in your tender bidding, than these are few key factor that you need to review.
1. Completeness of the tender document,
2. Financial against current work load.
3. Similar past experience.
4. comments from third party on your past and current performance.
5. Current resources that you have ( Technical staff, machine, Plant, Equipment and supporting staff.)
6. Financial against your offered price.
7. stay competitive in your offer by knowing the market rate in construction industry.

Happy tendering.

Big Money in construction Industry

Now a days, Construction Industry still maintaining it relevancy in improving any country economy. This is because in construction there is lots of other industry will involve. It covered vast range of industry. Some of the major field that directly involve in the construction industry are Manufacturing Industries, Financial,Timber industries, Transportation industries, traders for the construction material and also Labour.

By taking a glance on the few listed industries that having direct impact due to this construction activities, it only mean one thing, That is, there is lots of money to be grab in this industries. Take for instance. A 10 million worth in value of a project is awarded to a contractor. The ratio of the construction material to construction work is ranging from 6:4 to 7:3. with this ratio, it is about 6 Million to 7 million is for the manufacturer, supplier, and transportation. the remaining is for the labour cost. For contractor usually the profit margin will be ranging around 3% to 6% of the contract sum. with some simple calculation contractor will make 400K to 600K for a 10 million project. How about the the other industry that involve? This huge sum of money is vital to ensure that the economy keep on moving.

Without construction industry there will be no Houses, No road, No utilities and may other things.

However Construction industry is not for those who only think that they will make money with money. Person who involve in this industry must have knowledge, skill and commitment to ensure their success. It is very important that they know what is the risk in this industry.

Some of the major risk is Labour factor, follow by weather, the construction life cycle, Material and financial  and many more. Thus if you are thinking to involve in construction business because you have strong financial background, re-think about it.

Pre-construction Meeting Agenda

Pre-construction meeting is the meeting that need to be conducted before any physical construction works started. Sometime this meeting being named as "Kick off meeting". Usually this meeting is to brief the contractor and consultants on the contract particular such as the official date of the site possession, the contract value, contract duration, the procedure of construction and contract and the do's and don't for the contract.

Below are the common agenda for the Pre-construction meeting.

1. Opening by the Chairman.

2. Contract Particular.

3. Introducing the construction team( Client, Consultant & Contractor )

4. Scope of work

5. Contractual requirement such as;

- Insurances

- Performance bond/Performance Guarantee

- Levy

- etc;

6. Line of Communication

7. Progress Claims and Payments

8. Requirement for Project Quality Plan

9. Requirement for Health and safety Plan

10. Environmental requirement (if any)

11. Monthly Progress reporting.

12. Other matters arising.

Construction Codes & Inspection Handbook

Writing Meeting Minutes and Agendas. Taking notes of meetings. Sample minutes and agendas, ideas for formats and templates. Minute taking training ... examples and exercises. (Easy 4 Me 2 Learn).

How to Construct A Proper Road

Step by step general guideline).

1. Received construction Drawings
2. Engage a License Surveyor
3. Site boundary / Right of way setting out
4. Surveyor to take all the existing ground level within the R.O.W for control and calculation purpose.
5. Submit for approval all the survey works done on site prior to Site clearing works
6. Start site clearing
7. Setting out for road center line, road edge, road side drain and all necessary level
8. Submit for approval all the survey works done at site prior to any earthwork
9. Upon Approval, Proceed with the earthwork (Construction of the Subgrade) to achieve the design level.
10. Construction of the road must be done as the approved project quality plan and method statement.
11. Perform the Quality check according to the Project Quality Plan (PQP) and method statements to confirm to the design requirements.
12. Upon achieving the design requirements for the subgrade, set up the second stage level control for the sub-base work and submit for approval prior to sub-base work.
13. Upon approval proceed with the sub-base work.
14. Perform QAQC Check as per approved PQP.
15. Upon achieving the design level, submit for inspection and approval to proceed with the road-base work.
16. Set up the control level for the road-base work.
17. Submit for approval.
18. Upon approved, proceed with the road base work.
19. Repeat QAQC Procedure as required in Approved PQP for road-base work.
20. Upon achieving the design level for the road-base, submit for inspection.
21. Only proceed with the pavement work when the constructed Road-base is approved and accepted by client or their superintending officer. ( If any)
22. Installation of the road furniture.
23. Handing over for completion.
    
