Tender Estimation

Winning a tender is a tricky process that any contractor have to endure with. There is some criteria that contractor need to meet in order for us to be recommend as potential contractor for a project. Among the requirement are;
1. Cash flow ( Financial Capacity)
2. Plan, Machinery,Equipment, Labour and technical staff.
3. Work Experience
4. Current Work load
5. Achievements
6. Reputations
7. Project Pricing.
8. Communication and negotiation skills.

However out of all the listed above, Project Pricing always become the turning point for a contractor. This will determine weather we will win the project or not. Most of contractors will fulfils all the above requirements that will qualified them for the tender. When this situation happened the other factor will be the pricing. The question is What is the average cost that contractors offered. From our experience, the normal practice, all those contractor which offered the cost that is with in 15% below and above the average pricing will be consider for next stage of evaluation.

In some country, most of tendering period will take about 3 weeks to 1 month from the date of a project are publish to allow contractor to make calculation and submit their bid on the tender closing date. Very often bidders will rely on the "schedule of rates" which is publish by Public Work department. In my opinion this practice by contractor is quite dangerous. Why? The reason is the publish "Schedule of Rate (S.O.R)" is normally base on the past year record. Hence it might not relevant at the point of tendering. Because of this some adjustment have to be made to this "S.O.R" by contractor which will not reflect the current market price. In view of this, we believe that having our own estimation will be more accurate.

Doing price estimation is not and easy work. Contractor need to do
1. Quantity take of, 
2. Numbers and type of equipment required, 
3. Duration needed to complete each scope of work, 
4. Current market rate for each and every item that had been identify to complete the project, 
5. Activities involve for each scope of work, 
6. Management cost for supervising the project, 
7. Profit margin, unknown risk to contractor in executing their work and 
8. also some public relation cost.

By listing all of this item, contractor already minimised error in cost estimation and had help contractor to control their losses and at the end of the day, contractor will be able to offered a competitive project cost for a tender.

There is lots of software and manual form that can be use to do this estimating work. The picture below is what I use to do mine.

This is a screen shot for some of the form that I create for my tendering purpose.

As for the "S.O.R" that had been mentioned earlier in this article, there is some set of rules and guideline that contractor had to be abide with to ensure that their estimation is not out of date. For instance, S.O.R publish this year is base on Last year average market price, therefore to use this S.O.R in our tender estimation, contractor have to allow for some increase in price for current year. Say 5% increase. Apart from that, contractor must also determine the S.O.R is publish for which area and the percentage increment according to distance from that particular location. By Using this method it eliminate almost all of the process that i bold earlier. Save time!!!!.

Ask ourself, are we satisfied with the estimation we did by using S.O.R? Do we know What is the actual cost for the project? How much is the Profit Margin? How much is the unknown cost we allow? and if we have to go through pricing negotiation with the future client, How much lower are we willing to go for? 5% discount, 10% discount on the offered price? we might have no idea. At the end we will say we cannot afford to give discount. The key to this are what are the estimate for actual construction cost, how much is the unknown risk that we allow for and how much is the profit margin? Only you know.

Happy tendering.

Free sample of External Drain Inspection Check List

Quality control of a product in construction is very important part of construction work. Below is sample of inspection check list for external drain construction work.  Right click  on the image to have a clear view.

How to estimate earthwork construction period.

How to estimate the duration required to complete Earthwork Excavation? Estimation on the numbers of days required to complete the task by utilisation of machinery does not required complex calculation. All it take is simple mathematics and some knowledge on the efficiency of  machine capability.  Below is an example of the calculation.

1. Quantity of the Earthwork Excavation = 1000 cu.m.

2. The machinery needed = Excavator and Lorries 

     Assumption : 1 no. of Excavator and 1 no. of lorry required.

                        : Excavator need 3 minutes to make a cycle of excavation works.

                        : Excavator Capacity = 1.5 cu.m

                        : Lorries capacity =  10 ton

                        : Lorry need 5 minutes to make a cycle of transportation.

