1.

0 INTRODUCTION

Tendering is the process by which bids are invited from interested contractors to carry out

specific packages of construction work. It should adopt and observe the key values of fairness,

clarity, simplicity and accountability, as well as reinforce the idea that the apportionment of risk

to the party best placed to assess and manage it is fundamental to the success of a project.

In a developing country like Ghana there are wide range of construction activities such as:

construction of high ways, residential buildings, commercial buildings, etc. which are issued out

by consultancies to contractors by means of tendering processes.

This study depicts exact process by which a contractor selection is done by means of the

tendering process.

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2.0 PROJECT AND CONSULTANCY

Mr Acquaye Frank who wanted to build a six storey hotel on a land he bought at Nkawkaw in

the Eastern region of Ghana contacted one Mr Kwesi Akoi a well-known architects who owes a

consultancy firms together with other engineers, thus the Associate of Engineers Consult. (AEC)

AEC is consultancy firm which comprises groups of Architects, quantity surveyors, structural

engineers etc., who undertake civil and construction works for both private and public domain.

After the consultancy had advised the client on the project design, cost and duration an

agreement was made with the consultancy to carry out with the tendering process such that

project can start after a month from agreement.

3.0 TENDRE DOCUMENTATION

Here the tender document is drafted which it identifies work at hand and its requirements this

includes:

 Bill of quantity

A bill of quantities (BOQ) is a document used in tendering in the construction industry in which

materials, parts, and labor (and their costs) are itemized prepared by quantity surveyors and

building estimators of the consultancy.

It also details the terms and conditions of the construction or repair contract and itemizes all

work to enable a contractor to price the work for which he or she is bidding.

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Bills of quantities are prepared by a “taking off” in which the cost of a building or other structure

is estimated from measurements in the Architects, Structural Engineers, etc. The BOQ also gives

other important sections such as the preliminaries, preambles, prime cost and provisional sums.

Below is the prepared bill of quantity issued in the tender document by the consultancy.

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The BOQ is used to create a cost estimate such as in regard to the square area in meters of walls

and roofs, the numbers of doors and windows, and systems as heating, plumbing and electrics.

 Specification

This is a written technical information which spells out the quality of materials and

workmanship which would form the bases of executing the works.

 Drawing

Non detailed printed drawing would be issued out to contractors bidding for the contract, so as to

get the idea of what is expected of them, since consultant had already measured the actual

drawing.

 Form of Tender

The form of tender is a covering document prepared by the Client and signed by the tenderer to

indicate that they understand the tender and accept the various terms and conditions of the

contract, and other requirements of participating in the tender exercise. It also allows tenderers to

fill in their names, address and the amount of money for a lump sum offer.

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Below is the form of tender issued out by the consultant in the tender document.

To: Associate of Engineers Consult

Tender for: Proposed Six Storey Hotel

Dear Sirs,

Upon examining the conditions, drawings and bills of quantity we offer to carry out and

complete the works described, for the firm price of; GHC…………………….excluding VAT and

complete within 44 weeks from the date of possession. It will remain open for acceptance 30

days from the date of return of tender.

We agree that should any obvious pricing or arithmetic error be discovered before acceptance of

this offer in the priced bills of quantities then these errors will be corrected using various

alternatives.

We understand that we are tendering at our own expense and that neither the lowest nor any

tender need be accepted.

Signature……………….. Date ………………….

Company………………..

Address ………………….

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 Requirements and conditions of contract

Prior to the acceptance and evaluation of tender all bidders required to respond to the following

requirements issued by the consultancy. This includes;

1. Bid bond

Bid bond is issued as part of a supply bidding process by the contractor to the project owner, to

in hopes guarantee that the winning bidder will undertake the contract under the terms at which

they bid.

The cash deposit is subject to full or partial forfeiture if the winning contractor fails to either

execute the contract or provide the required performance and/or payment bonds.

The bid bond assures and guarantees that should the bidder be successful, the bidder will

execute the contract and provide the required surety bonds.

A Bid Bond of an amount not above 10% of the contract total amount is to be deposited when

contractors are bidding for contract.

2. LAD

Contracts generally include a provision for the contractor to pay liquidated damages (or

liquidated and ascertained damages, sometimes referred to as LAD's) to the client in the event

that the contract is breached. In building contracts, liquidated damages usually relate to the

contractor failing to achieve practical completion (i.e. completing the works so they can

handover the site to the client) by the completion date set out in the contract.

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Liquidated damages are not penalties, they are pre-determined damages set at the time that a

contract is entered into, based on a calculation of the actual loss the client is likely to incur if the

contractor fails to meet the completion date. The Client issued an amount of GHS 150000

(benefit foregone) as a loss in case the contract is not finished on time as stated in the tender

documents.

3. DLP.

A defects liability period is a set period of time after a construction project has been completed

during which a contractor has the right to return to the site to remedy defects and the period is

six (6) months for this project.