    
    
    
24. Bingo…..The PHYSICAL WORK IS COMPLETED.

Preliminaries work

Preliminaries work.
Preliminaries work is description that always being used in tender and contract documents. It consist of more than one work or things that is essential and without it the construction work will not be able to proceed. Below are list of preliminaries work normally being included in the tender and contract document.
1. CIDB Levy,
2. Insurances,
3. Performance Bond,
4. Site office for contractor,
5. Site office for Superintending officer and representative,
6. site clearing,
7. Mobilization and demobilization,
8. Temporary works,
10. Progress report, Quality assurance and Quality control report, Safety and health report.
11. Environment monitoring report.
12. Safety and health officer/supervisor,
13. Environmental consultant,
14.Safety and health protective equipment,
15.As-built drawings,
16.Statutory and regulatory requirement,
17.Transpotation services for S.O and S.O.R's
18.monthly Site meeting
19. Site clearing prior to completion.
20. others..

 
The item that is listed above is the normal preliminaries work in a tender or contract document.

BROKE DOWN CONTRACTOR

Have you ever been a broke down contractor?...

What does it mean with broke down contractor? it is very common that we here that contractor complaining that they cant bring some more construction material. this is not because that they do not have even a single sen but it merely because what they have is just enough to run the company. Most of the time construction payment is base on monthly or progressive payment certified by the client or their representative. However there is cases that after the evaluation and verification process after contractor submit their claim, contractor had being paid very late. some time they only received their payment after 3 months or even more. with this view, lets we make some calculation;

lets say, contract sum = $50M

construction period = 12months

Average (prorated) spending /months = $50M/12 = $4.167M

Hence total spending for 3 months = 3 X $4.167M =$12.5M

let say, Evaluation on work done take 2 weeks after progress claim submission.

therefore spending for 2 weeks =( $4.167/4weeks) X 2 weeks = $2.08M

The total spending from the date contractor submit their claim until they received their payment

will be;

=3 months spending + 2weeks spending = $12.5M + $2.08M = $ 14.58M

With that you have to fork out $14.58M!!!!!!!! its is a big sum of money.

Looking at this scenario, It is very important that a proper financial planning being carried out for every construction project.

This scenario is only for one project. what if you have 2 or even more project in hand !! It can be a deadly disaster...

Looking into this situation, if contractor is now well prepared with the financial planning when they are participating in a quotation or tender it will be a trap for your self...you will be one of the broke down contractor or even a bankruptcy!!!!!!!!!!!!

Construction is not for those that are not prepared to be a broke down person.

ROAD CONSTRUCTION

CLICK IMAGE FOR MORE REFERENCE


Component of Road Construction.

1. Survey Works
   1a. Right of way or Boundary Survey
   1b. Road centreline (CL) Survey.
   1c. Road levelling survey ( Subgrade Level, Subbase Level, Roadbase Level,Finishing road level survey.
   1d. As built Survey.
   1e. Invert level for drain, Culvert
   1f. Slope formation survey.
2. Site clearing.
3. Stripping of top soil.
4. Cutting and filling to form the subgrade level.
5. Cutting to form the slope formation level.
6. Laying of the Subbase with the approved material.
7. Laying of the roadbase with approved aggregate.
8. Spreading filler to top of roadbase.
9. Sparying the prime coat on top of the roadbase.
10. Laying of the Asphaltic Binder course.
11. Laying of the Asphaltic Wearing Coarse.
12. Construction of the drainage system, (Bench or berm drain,Toe Drain, Roadside drain)
13. Piling works to drain, Culvert or bridge.
    
     

Testing required in road construction.

1. Selection of material
2. Compaction test.
3. CBR test
4. Makintosh probe testing
5. Marshall test
6. Cube test for concrete.
   
