BIDDING PROCESS

(2 Sept 15)
 TENDERING TERMS & BID SYSTEM
ICB OR INTERNATIONAL COMPETITIVE BIDDING
NCB OR NATIONAL COMPETITIVE BIDDING
RFP OR REQUEST FOR PROPOSAL. ONLY TECHNICAL
PROPOSAL
RFQ OR REQUEST FOR QUOTE. MORE SPECIFIC-USED
WHEN ORGANISATION HAS ALREADY DECIDED ON A
PARTICULAR SERVICE/PRODUCT BUT WANTS
COMPETITIVE PRICING
 EOI OR EXPRESSION OF INTEREST-SIMILAR TO RFP.
EOI STANDS FOR BUSINESS INTERESSION OR INTENT
TO BID
RFI OR REQUEST FOR INFORMTION-ORGANISATION
WANTS TO GATHER INFORMATION ABOUT SPECIFIED
SUPPLIER/COMPANY/PRODUCT IN INITIAL DATA
GATHERING PHASE FOR PRE QUALIFICATION.
 FOUR STAGES-DEVELOPMENT PHASE OF A
PROJECT?
PRLIMINARY
STAGE 1- OWNER EMPLOYS AN ENGINEER TO
INVESTIGATE AND PLAN THE PROJECT.

STAGE 2-ENGINEER TO CARRY OUT PRELIMINARY

INVESTIGATIONS, PREPARES ESTIMATES AND
DETERMINES TECHNICAL, PHYSICAL AND FINANCIAL
VIABILITY OF THE PROJECT.
 STAGES OF DEVELOPMENT PHASE.?
APPROVAL
STAGE 3-IF FEASIBLE (BOTH TECHNICALLY AND
FINANCIALLY)-OWNER GIVES CONSENT IN PRINCIPLE.

STAGE 4-DETAILED PLANS/DOCUMENTS AND

ESTIMATES ARE SCRUTINISED AND APPROVED BY
COMPETENT AUTHORITY.
 WHAT DOES 1ST STEP IN FORMATION OF A CONTRACT INVOLVE..?

A DEFINITE OFFER BY ONE PARTY-USUALLY WRITTEN

OR PARTLY WRITTEN AND OR PARTLY ORAL-CALLED A
TENDERIT IS AN OFFER FROM A CONTRACTOR TO
UNDERTAKE A WORK FOR A CERTAIN SUM OF MONEY.

WHAT FORM COULD THE WORK TO BE UNDERTAKEN TAKE ?