                        : Specific Gravity of the earth = 2.7

Base on the assumption, the calculation is as follows;

         a) Duration required to fill a 10 ton lorry 

              : 10 ton lorry bucket capacity = 10/2.7 = 3.7 cu.m

              : cycle require to fill the lorry bucket = 3.7/1.5 = 2.4666 Cycle or 3 cycle.

              : hence, time required for filling the lorry = 3 cycle X 3 minutes = 9 minutes

         b) Duration required for lorry to complete a cycle of transporting and unloading =5 minutes

              : Therefore total  time taken for one cycle of earthwork = 9 minutes + 5 minutes = 14 minutes.

              : 14 minutes is required to complete 3.7 cu.m of earthwork.

         c) Duration required to complete 1000 cu.m earthwork;

             : 1000 cu.m / 3.7 cu.m = 270.27 cycle = 271 cycle.

             : hence, time require to complete 1000 cu.m earthwork = 271 cycle X 14 Minutes = 3794 minutes

            

         d) Number of working hours per day = 8 hours

             

         e) Convert the Duration in minutes into days;

             : 3794/ (8 X 60) = 7 days.

Therefore total number of days to complete the 1000 cu.m of earthwork (cutting and cart away for a short distance) by utilised 1 number of excavator and 1 number of 10 ton lorry is 7 days. Hence your construction period is only 7 days. However this example is excluding number of unworkable day due to rain.

If the number of lorry is going to be increase to 2 then some correction can be make to the duration required to complete the whole cycle by by 5 minutes. this is because the waiting time for the excavator can be reduce by 2.5 minutes each for both lorry. Therefore the complete cycle can be consider as 9 minutes only.

With this free example hope that you will have nice time to plan for your earthwork construction.

               

RFI (Request for inspection) sample

REQUEST FOR INSPECTION
CONTRACT NO: PROJECT TITLE:
REFERENCE NO:			DATE:
TO:			ATTENTION:
ACKNOWLEDGE RECEIPT BY: DATE:
We hereby request for inspection on : For the following work:(Tick in the box below (√))
BUILDING WORK
Boundary setting out		Building setting out			Setting out ( specify):
earthwork		Foundation			Beam		Column
Staircase		Reinforcement			Formwork		Roof truss
Slab		Perimeter drain			Apron slab		Wall/partition
Roof covering		Door frame			Door leave		Window frame
Window leave		Rain water drain Pipe			Gutter		Plastering
Painting		Floor Screeding			Floor tile		Wall tile
Water Proofing		Septic tank			Other :
CIVIL WORK
Earthwork		Road subgrade			Road sub base		Road base
Sewage manhole		Waste water manhole			Drain Alignment		Road Alignment
Road side drain		Flexible Pavement			Fencing		culvert
Road kerb		Road Marking			Signages
Mechanical & Electrical works
Internal water pipe		External Water pipe			Water tank		switches
conduit		wiring			Power point		Lighting
Lightning arrester		MCB			DB		MSB
Cold water fitting & accessories					Electrical fitting & Accessories
Other:
Location:
SO/SOR/RE/COW The above work inspected on : Inspected by:			Witness By Contractor: Signature: Date:
Approved (      )                  Not Approved (      ) Remarks:

Related Topic:
RFI
Request For Information 2010
Request for information form 2012
Inspection form for reinforcement installation
Document control and Correspondance Document Register

Material approval log form

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CONSTRUCTION: TRACKING CONTRACTUAL AND TECHNICAL REQUIREMENTS

TRACKING CONTRACTUAL & TECHNICAL REQUIREMENTS

Project planning and management is the father to a successful construction. Establishing a Master work program is the initial step to start a construction project. Without work program, a contractor will easily get lost in ensuring that his project will be completed on time.

Work program is a path that all contractor shall follow closely. It is a guidance to all project management staff on what and when an activity shall start and finish. However Physical activity alone is not the only thing that is crucial for achieving the project goal. Proper tracking of documentation ranging from contractual requirement to technical correspondence are also playing an important role in ensuring the physical activity can be implement smoothly. 