   
   
   
    

Road structure

PIPE LAYING WORKS

General sequence of Water Main Pipe laying works.

1. Site survey and setting out.
2. Site clearing.
3. Earthwork and trenching
4. Pipe laying and Jointing works
5. Piling to Man hole/ service hall/valve chamber
6. Piling to anchor Block/thrust block
7. Construction of man hole /chamber/bridge/Thrust block
8. Testing
9. Rectification of pipe ( if any)
10. Testing and commissioning
11. Back filling to Pipe trench
12. Site tidying prior to handing over for completion
13. Handing over for completion.

*Item,5,6 and 7 can be done concurrently with item 4.

*Item no.8 can be perform segment by segment

( lat say every 100m of installed and jointed pipe.)

 

Type of testing to be performed.

1. Pressure test.
2. Leakage test
3. Welding test ( in the case of mild steel pipe is in use)

Pipe flushing

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METHOD STATEMENT FOR EARTH WORK

MACHINERIES AND EQUIPMENT(S) INVOLVE IN THE EARTHWORK ACTIVITIES

1. DOZER


2. EXCAVATOR


3. ROLLER


4. DUMPING TRUCK


5. SHOVEL


6. SURVEY EQUIPMENT.

I). SURVEY AND SETTING OUT.

1. 
   
   Appointment of license Surveyor.


2. 
   
   Proceed with boundary survey and setting out.


3. 
   
   Verification by the S.O or S.O.Rs’ on the survey done by license surveyor.


4. 
   
   Upon completion of 1^st KM of the boundary survey , the site clearing activities will proceed.

II). SITE CLEARING.

1. 
   
   Mobilisation of the Machinery(s) and equipment(s).


2. 
   
   Upon the completion of 1^st KM boundary survey by the Licence surveyor, the site clearing shall start.


3. 
   
   All clearing shall been done with in the site boundary.


4. 
   
   Prior to clearing at any chainage of the road, Construction Manager or contractor rep. shall identify if there is any existing crops or structure within the area that require the attention of S.O. / S.O.Rs’. If there is any, Contractor Reps’ shall inform the S.O / S.O.Rs’ for verification. Photo of evidence shall be properly taken and area affected shall be define clearly.


5. 
   
   No Site clearing shall proceed at the affected chainage unless officially directed by the S.O.


6. 
   
   All debris from the clearing activities shall be properly dispose within then project site. If there is any debris need to be dispose beyond the site boundary, contractor shall abide to the local authorities rules and regulations.


7. 
   
   No debris Shall being dump within the filling area designated for permanent road.


8. 
   
   No burning shall be allow as a method of disposing all the debris.


9. 
   
   The Construction Manager or Contractors’ Rep. shall notify the S.O / S.O.Rs’ on the location of the dumping site as to suite the site condition.

III). EARTHWORK – CUTTING ACTIVITIES & SLOPE FORMATION.

1. 
   
   Cutting activities shall be done as shown in the construction drawings.


2. 
   
   Prior to cut and fill activities, all top soil shall be scrub and stock pile for later usage(if necessary) at the designated stock yard area which will be jointly identify at site by construction Manager / Contractor reps. and S.O / S.O.Rs’.


3. 
   
   Prior to cutting, the soil sample shall be tested for their suitability as fill material for the fill area. If the material are suitable, it shall be stock pile at the designated area which will be identify at site by the Construction Manager in the event that the filling activities have not yet proceed or otherwise.


4. 
   
   All the unsuitable material from the cutting area shall be dispose according within the site boundary.


5. 
   
   Temporary access for existing traffic shall be provided as and when needed.


6. 
   
   In the event that the temporary access are provided, there shall be enough detour signboard, AWAS sign, CONSTRUCTION IN PROGRESS sign and any others safety precaution signboard shall be erected to prevent any danger to the user.


7. 
   
   During working hours traffic officer (s) shall be assigned to control the flow of traffic at the affected area.


8. 
   
   Temporary drainage shall be provided along the construction site (if necessary) to drain-out the surface water.


9. 
   
