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.