Most contractor always failed to keep track on this matter. Due to that, I publish here a free sample on how I do my tracking. By filling this form I can easily know what been submitted and what is the status. For example, in any building construction activity, there is a lot of construction materials that need to be submitted for approval.prior to its usage for construction. All contractor know that they have to do this early and most of the material sample and specification usually had been submitted for approval with-in  three to four month after the award of a project. However some of the material submission needs few months to be study and consider before any approval is given. In this case, how does the tracking form become an important tool to ensure that the approval can be received. 

This is how it happen. Every weeks or months contractor will review what activity will start the next following week or month. By knowing the activity, contractor will immediately know what is the construction material needed and do this material need any approval. If  the answer is yes, than the form if properly recorded it will show whether the material had been submitted or not and what is the status of approval. With this approach, contractor do not have to flip open the whole file to know what is the status of the material. Does this look easier to us. 

Therefore, by implementing this tracking form in the project monitoring process by managers or engineers it will help in making the construction works can be done smoothly.  

MAKING MONEY OR LOOSING IT

Hai All. This week I am making internal audit for a firm under provision of "Construction Management Services in civil, Building & Infrastructure works". Great..The Quality Management System (QMS) Manual was nicely in place and fullfill all the ISO 9001:2008 requirements. Procedure and processes to achieve their goal all had been properly documented and followed. The question here is how do they can loose so much in a project !!!!!!. It cause millions.

It is no body fault. That is construction. After a light conversation with the owner, I realise Who is the culprit behind all the event that make them lost so much. Here is it.

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Project planning( Click this to purchase at Amazon) had failed.
The project had been awarded, However they could not start the construction due to le land accusation problem.

Time.
The above issue was only resolve almost a year after the contract awarded. Cost increase.

Project Pricing.
Pricing was done and accepted however there is no clause allow for price fluctuation variation order. From tendering until start work, it take almost two years!!! market price for almost all construction material had increase and the worst part is it goes up above their pricing. It is not contractor fault. They had include such situation in their budget but they still get beaten.

Service provider.
Their main service provider had pull out from that project to avoid the losses. They pull out without making any profit. They make such a loss in form of had not been able to captured other opportunity to make money  from other project. They don't dare to take the opportunity due to the reason that the project they had committed to is a mega project to them. Hence they can't wait any longer and decide to give up the project.

The firm decision.
To continue with the project no matter what it takes. They cannot pull out because of legal implication on them. They will be blacklisted!!!!!....They had to proceed with a lost.

Minimising the Lost.(Click this link to purchase)
Actively look for ways to minimise losses. Negotiating Skills required...!!!!!


Moral of the story.
1. Step back If you are not prepared to continue.
2. planning is a way to maximize your profit and ability.( Click here to buy).

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Related Article in this blog :
Top Secret of successful construction project.
Project planning guide
Tendering Guide
Quality Documentation filing
Tendering : Evaluate your financial capacity
Construction tender bidding procedure and processes
Big money in Construction Industry
Making Money in Construction
How to reduce the construction cost
Winning a tender
Important of project Planning
How to bid and win any tender
Construction Management

Top secret of successful construction project.

Being a contractor is always about making money by delivering projects to client. The question is, do you have a proper tool to make your dream come true?

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Here is the secret.  Successful contractor always have this four Alphabets in his mind.

" P-D-C-A" which is stand for , P=Plan, D=Do, C=Check and A=Action.

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As a contractor, in actual fact, all of them is doing the same thing. However the missing link is, this PDCA is always not documented properly and been compile into a manual. it is OK if all this PDCA work can be done alone by the owner of the firm but how about is this task is given to their staff ? For experience staff they might already have the idea on how to do it but it always not the case for newbies.

In view of this situation I attach herewith the link on part of the PDCA process. This process I name it PROJECT MONITORING PROCESS. it come together with how to monitor a project and what are the form that required in order to properly documenting the progress of a project. feel free to take a look on the list below.

