3.27.2013

TYPES OF TENDER


1.0 PREFACE
            As a final year’s student of Civil Engineering’s faculty, we were given a task or an assignment to have an interview with any professional engineer in order to get information regarding one of the procedures of building construction. From all the topics given, I have chose topic of “Types of Tender” that is usually used in construction industry. 
            In order to finish this assignment, we have to interview a professional engineer or General Manager in gathering all the information regarding this topic. So, I have decided to interview a Group Station Manager / Special Projects of a company named Global E-Teaching Sdn.Bhd., which is Encik Nik Ahmad Kamal bin Nik Mustapha. I would like to thank to him for spending his time with me and my friends for the interview. From the interview, I have gathered many information regarding this topic.
            I would also like to give special thanks to my lecturer of Construction Project (ECM317), Encik Abdul Halim for giving me and the other friends the guideline in finishing this assignment. Encik Abdul Halim has also helped us by giving us advices and information regarding this assignment and always monitors our progression.
            Besides that, I would also like to thank to all my friends for helping me and also guide me a little bit in finishing this assignment. With the helps from all of them, I have successfully finished this assignment.


2.0 DETAIL INFO OF ENGINEER



NAME                  : Nik Ahmad Kamal bin Nik Mustapha
AGE                   : 47
GENDER                : Male
MARITAL STATUS        : Married
PROFESSION            : Group Station Manager / Special Projects
COMPANY ADRESS        : Perlis Power Plant,
                        persisiran pantai sungai baru,
                        02700 simpang Empat,
                        perlis indera kayangan.                                              
                                                                                     
EDUCATION BACKGROUND : - Sek. Men. Besut, Terengganu.
                       - Sek. Men. Sains Dungun, Terengganu.
                       - Universiti Kebangsaan Malaysia.
                       - Universiti Teknologi Malaysia.
                       - University in United Kingdom.

JOB EXPERIENCE       : - Felda (Kota Tinggi / Seroja / 
                         Jengka 18 /Gua Musang).
                       - Felda Head Quarters.
                       - Second Power Power in Pahlawan.
                       - Power Plant in Melaka.
                       - Perlis Power Plant


3.0 TYPES OF TENDER
In a construction industry, there are many processes involved in building construction. One of the processes is tendering process, but before we proceed with the tendering process, we have to know more details about the types of tender involved. Tender is a formal written offer to provide goods or services for a particular price, while tendering is a management and commercial function of determining the tender based upon the estimate and other details prepared by contractor’s estimator or other personnel. There are three types of tenders that are normally involved in construction industry. These three types of tender are Open Tender, Close Tender and Negotiated Tender.
3.1 Open Tender
Open tender is an arrangement where an advertisement in local newspapers or trade journals invites contractors to apply for tender documents. This type of tender is open to all qualified contractors registered under the same class. A deposit is usually required to ensure that only serious offers are made, presumably it is needed to cover the cost of copying the documents. Local authorities have been advised against open tendering because it often leads to excessive tender lists where the cost of abortive tendering is considerable. There are instances of selection criteria being applied after the tender has been submitted, so a bid could be rejected if a contractor does not belong to an approved trade association.
3.1.1 Advantages of Open Tender
The advantages of Open Tender are:
Ø  Give high level of competition and contractors tend to give best prices as compare to other tendering method.
Ø  There is no list of restrictive tenderer, which does not allow favoritism.
Ø  It is very transparent process which ensures that only the contractor with the best price and meeting all the technical requirements will win the tender.
Ø  This process is usually manage by procurement board where its staff are trained for such exercises and board ensure that all the procedures involved in tender are followed.
Ø  Lesser possibility of contractors “ganging up” to quote higher price for the project.
Ø  It offers chances to new and inexperience contractors to bid for the tender.

3.1.2 Disadvantages of Open Tender
The advantages of Open Tender are:
Ø  Tenders may be received from firms who neither have the necessary financial resource nor technical knowledge and experience of the class of work involved.
Ø  There is a risk that the contract may be awarded to an unscrupulous contractor.
Ø  A lot of wastage as unknown copies of tender documents has to be prepared.
Ø  Increase time and financial expenses, as a lot of tender needs to be evaluated.

 3.2 Close Tender / Selected Tender
Selected tendering consists of drawing up a list of chosen firms and asking them to tender. It is by far the most common arrangement because it allows price to be the deciding criterion; all other selection factors will have been dealt with at the pre-qualification stage. There are three ways in which selected tendering lists are drawn up:
Ø  An advertisement may produce several interested contractors and suitable firms are selected to tender.
Ø  The consultants may contact those they would wish to put on an ad-hoc list.
Ø  Many local authorities and national bodies keep approved lists of contractors in certain categories, such as work type and cost range. Contractors who ask to be included on select lists of tenderer are usually asked to provide information about their financial and technical performance, particularly about the type of work under consideration. The National Joint Consultative Committee for Building (NJCC) has written the 'Standard form of tendering questionnaire - private edition' so contractors can prepare answers to relevant questions in advance. The questions mainly deal with projects carried out during the previous three years. Once the form has been completed, it can be used for specific projects or for those compiling lists of selected contractors.


