Step ✔
Preparatory session
1. Chairman and Secretary check documentation for proper approval of all Evaluation Committee members and any observers
2. Chairman describes the scope of the proposed contract, identifies the
organisations responsible for preparing the tender dossier, and summarises the essential features of the tender procedure to date, including the evaluation grid published as part of the tender dossier
Tender opening session
1. All tender envelopes are handed over to the Chairman
2. All tender envelopes must be numbered according to the order in which they have been received
3. Chairman verifies that all tender envelopes which have been received are available at the tender opening session
4. Chairman & Secretary verify that all tender envelopes were sealed and in good condition
5. Chairman & Secretary open the tender envelopes in order of receipt. They mark the tender envelope number on the front page of each document
6. For each tender envelope, the Chairman & Secretary announce and check that the summary of tenders received correctly records:
❏ The registration number on the envelope ❏ The name of the tenderer
❏ The date (and time, for those received on the last date for submission of tenders) of receipt
❏ The condition of the outer envelope
❏ Whether or not the tenderer has duly completed a tender submission form ❏ The total financial offer and any discounts applicable (exact working as in the
tender submission form)
❏ Overall decision regarding suitability of tenders for further evaluation 7. Declarations of impartiality and confidentiality are signed by all members of the
Evaluation Committee and any observers 8. Chairman signs the Summary of tenders received
9. For each tender considered suitable for further evaluation (as determined on the Summary of tender received), the Chairman initials the first page of every copy of the tender and all pages of the financial offer
10. The Tender opening report is signed by all the members of the Evaluation Committee
110 The Management of Construction
proposals. In many other English-speaking countries, contract documents for public projects require the use of several criteria, in addition to price, in the evaluation process.
Criteria
First, we consider the use of price alone as the selection criteria. If those contractors submitting tenders have already been pre-qualified, the owner may simply compare their prices and select that contractor with the lowest price. Even in that case, the invitation for tenders may have requested that proposals include prices for alternatives, in addition to the basic work. If the available funds make it possible to include some of those alternatives, in addition to the basic work, the owner may analyse combinations of several alternatives to decide which proposal can provide the greatest benefits at the lowest price consistent with available funds. If no pre- qualification process has been used to identify qualified contractors, the owner might still award to the low tenderer, but it is more likely that a post-qualification process would be used to ascertain the lowest qualified tenderer.
Often, the contract is awarded to the lowest qualified tenderer. Sometimes tendering documents will specify that the contract will be awarded to the ‘lowest, responsive, responsible tenderer’. These three adjectives have special meaning. Lowest means the lowest price, either for the basic work or for the basic work plus some or all of the alternatives. Responsive means that the tender submittal is completely regular, with all signatures in place, all blanks filled in, all attachments such as the tender bond included and all addenda acknowledged and that it was on time. Responsible means qualified in the sense we have already used the term.
The Texas Department of Transportation (2002), in its standard contract language for the award and execution of unit price contracts, states the following:
30–01 CONSIDERATION OF PROPOSALS. After the proposals are publicly opened and read, they will be compared on the basis of the summation of the products obtained by multiplying the estimated quantities shown in the proposal by the unit bid prices. If a bidder’s proposal contains a discrepancy between unit bid prices written in words and unit bid prices written in numbers, the unit price written in words shall govern.
Until the award of a contract is made, the owner reserves the right to reject a bidder’s proposal for any of the following reasons:
(a) If the proposal is irregular as specified in the subsection titled IRREGULAR PROPOSALS of Section 20.
(b) If the bidder is disqualified for any of the reasons specified in the subsection titled DISQUALIFICATION OF BIDDERS of Section 20.
In addition, until the award of a contract is made, the owner reserves the right to reject any or all proposals; waive technicalities, if such waiver is in the best interest of the owner and is in conformance with applicable state and local laws or regulations pertaining to the letting of construction contracts; advertise for new proposals; or proceed with the work otherwise. All such actions shall promote the owner’s best interests.
30–02 AWARD OF CONTRACT. The award of a contract, if it is to be awarded, shall be made within 30 calendar days of the date specified for publicly opening proposals, unless otherwise specified herein.
Award of the contract shall be made by the owner to the lowest, qualified bidder whose proposal conforms to the cited requirements of the owner.
A proposal is considered irregular, according to Section 20,
(a) If the proposal is on a form other than that furnished by the owner, or if the owner’s form is altered, or if any part of the proposal form is detached. (b) If there are unauthorized additions, conditional or alternate pay items, or
irregularities of any kind which make the proposal incomplete, indefinite, or otherwise ambiguous.
(c) If the proposal does not contain a unit price for each pay item listed in the proposal, except in the case of authorized alternate pay items, for which the bidder is not required to furnish a unit price.
(d) If the proposal contains unit prices that are obviously unbalanced.
(e) If the proposal is not accompanied by the proposal guaranty [tender bond or
other security] specified by the owner.
A tenderer may be disqualified, according to Section 20, if (1) it submits more than one proposal from the same partnership, firm or corporation under the same or different name, (2) there is evidence of collusion among bidders or (3) it is considered to be in ‘default’ for any reason specified in a separate subsection.