WHAT FORM?
CONSTRUCTION OF A PROJECT AS PER DRAWINGS/SPECS.
OR SUPPLY OF MATERIALS OF CERTAIN SPECIFICATIONS, AND
QUANTITY REQUIRED TO COMPLETE A SPECIFIED WORK.
OR SUPPLY OF MATERIALS AND LABOUR, REQUIRED TO COMPLETE
A SPECIFIED WORK.
OR SUPPLY OF MACHINERY AND EQUIPMENT WITH OR WITHOUT
FUEL, OPERATOR ETC.
OR TRANSPORT OF MATERIALS..
OR ?
 WHAT 4 STAGES? BIDDING PHASE OF A
PROJECT TO START OF CONSTRUCTION
STAGE 1-WHEN ALL IS SET, SELECTED CONTRACTORS ARE INVITED TO
BID.
STAGE 2-AFTER MAKING ALL BUSINESS ARRANGEMENTS,
CONTRACTORS SUBMIT THEIR OFFERS OR TENDERS
STAGE 3-OWNER WITH THE HELP OF ENGINEER SCRUTINISES THE
PROPOSALS, SELECTS A PARTICULAR CONTRACTOR WHO ENTERS
INTO A CONTRACT AGREEMENT WITH THE OWNER.
STAGE 4-CONTRACTOR SETS IN MOTION THE ORGANISATION TO
CARRY OUT THE PROJECT IN MOST EFFICIENT AND ECONOMIC WAY..
 EXPLAIN PROCESS OF TENDERING
INVITATION TO TENDER (NOTICE INVITING TENDER-NIT)-
AFTER PRELIMINARIES ARE COMPLETED AND OWNER DECIDES TO
PROCEED WITH THE WORK-NIT IS ISSUED:
TO ASCERTAIN IF AN OFFER (TENDER) CAN BE RECEIVED FROM
INTERESTED BUILDERS TO EXECUTE THE WORK WITHIN TIME LIMITS
AND COST?
OWNER DOES NOT INCUR ANY LIABILITY FOR EXPENSES TO BE
INCURRED BY THE BUILDER IN PREPARING AND SUBMITTING HIS
OFFER.
 BIDDING PROCESS
PRE QUALIFICATION
INVITATION OF BIDS, NOTICE INVITING TENDERS, PRE BID CONFERENCE
TENDERING WITH TWO BID SYSTEM (TECHNICAL BID AND FINANCIAL BID)
PREPARATION OF BID DOCUMENTS (PROCESS, METHODS AND
TECHNIQUES), BID SUBMISSION PROCESS
REVIEW OF GENERAL SPECIFICATIONS AND TECHNICAL SPECIFICATIONS
BID EVALUATION CRITERIAS/PARAMETERS AND TECHNIQUES
BIDDING STRATEGY
DOMESTIC AND INTERNATIONAL PROJECTS.
PROCESS OF TENDERING NEGOTIATION.
ELECTRONIC TENDERING.
 PREQUALIFICATION
Prequalification of bidders
Evidence of satisfactory previous
experience
Financial stability
Advanced or specialized prequalification
may be required as dictated by the
magnitude and nature of the work
Bid bonds are often required
 PRE QUALIFICATION OF CONTRACTORS
MAJOR & MEDIUM SIZED PROJECTS/EXTERNALLY FUNDED
WORKS
THOSE REQUIRING SPECIAL EXPERTISE/EQUIPMENT
(EXAMPLE?) RUN RISK OF COST & TIME OVERRUNS.
INSTEAD OF INVITING BIDS OPENLY, BIDDERS APPLY FOR
PRE QUALIFICATION.
EMPLOYER PUBLISHES A PRE QUALIFICATION DOCUMENT
IN LEADING NEWS PAPERS.
INTERESTED BIDDERS SUBMIT THEIR CREDENTIALS IN A
PRESCRIBED FORMAT
 INFORMATION TO BE SUBMITTED FOR PRE
QUALIFICATION?
PAST EXPERIENCE.
MAJOR WORKS IN HAND.
TECHNICAL PERSONNEL ON ROLLS.
EQUIPMENT HELD.
FINANCIAL CAPACITY.
PAST RECORD OF WORK DONE, CLIENT? DATES OF
COMMENCEMENT, COMPLETION, VALUE AND SO ON?
PAST HISTORY OF LITIGATION.
QUALITY AND SAFETY REQUIREMENTS/CERTIFICATIONS.
 PROCEDURE FOR PREQUALIFICATION
BASED ON RECEIPT OF INFORMATION, ANALYSIS IS DONE ABOUT THOSE
WHO FULFIL LAID DOWN CRITERIA.
IN CASE OF PAUCITY OF ELIGIBLE APPLICANTS, JOINT
VENTURES/CONSORTIUM OF TWO/THREE FIRMS ARE PERMITTED FOR
HEALTHY COMPETITION.
APPLICATIONS RECEIVED SCRUTINISED. MARKS ALLOTTED OUT OF 100.
SUCCESSFUL APPLICANT TO SCORE LAID OWN % OF MARKS.
AFTER EVALUATION QUALIFIED BIDDERS ARE ISSUED TENDERS FOR
SUBMISSION.
IF SEPARATE PRE QUALIFICATION DOCUMENT NOT FEASIBLE(PAUCITY OF
TIME/TYPE OF WORK) TWO ENVELOPE SYSTEM IS FOLLOWED.
FIRST ENVELOPE CONTAINS TECHNICAL BID. AND SECOND ENVELOPE
CONTAINS FINANCIAL BID.
 SUGGESTED GUIDELINES-PREQUALIFICATION CRITERIA
MIN ANNUAL FINANCIAL TURNOVER-CONSTR WORKS IN ANY ONE
YEAR DURING LAST FIVE YEARS. (2.5 TIMES ANNUAL PAYMENT
PAYABLE AS PER PROPOSED CONTRACT)