   All temporary drain shall be discharge to the nearest stream / river / nearby drain. All discharge outlet shall be provided with silt trap before it being channel to the stream / river / nearby drain.


10. Joint Inspection shall be conducted to verify the work done.

IV). EARTHWORK- FILLING / EMBANKMENT ACTIVITIES.

1. 
   
   Prior to filling activities or embankment activities, all the material that is going to be use as filling or embankment material shall be tested for the suitability. Marking peg for the purpose of filling or embankment layer thickness shall be established.


2. 
   
   After setting out of the fill or embankment area, the filling or embankment activities than shall started. The filling activities shall be done in layer. Each layer shall be properly compacted and tested before subsequence layer is lay.


3. 
   
   The process shall be repeat until it reach the proposed finish platform level as per construction drawings.


4. 
   
   All filling shall confirm to the approved construction drawings.

Increase in prices for Quarry product

Quoted article from the borneo post

Shortage of construction material in sarawak

Quoted from the borneo post

Construction Material Pricing.

Construction industry is always subject to increase in construction material cost. All over the world, this scenario is unavoidable. In Malaysia, particularly in Kuching, sarawak, the cement cost already being revised upward effective from 1st March 2011. This is as publish in The borneo post which also being publish in this website.Official Website of Ministry of Housing and Urban Development

How to reduce the construction cost

How to reduce the construction cost.
Construction Industry is an industry like the other field of business. It is all about trading for what each and every one wanted for. The client will want to have a product that is value for money and the consultant always wanted to be part of the business with a reasonable price for their render service. The builder which known as contractor which will offer how much they need to be pay for realising the quality product.
The first stage that the contractor needs to do is win this competition. Next is start building the product with the agree contract sum between the client and them. When start building the product the contractor will have to find a way on how they can maximize their profit. The term is to do some cost saving in their activity in order to increase their profit margin from what have been included in their original contract sum.
There is a numbers of process or technique that contractor need to applied if they wanted to increase their profit margin. The answer is cost reduction for the construction. How can this being done. Here are some techniques that can be use.

1. Shopping for the cheapest and quality material available in the market.
2. Mitigate the risk of increase in construction work by sublet certain portion of work especially labour. ( Lump sum cost for certain work which the increase of labour cost will be absorb by the subcontractor)
3. Method of construction ( eg. By machine or man power)
4. Building component (temporary or permanent work). Eg. Recyclable falsework & formwork, Factory fabricated building component such as floor slab.
5. Plan for the project and adhere strictly to the programme.
6. Complete the project at the shortest time frame which will save more in the plant, equipment & manpower cost.

Acquire own machinery, plant & equipment instead of renting. For the long run this strategy will significantly reduce the contractor construction cost. However beware of the maintenance cost.

How to Win Tenders: Win More Tenders by Qualifying (Part 2)

How to Win Tenders: Win More Tenders by Qualifying (Part 2)

How to Win Tenders: Win More Tenders by Qualifying (Part 1)

How to Win Tenders: Win More Tenders by Qualifying (Part 1)

WINNING A TENDER

HOW TO WIN A TENDER

Construction industry is always about winning a tender. There will be no business for contractor if they do not participate in any tender or quotation. However tender or quotation is only the first step for contractor to get their business running. The important point here is winning a quotation or tender.
How to win in a tender or quotation competition? Here we will discuss some of the most important point on how it shall be. Bellow are what really important for contractor to know and do.

1. Completeness of tender document.
   
   Make sure all instruction in the "INSTRUCTION TO TENDERER" being fulfilled such as all pages that need to be sign are already sign and all required supporting document being attached in. In other words completeness of the tender document.
   
    
2. Cash flow of the contractor.
   
   The cash flow normally being defines as how much the capital that a contractor have and ready to be utilised in the event that the contractor being award the project. Normally the available amount shall not less that by 5% of the tender sum. The capital can be combination of the cash in hand (Bank balance) and credit facilities (eg. Overdraft, project financing facilities from the bank, fixed deposit and ect.). How to know wether you have enough or not.
   
