TENDERING INTRODUCTION A tender can be said as an offer to do work or supply goods at a fixed price.

Initiating step invited of a tendering process in sealed bids for which qualified construction or contractors are to submit

for supply of specific and clearly defined goods or services during a specified timeframe. The tender process is designed to ensure that the work to be done for client/government is given out in a fair way. For example in Malaysia, there are a number of policies known as procurement policies which guide government of Malaysia on how to make decisions on which tender to accept. Although price is very important in the decision on which tender or bid to accept, it is not the only factor taken into account. Once client/government accepts a tender, it is binding on both parties. This means that the person or company that won the tender has to provide the goods or services in the manner agreed to and at the price offered, and client/government must pay the agreed price at the agreed time. In other words, once accepted, a tender is a binding contract. TYPES OF TENDERING When talk about tendering, it is involved some kind of complicated process and procedure. Before any tendering process can be done, professional team and employer must make sure all necessary tender documents have been prepared, checked and approved. The source of the funding also must have been identified and the project financing put in place. The procedures for subsequent stages should have been established with the express consent of the employer to ensure the tendering process will go smoothly. What types of tendering that employer want to choose is depends on nature of contract, complexity of the construction, expertise needed and several reasons. But usually for the

government project all over the world, is tend to make open tender to ensure the procurement and works to be done in fairly manner without prejudice. Open tender is one of the types of tendering that commonly used in this world. Actually there are several types of tender including open tender, selective tender, negotiated tender, serial tender and term tendering. WHAT IS THE NEGOTIATED PROCEDURE? According to the Community and national legislation, "negotiated procedure means the procedure whereby the Contracting Authorities consult the economic operators of their choice and negotiate the terms of the contract with one or more of these." In the negotiated procedure, "Contracting Authorities shall negotiate with tenderers the tenders submitted by them in order to adapt them to the requirements which they have set out in the contract notice, the tender documents and the additional documents, if any, and to seek out the best tender." Negotiation Tender Negotiation tendering is extensively used in the engineering and construction industry commencing from tendering till dispute resolutions, i.e. under the styles of pre-contract negotiations and post contract negotiations. Usually with single contractor but may be up to three contractors. Negotiation process involves are as follows: - Identification by the employer of a suitable contractor to negotiate with. The contractor can be selected either from the employer's own list of preferences or on the advice of the professional team. - The contractor being apprised of the workscope. The selected contractor is issued with details such as the scope of work involved, relevant drawings, design and /or information to enable him to

appreciate the extents of obligations and the employer's actual needs. Some employers prepare and issue to the contractor proper tender documents inclusive of a nominated bills of quantities to assist contractor in pricing the works for the forthcoming negotiations. Negotiations can be applied to the following type of contract: - In Partnering type of contracts under the so called win-win formula. - Where the employer has a long term business relationship with the contractor. - In situations where the parties are in a relationships of holding and subsidiary companies. - Where the contractor is involved in the financing of the project. - In situations where the employer finds it advantages to employ the same contractor to continue an initial or existing contract for the new works - Where there is a pressing need to have a very early start of work on the site and to complete the works on a fast tract basis. - In special circumstances e.g. Security reasons, emergencies etc where it is expedient to secure the services of a particular contractor only. - Where there is only a single contractor who is the only one available or with ether the special skill or resources to carry out the particular works. - The employer's resources are either limited or constrained thereby making the use of the other tendering impractical. Advantages Disadvantages cost work is likely higher than

Only reputable contractor are The invited for negotiation. The Contractor can

competitive tender.

contribute his expertise during Reduces the availability of work for other design stage. Early Commencement contractors. of Should the negotiations be deadlock or

work on site. It shortens the prove eventually unsuccessful, this causes period involved in appointing wastage of valuable resources on both

the contractor.

sides and loss of time for the employer, thereby delaying the overall selection of suitable contractor.

Reduce risk of failure Best alternatives for such the as

employer to adopt is special circumstances and etc. Experience has shows that contracts let out this basis result in fewer disputes and claims during the construction stage. emergencies, security reasons

NEGOTIATED CONTRACT PROCUREMENT what is it? With the cost of tendering increasing again as we pull through the tail end of the recession, and the feeding frenzy of contractors buying work to remain in business all but gone, should we be looking at alternatives to a traditional procurement route? If the answer is yes then most will agree that at the top of that list of alternatives sits Negotiated Contract Procurement. In its purest form, the client instructs their advisor (usually the quantity surveyor) to enter into negotiations on their behalf with a selected contractor. The contractor will have almost certainly worked for the client on a number of projects, the client will have an understanding of the contractors procedures, their suitability for the contract, their profit and overhead percentages and their ability to produce a quality product and a good working relationship will already be in place. It would be foolhardy for a client to enter into a negotiated contract with a

contractor who was new to them or had underperformed on a previous project.

HOW SHOULD IT BE USED? The only effective way for a negotiated tender to be employed is to treat it from the outset as a method to select a partner and award the contract. The basis of this tender process is information. The clients Architect, QS and other consultants must prepare a package of information comparable to that required for design & build. The contractor can only negotiate on the information given so it is vital that the package is comprehensive. The contractor then effectively becomes part of the design team and assists in developing the design in order to price it accurately. The result is a guaranteed maximum price (GMP). The contractor agrees that the project can be completed to the details and standard shown within the GMP. He may also advise on cost savings where relevant.

WHAT ARE THE PITFALLS? Cost: As with design & build contracts price fluctuations can occur. These are usually due to the client amending items after the contract is let. Although these changes can be approximately costed against work of a similar nature (e.g. hanging a new door), there is not the same facility for measurement and valuation changes as exists in traditional procurement, where each item is priced and these costs are submitted as part of the tender return. Substandard or incorrect buildings: Where the details on which the GMP is based are not concise, the contractor will procure products and services from the lowest bidder to increase profit margins. This can be combated

by ensuring the information pack supplied to the contractor specifies the products precisely and where this is not possible, gives an accurately worded performance spec.

WHERE CAN NEGOTIATED TENDER BE EFFECTIVELY EMPLOYED? Negotiated tender can be used in any situation where traditional procurement would normally be employed. The keys to successful negotiation are information and trust. This process will fail where either one of these is missing. It is imperative that the clients design team can produce a comprehensive set of design documents and specifications and even more important that the client and the contractor trust each other.

WHERE NEGOTIATION SHOULD NOT BE USED Negotiated tender is not suitable where: The client is not completely sure of what they are looking for. The client has limited experience of building procurement.

SUMMARY It can be seen from the above that the up front information required for a negotiated tender is not dissimilar to the employers requirements for design and build. The areas of application however differ greatly. Whereas D&B is not suited to the procurement of most healthcare contracts it has been proven that negotiation is. In the complicated environment of a healthcare campus, having a contractor on board early can benefit all parties. This is particularly relevant when the project represents refurbishment or alterations within buildings which have to

remain operation and where the work must be completed in phases often with complicated interrelationships.

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