3.2.1 Types of Close tender / Selected Tender
3.2.1.1 Close Tender Offer Only To Bumiputra
This type of tender is offer only to bumiputra, who fulfill the condition such as classification of contractor, such as paid up capital and expertise.
3.2.1.2 Close tender Offer Through Selection
This type of tender is usually offered to contractor who is reliable of accomplishing the job satisfactory. Tender offered involves specialist field such as piling work.
3.2.1.3 Close Tender Offer Through Pre-Qualification
Normally this type of tender is applied in huge and complex project, which require contractor specialization in their field. An invitation to tender is offer to selected list of contractors, who has reliable reputation in his class of work, or who has previously carried out their job satisfactory, particularly to the owner.
3.2.2 Advantages of Close Tender
The advantages of Close Tender are:
Ø  The exact number of tender is known, hence reduce wastage and expenses as for extra tender documents and tender evaluation.
Ø  The contractor record of previous performance provides a great magnitude of reliability in term of financial, technical and experience aspects.
Ø  Normally the quality of work from the contractor is satisfactory.
Ø  It is suitable for project require certain level of efficiency, skill and experience from the contractor.
3.2.3 Disadvantages of Close Tender
The disadvantages of Close Tender are:
Ø  Officers involve in the tendering process may be biased to a particular contractor.
Ø  Tender sum may be not the lowest, as not all qualified tenderers are invited.
Ø  There is possibility of contractors “ganging up” or existence of “cost syndicate” to quote at higher tender sum.
Ø  Normally new and inexperience contractors are no invited.
3.3 Negotiated Tender
Negotiated Tender is an alternative to Open Tender and Close Tender. Under this method normally one contractor is approached and such tender mainly used for specialist work such as lift system or airport project at big level, in such case there are limited number of contractor who do such work in the market. It is based on one-to-one discussion with contractors to negotiate the terms of contract. It is usually advisable in special circumstances, such as :
Ø  Project to be carried out urgently, where construction drawings and list of materials are still in the process.
Ø  Projects for armed forces, where the work site is of restricted area.
Ø  Projects where preferred contractor has performed successfully for the employer previously.
Ø  Projects where contractor already engaged on the same site.
Ø  Projects where space is very restricted and contractor is executing another contract there.
Ø  Projects where contractor has special has special knowledge and experience about the particular site, type of work and type of contract.
3.3.1 Advantages of Negotiated Tender
The advantages of Negotiated Tender are:
Ø  Since only one contractor is invited, negotiation can be easily dealt with, and it saves a lot of time and money compares with other type of tenders.
Ø  The contractor record of previous performance provides a great magnitude of reliability in term of financial, technical and experience aspects.
Ø  Normally the quality of work from the contractor is satisfactory.
Ø  It is suitable for project require certain level of efficiency, skill and experience from the contractor.
3.3.2 Disadvantages of Negotiated Tender
The disadvantages of Negotiated Tender are:
Ø  Officers involve in the tendering process may be biased to a particular contractor.
Ø  Tender sum may be not the lowest, as all qualified tenderizers may not be invited.
Ø  Normally new and inexperience contractors are not invited.
4.0 CONCLUSION
            From the interview that has been done and also some related research, I have successfully finished this assignment on time. From the topic that I have chosen, it can be said that tender that has been used in construction industry can be divided into three types, which are Open Tender, Close Tender and Negotiated Tender. All these tenders have their own advantages and also disadvantages and all of these have been discussed in this assignment or report.
            Actually, there are some advantages of doing this interview. From the interview, I can get more knowledge regarding the topic that I have chosen. All the knowledge can help me in finishing this assignment and also help me in getting more additional information that me and my friends never know before.
            Besides that, I am also getting more information about the responsibilities and duties of an engineer. From the interview, I can get to know the engineer that I have been interviewed and thus getting more information about his experience and challenges of being an engineer. He has also gives us many advices and spiritual support for us to achieve our ambition. That was a very great experience for me and my friends.
            This interview gives us a lot of advantages thus helped us in finishing this assignment. All the peoples involved in finishing this assignment have give a lot of cooperation and also has helped me in many ways, so that I can finish this assignment successfully.



REFERENCE

~IzZy~

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