    
   Let say;
   Total tender sum = $ 100M.
   Construction period = 12 months
   Average prorated cash flow = $100/12mths = $8.34M
   
    
   Minimum Ready capital needed = $100M X 5% = $5.5M
   ( This minimum is because that in actual fact that normally in the first 3months the expenses for the project will be considerably low due to the reason that the first 3 months expenses could be only the preliminary expenses such as preparation for insurances, Bank guarantee, site office, and all office and accommodation required under the contract by client.)
   
    
   With reference to the above calculation contractor now can compare wether they have enough capital to win the project. For example:
   
    
   Available cash flow = bank balance + Fixed deposit + credit facilities.
   Say:            = $ 3M + $1M + $7M = $11M > $8.34M >$5.5M
   
    

• Contractor already passed the cash flow evaluation.

 

1. Construction period.
   In tendering contractor must never exceed the construction period required by client. One common mistake by contractor is never specified the duration they offered. This condition will cause them to be disqualified.

 

1. Contractor resources
   Resources can be categorised as follows:
   
   1. Plant and equipment.
   2. Machinery
   3. Man power
   All of the resources above must be as relevant as impossible to the nature of the project. For example in road construction, the plants that you will need are premix plant, soil test laboratory, Excavator, Dozer, Engineer, Site Supervisor, labour and ect.

 

1. Contractor current commitment.
   Contractor current commitment is define as current project that still progressing undertake by contractor. The more commitment the contractor have in hand the more slim chances that they have to win a tender. However, if the current commitments that they have are almost completed, there is a chance for them to win a tender. The only thing is that make sure that the current project report is ahead of schedule or on time. This is the factor that will contribute to the reputation of the contractor.

 

1. Previous Experience.
   Previous experience is defined as the project that had been completed by contractor. This Experience shall be as relevant as it be to the nature of tender that the contractor participating. The other factor to this is the size of the project. In this case the value of project is counted. Let say the tender price for this tender is $100M then the contractor experience must reach at least nearly $100M or more. With that, the client will be more comfortable to award the tender to the contractor who have completed the same nature of project and almost the same value or event more value from what he currently tendered for.

 

1. Tender Price.
   This tender price is the one that weighted most in the event that contractor already pas all the evaluation above. When it comes to this Factor there are a few item that will be considered. The Most important item is that the tender price shall not exceed the client budgeting price.
   The next issue is that it is in the range of what the market offer and the last but not least item is value of money.
   
    
   For instant if the client budget is $120M with the construction period of 12 months, the revenue collected when the project completed and in operation is $2M/mths.The recommended contractor have the following offer;
   
    

Tenderor no./Name	Offered tender price	Offered construction period	Ahead completion	Revenue
A	$100M	10 mths	2 Mths	$4M
B	$98M	12 mths	0mth	$0
C	110M	8 mths	4 Mths	$16M

 

Locking into the data above which one will be choose.

Lets do some analysis.

 

Take into account early completion :

Client will make extra 2M with contractor A after deduct $2M extra compare to contractor A and revenue of $4M in choosing Contractor C.

 

If I were the client, I will choose contractor C because after considering the expenses for this project do not exceed the project budget and in return, I will make extra $4M if I can operate this property earlier that planned.

 

This selection is what we called "Value for Money".

 
With the tips mentioned above contractor shall be able to secure another project under their cap.

SITE DIARY FOR CONSTRUCTION WORK

It is very important that contractor to keep a proper record of their daily site activity. One of the common way to do this is by preparing a site diary. All recorded daily site activity must be verify by the Superintending Officer (S.O) or their representative(S.O.R). If the site diary is keep by the S.O or S.O.R, it is very important that contractor must have the copy of this Site Diary.

The information in the site diary can be part of the vital evident if there is any dispute in the project.

Purchase Your site Diary Here.

Drawing or Document Register

Control of document or drawing is part and partial of the process to ensure a construction project can be delivered on time and meet the specification. It is an important area that all personnel involve need to practice. The proper record of document or drawing issue, will make it easier for all parties to track and dispute on the matter of drawing or document distribution can me minimised or prevented