4. Issuance of the following by contractors;

 Registration certificate,

 SSNIT certificate,

 Labour certificate

 And Income tax clearance certificate

 Submission of tender

All bidders are to submit processed tender not later than 30 days open for acceptance , thus from

1st January 2015 to 30th January 2015, 12pm at the General Post of Accra , which would serve as

a collection point with active attendance available to monitor the operation.

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4.0 CONTRACTOR SELECTION

Upon the nature of the project Associate of Engineers Consult (AEC) opted for open tender

method of contractor selection since it gives all contractors irrespective of their class, an

opportunity equal to submit a tender quoting price they intend to offer for the proposed project.

5.0 TENDER ACQUISITION AND ADVERTISEMENT

The source of advertisement medium of the contract is by publishing on three graphic editors,

thus daily guide, Ghanaian times and the Chronicles and one web advisement at Ghana

toady.com.

6.0 TENDERERS/ CONTRACTORS

Seven contractors opted and purchased processed and submitted the tender in other to bid for the

65 storey project, and they include;

 OSAR construction Ltd. (class D2)

 Mega Max Structures Ltd.(class D1)

 T.T Brothers construction Ltd. (class D2)

 Build Craft construction (class D3)

 Brook’s and Son’s ltd (class D4)

 Jaco & Co, construction ltd. (class D3)

 B.E structures Ltd.

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7.0 TENDER EVALUATION

Prior to detailed evaluation of tenders, the consultancy will go through all tenders whether each

tender is substantially responsive to the requirements of the tendering documents.

Three (3) of the bidders failed to tender evaluation section due to the following reasons;

 Build Craft construction (class D3); failed to submit tender on time , thus from 1st January

2015 to 30th January 2015, 12pm as issued in the tender documents, rather they submitted it

around 12:30pm which tender was close for submission by then.

 B.E structures Ltd. (class D3); also did not make it out since they failed to show certificates

of registration in their documents as specified by the contract document.

 Jaco & Co, construction ltd. (class D3); failed approve and confirm correction error terms as

specified, since there was error in their bill.

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Below is the error correction than by the consultancy

Error correction done by consultant

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 GENERAL SUMMRY

PRELIMINARY 16,500.00
HOTEL 419,000.00
EXTERNAL WORKS 9,000.00
PC, PROV, & DAY WORKS 45,000.00
SUB TOTAL 489,500.00

ADD INSURANCE 3,000.00

Calculating for percentage adjustment

Corrected tender figure …………………………… 492500.00

Original tender figure ……………………………... 502500.00

Error -10000.00

Corrected tender figure ………………………………………………. 492500.00

Less

PC& Prov. Sums & day works ……………… 45000.00

Insurance ……………………………………. 3000.00 48000.00

444500.00

Correction factor = 10000 * 100%

444500

=2.25% (-ve)

 All rates and prices herein (other than PC & Provisional sums) was to be subjected to a

rebate of 2.25 %.......since Jaco & CO failed to confirm this error they were withdrawn.

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Only four (4) contractors made it through, passing all conditions of contract to the evaluation

stage. Namely;

 OSAR construction Ltd. (class D2)

 Mega Max Structures Ltd.(class D1)

 T.T Brothers construction Ltd. (class D2)

 And Brook’s and Son’s ltd (class D4)

The evaluation

The international (FIDIC) tendering rules were use as basics in evaluating tenders. In this

method of evaluation the consultant would determine for each tender the evaluated tender price

by adjusting the tender as follows:

 Making any correction for errors

 Converting the residual amount into Ghanaian cedis using the exchange rates

 Adding any benefits foregone for longer times of completion.

 Making appropriate adjustment for any other acceptable quantifiable variations, deviations

or alternative offers not reflected in the Tender price. Etc.

Below is a table depicting tabulated result showing the best tenderer who won the contract using

FIDIC method.

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 corrected
corrected tender fig benefit foregon evaluated tender
contractor period remarks
(Ts) (Br) fig (Te)
(mo)

1. OSAR construction Ltd 475,000.00 15 150000*5 1225000 4th

2. Mega Max Structures Ltd 500,000.00 10 150000*0 500000 1st

3.T.T Brothers construction Lt 480,000.00 13 150000*2 780000 2nd

4. And Brook’s and Son’s ltd 490,000.00 12 150000*3 940000 3rd

Hence contractor 2 (Mega M.Ltd) qualifies for the project.

8.0 CONCLUSION

The tendering process is commonly used in both the private and public sectors for the

procurement of goods and services. Both the tendering party and the respondent need to be

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mindful of ensuring the accuracy of the documentation exchanged and statements made during

the tender process. The above example shows contract documentation the and use of open

tendering is as means of selecting contractors to offer a bid for contract using the international

(FIDIC) tendering rules.

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