The foregoing quotation is a good illustration of many of the issues we have covered in this section. We should also note that the Texas documents require that ‘each bidder shall furnish the owner satisfactory evidence of his/her competency to perform the proposed work’ at the time the proposal is submitted. Note, finally, that Section 30–01 above allows the owner to ‘waive technicalities’; this provision makes it possible for the owner to ignore minor irregularities in tender submittals, if it is in the owner’s best interest to do so and if the result is legal.
The third and final approach to evaluating contractors’ tenders is on a best-value basis, wherein factors other than low price are considered. In this case, a series of criteria are set forth, to which tenderers respond, in a manner similar to the method we described for the selection of design consultants. Those responsible for the evaluation assign a mark to each item in each response and compile the overall scores. After review, the project is awarded to the contractor with the most favourable score.
In one project in New Zealand, the construction of renovations and additions to the Queen Elizabeth II Pool complex in Christchurch, the following criteria and corresponding weightings were used to select the contractor: key personnel (40%), relevant experience (20%), quality record (20%), proposed methodology (15%) and quality assurance systems (5%). It may be surprising that price is excluded from this list! In other cases, contractors’ proposed prices are included in the consideration, with a weighting percentage representative of the relative importance the owner attaches to that criterion. In any case, the owner will inform tenderers of the criteria to be used in the evaluation, but practices vary as to whether contractors are informed of the weights to be assigned to each criterion.
Table 4.7 contains a scoring matrix for contractor selection on another New Zealand project. Note at least three matters of interest, in addition to the list of criteria. First, the initial scoring was performed without reference to the tendered price. Second, two of the five tenders were eliminated after the initial scoring. Third, the tendered price was weighted at 15% of the total in the final scoring.
Table 4.7 Contractor selection criteria matrix
CONTRACT A – Carson Group
Contractor selection criteria Weighting % Contractor #1 Initial Score Wt Final Score Wt Contractor #2 Initial Score Wt Final Score Wt Contractor #3 Initial Score Wt Final Score Wt #4 Initial Score Wt #5 Initial Score Wt
Company Health project construction experience in the last 5 years.
15 0 0 0 0 100 15 100 15 70 10.5 70 10.5 20 3 0 0 Experience capability of Tenderer’s
proposed senior site management on multi-million dollar projects (team list, roles and responsibilities, CVs, percentage of time on site) for each person.
15 70 10.5 70 10.5 100 15 100 15 70 10.5 70 10.5 50 7.5 50 7.5
Company’s present workload and capability to support this contract (and possibly other contracts as part of the project).
10 70 7 90 9 100 10 100 10 100 10 100 10 65 6.5 70 7
References – Tenderers shall provide the names and contact details of 5 clients and 3 consultant project managers who have worked recently with the proposed team (Referees will be asked to comment on performance, attitude, negotiation stance, time and quality).
CONTRACT A – Carson Group
Contractor selection criteria Weighting % Contractor #1 Initial Score Wt Final Score Wt Contractor #2 Initial Score Wt Final Score Wt Contractor #3 Initial Score Wt Final Score Wt #4 Initial Score Wt #5 Initial Score Wt
Quality Control Systems. 5 80 4 80 4 90 4.5 90 4.5 90 4.5 90 4.5 40 2 40 2 Company and senior site management
experience in working in a large functioning facility.
10 65 6.5 65 6.5 90 9 90 9 80 8 70 7 45 4.5 50 5
Experience in Partnering. 5 80 4 80 4 50 2.5 65 3.25 55 2.75 80 4 12 0.6 20 1 Contract resources/equipment available
financial strength, bond provision capability, balance sheet and capital structure.
15 60 9 60 9 90 13.5 90 13.5 95 14.25 95 14.25 55 8.25 70 10.5
Tendered Price 15 0 85 12.8 0 95 14.3 0 90 13.5 0 0 100 41 60.8 69.5 92.5 60.5 80.75 32.35 33
114 The Management of Construction
Figure 4.8 sets forth a summary of the three criteria options discussed above, both with and without contractor pre-qualification.
Qualifications
In preparing and submitting their tenders, contractors may find that they would like to change some of the requirements or conditions specified for the project and thus ‘qualify’ their proposals. Like so much of our discussion regarding the tendering process, practices differ in different parts of the world and between public- and private-sector projects. In some settings, whether public or private, contractors regularly attach such qualifications, or tags, to their proposals. One example is a proposal to furnish a lighting system not allowed in the specifications because it would be manufactured by a company not listed in the documents; the contractor might qualify its tender by saying that the use of a locally manufactured system would lower the tender price by a certain amount. Another example is a tender in which a contractor stated that that its price did not include the removal of obstructions such as wood and concrete in the excavation for a sewer line. When such tags are permitted to accompany tenders, the owner must evaluate their impact on the project cost in its analysis of tender prices.
In places where qualifications are not allowed, the owner would probably reject a tender containing such tags by saying it is not ‘responsive’ to the invitation for tenders. This culture prevails in most public-sector work in the USA, although such owners sometimes invite tenderers to propose alternative methods and materials for any portion of the work they choose. In general, it can be said that private-sector work provides much more flexibility and that the owner has more freedom to accept proposal qualifications.