Project monitoring process
Investigation form
project status review

PROJECT PLANING GUIDE

What is the purpose of Project Planning? In actual fact Project planning shall begin as early in the tendering process. The purpose of doing a planning is:

"TO DELIVERED THE PROJECT WITH-IN  THE STIPULATED TIME, SPECIFICATION AND REQUIREMENT."

Contractor that comply to the purpose above, no doubt that he/she will gain profit. In other words " planning is a tool that will guide contractor through out the construction process and to avoid any losses in term of money. As such the important document that a contractor shall have with him for every construction he/she undertake is Project Quality Plan (PQP). In this document there is guidance for his staff on site to do their works efficiently.

REQUEST FOR INFORMATION FORM

Request for information form (RFI) is one of the crucial form contractor or client must have. I will be more important especially in documenting issue at site which contractor or client representative are not really sure.

Most of the real scenario at site is contractor or client just having verbal instruction or discussion at site on what ever the issue arise. however both side usually failed to captured the discussion or verbal instruction officially. The problem started when the discussion or verbal instruction was carried out physically but it failed to improved the condition. Instead as the result of that the issue getting worse. when this happened, there is no ground for client or contractor to protect them-Selves. As the result it will bring more dispute especially when contractor and client start to question about the cost.

Therefore it is always being a wise step that any instruction being officially documented to protect everyone interest.

Here is the link to my improved Request for Information Form for reference.  However I claim no responsibility to the usage of the form if your going to use this sample. 

TENDERING: Evaluate your financial Capacity

Hi there, below is guideline on how to evaluate your financial capability for tendering purpose.

Available CASH IN HAND
Average 3 months bank statement = RM A
Remaining of banking Facilities = RM B
Credit Facilities (Construction Material) = RM C

Total Cash Available = RM A + RM B + RMC,  eg. $2,000,000.00

Liability
Current Project In Hand ( Value of Remaining works)
Project 1 = RMa , eg: $5,000,000.00
Project 2 = RMb, eg. $ 8,000,000.00

Liability recorded in the audited account = RM E eg, $300,000.00

Tender value = RM D , eg.; $ 30,000,000.00

Total liability = RMa + RMb +RM D + RM E , eg. $43,300,000.00


usually under instruction to tenderer do stated minimum available financial required to ensure that contractor have the capacity to carry out the work.


hence,
I assume that the requirement is 3% of the tender value.


therefore ; Available cash percentage (%) = Total cash / Total Liability 
                                                               = ($2,000,000.00 / $43,300,000.00)%
                                                               = 4.619% > 3% ( marginal pass only)


to be secure make sure that you have at least 6% financial capacity.


This is just a guideline. The positive result of your tender also depend on your track record, machine, equipment, plants, labour and your work experience.


Good luck all Contractors.

METHOD STATEMENT FOR SITE CLEARING.

           1.      Site perimeter survey shall be partially started and approved by
            S.O / S.O.R / S.O.R Rep.

     2.      Contractor shall obtain early commencement letter from NREB.


     3.      Prior to site clearing, contractor shall inform/Submit  and obtain 
             approval from the S.O / S.O.R / S.O.R Rep.    pertaining to the followings;

a)      Mitigation measure for the surface run off.

b)     Location of the Dumping Site for disposal purpose.

c)      Location of the stock pile yard for top soil for later use.

d)     Possible obstruction on site clearing activities such as existing crops,

 structure and etc.

           4.       Upon receiving approval from S.O/S.O.R/S.O.R Rep. site clearing activities
              shall proceed from the center of the roads towards the construction limit.


     5.      There shall be no vegetation, trees, debris and spoils be deposited into 
             streams, rivers or water courses or use as fill material.


     6.       All trees and vegetation identified by relevant authorities for conservation 
             shall be protected.


     7.       During the course of site clearing, all necessary temporary diversion for 
             water way shall be constructed and maintained throughout the construction
             period to keep the site free from stagnant water.


     8.      If due to unforeseen circumstances turfing works could not be carried out,
             those expose area shall be properly protected against erosion by ways of 
            covering it with   plastic sheets or any practical and equivalent method.