RECORD OF COMPLETION. SATISFACTORY COMPLETION OF;

THREE SIMILAR WORKS NOT LESS THAN 40% OF ESTIMATED
COST
TWO SIMILAR WORKS ---------Do-------- 50% OF .
ONE SIMILAR WORK ---------Do-------- 80% OF .
 PHYSICAL CAPACITY. CARRYING OUT EXCAV, CONCR & OTHER
MAJOR ITEMS USUALLY 80% OF EXPECTED PEAK RATE FOR
PROPOSED CONTRACT
MANAGEMENT. AVAILABILITY OF PROJECT MANAGER (NOT LESS
THAN 5YRS EXPERIENCE IN IMPLEMENTATION OF SIMILAR WORK)
BANKER CERTIFICATE. CREDIT LINES/LETTER OF CREDIT/CERTS FROM
BANKS FOR MEETING FUND REQUIREMENT ETC.(3 MONTH PEAK)
 PRE QUALIFICATION-BID CAPACITY
BIDDERS WHO MEET QUALIFICATION CRITERIA WILL BE QUALIFIED ONLY IF
THEIR AVAILABLE BID CAPACITY IS MORE THAN THE TOTAL BID VALUE:
ASSESSED BID CAPACITY=2 A.N-B
A= MAX VALUE OF WORKS EXEC IN ANY ONE YEAR (LAST 5 YRS AT
CURRENT PRICE LEVELS)
N=NUMBER OF YEARS PRESCRIBED FOR COMPLETION OF SUBJECT
CONTRACT
B=VALUE (AT CURRENT PRICELEVEL) OF EXISTING COMMITMENTS &
ONGOING MEETING ALL CRITERIA, WORKS TO BE COMPLETED IN NEXT N
YEARS
[DESPITE MEETING ALL CRITERIA .CAN THE CONTRACTOR BE
DISQUALIFIED?]
 MINIMUM FINANCIAL TURNOVER BASIS?
PROJECT ESTIMATE-RS 750 CR. DURATION 2YRS 6 MONTHS.
ANNUAL PAYMENTS?
MINIMUM ANNUAL FINANCIAL TURNOVER FOR CONSTRUCTION
WORKS IN ANY ONE YEAR (DURING LAST 5 YEARS). EXAMPLE.
LET US SAY- ANNUAL FINANCIAL TURNOVER DURING LAST 5 YEARS IS:
YEAR CONTRACTOR A CONTRACTOR B CONTRACTOR C
2010-11 575 CR 560 CR 570 CR
2011-12 680 CR 570 CR 580 CR
2012-13 595 CR 590 CR 585 CR
2013-14 605 CR 540 CR 545 CR
2014-15 550 CR 575 CR 600 CR
 EXAMPLE BID CAPACITY
PROPOSED PROJECT COST-750 CRORES
LIKELY DURATION: 2.5 YEARS
CONTRACTOR A EXECUTED WORKS OF SIMILAR NATURE- RS 400
CRORES MAXIMUM VALUE (AT CURRENT PRICES) IN ONE YEAR
DURING LAST 5 YRS OR .
VALUE OF EXISTING COMMITMENTS AND ONGOING WORKS TO BE
COMPLETED IN NEXT 3 YEARS IS Rs. 2000 CRORES
WHAT IS THE ASSESSED AVAILABLE BID CAPACITY (Aabc?)
Aabc= 2x750x2.5-3500 = CRORES ???
 CAN ONE BE DISQUALIFIED THOUGH INITIALLY QUALIFIED?
MADE MISLEADING STATEMENTS.
HAS DUBIOUS RECORD OF:
ABANDONING WORKS
NOT PROPERLY COMPLETING CONTRACTS
INORDINATE DELAYS IN COMPLETION
LITIGATION HISTORY
FINANCIAL FAILURES