Tendering

Tendering is a popular method from which building companies obtain work.

Lately, the tendering process has been very competitive. To win a contract, a company must carefully draft the tender papers. This report was created with the aim of identifying the areas of tendering that need to be scrutinized. The specific fields are addressed, as well as the major considerations to be considered. The study concludes with a decision of whether or not to tender the ’Design and Build’ proposal, with specific reference to a prior project by the same customer. Comparison of the Value of This Project and the Previous One

Site Location

The site of construction has a significant impact on the cost of a building. The previous project was the construction of a multi-story building in the center of a city i.e. in a ‘brownfield’. The new project is the construction of a bigger multi-story building in a ‘greenfield’. Construction in Greenfield has fewer costs compared to construction in a brownfield. The former incurs no costs for significant demolition, site clearance and remediation (Cunningham). Remediation may include any damage to water pipelines, sewer lines, electric cables, fiber optic cables among other utilities. When estimating the cost of building inside a city, one has to consider the costs of clearing the site prior to actual construction. Depending on the existing structures on the site of construction, the bidder has to do the appropriate calculation to include those costs in the bidding sum amount.

Site location can also affect access and transportation of materials to the site. When construction works are in the city center where there is sometimes traffic jam, construction work can be delayed. Delay of construction work translates to the project taking longer time than predicted. Therefore, the project may end up overrunning the predicted budget.

How the Different Circumstance and Specification Affect Pricing Of This Project

Construction of the Structure and Other Specification Differences

The design and structure specifications affect the cost of building (Cunningham). The function and geometry specification of a building may lower or increase the cost of the building. In the previous project, the building was to have an underground parking that used natural ventilation. The new project does not need to have underground parking as it will be provided outside the building. This has a significant effect on the building cost. However, the inclusion of HVAC system at all levels needs careful reviewing of the tender sum estimate. Also, the size of the size building will affect the cost of HVAC system.

Design and Build Procurement Route

Design and build procurement route of tendering is beneficial in a number ways. The contractor provides design and construction as a single contract. Design and build tenders are highly priced. However, for the contractor to win the tender has to strive to define the requirements of the client appropriately (Cunningham). Also, this approach of procurement gives the contractor flexibility to undertake the project at his optimum speed to complete it. The contractor also has the certainty of payment before commencing the project. However, this procurement route rests risks wholly on the contractor and the client can also recover costs directly from the contractor.

Therefore, there is need to carefully prepare the tender document putting into consideration any detail. The scope of the project has to be well defined and agreed upon by involved parties. This minimizes chances of risks arising in future.

Revision of The Estimate Components In The Previous Project

Project Scale and Duration

Construction project duration can be defined as period in-between the project sanction by the client and practical construction completion (Joe Martin, et. al). Project duration is one of the parameters for measuring the complexity of construction project using the construction complexity index tool (Xia Bo, Chan Albert). Studies in have revealed that the key problems in the construction sector are a poor prediction of project cost and duration period (Joe Martin, Theresa Burrow, Ian Pegg). Egan ( in Joe Martin, et. al) argued that construction projects are seen as hard to deliver within their predicted time frame and budget. He thus alluded that the duration component of a construction project needs deeper consideration to avoid risky scenarios. The period taken to complete a certain construction project will depend on several factors including but not limited to; design, phasing, access to the site of construction, site conditions, market constraints, availability of resources and financial availability (Joe Martin, et. al).

Risk Factors in the Estimate/Tender

The risk in construction can be viewed as the possibility of not meeting what is anticipated (Oyewobi L. O., Ibrahim A. D. , Ganiyu B. O. ). Risk can result into consequences such as cost overruns, time overrun, work of low quality and law court disputes among the parties involved. Some of the major risks that can be encountered in build and design procurement approach include; error in estimating the tender sum, the delay occasioned by the client, cash inflow problems and inclement weather (Oyewobi L. O., et. al). These risks and other unforeseen risks need a risk management approach to mitigate their severity in case of occurrence. Most of the risks can be appropriately covered if the language of the contract is clear to all the parties and the subsurface conditions which can be missed are well looked at (Oyewobi L. O., et. al). Construction being a risky industry and business, as it involving pricing before delivering the product, needs a careful analysis of cost estimates.

Factors to Determine Whether Or Not to Tender

Several factors influence the decision of the management team of a construction firm on whether or not to submit tender documents for a certain construction project. Some of such factors were identified as follows; identity and reputation of the bidding firm, the available physical resources to undertake the project, the workload the construction company has presently, ability of the client to pay, possible profit margin, type of work, work necessity, experience in similar projects, number of competitors among other factors (Oyeyipo O. O., Odusami K. T.,Ojelabi R.A.,Afolabi A.O.). However, the factors change from firm to firm and from one region to another. Factors such as the ability of the client to pay are given more weight than others. Also, a contractor will be hesitant to bid for a project in which he does not have enough experience such as multi-story buildings. The above-highlighted factors that determine whether or not to bid a certain construction project need to be well examined before submitting the tender documents.

Management

The success of a construction project largely depends on the management team. The management has the duty to coordinate the various players in the construction project to achieve the target. The project management to succeed in its work has to use the appropriate management tools. The management has to ensure there is adequate and timely communication, control mechanism, feedback capabilities, and effectiveness in coordination, set up functional organization structure, ensure adherence to the set schedule and plan and effective monitoring and evaluation (Chan P. C., Scott D., Chan P.L.). The management is the decision-making arm of a firm. The decisions the management makes will determine the success of the firm activities. Therefore, the management has to constitute of competent persons who understands the intricacy of construction projects.

A Close Second

The firm’s closeness to winning the previous tender is an indicator of growing reputation of it. The firm succeeded in observing the tender submission requirements. For the firm to win this tender it has to make careful considerations in cost estimates and technical components such as the constituting a team of qualified staff.

Conclusion and Recommendations

The report has clearly singled out the specific areas of the project which needs to be checked prior to submission of the tender documents. The factors which influence the success of a project have been outlined. The report has given the factors which should determine whether to tender or not.

It is therefore, my recommendation to the management that in consideration of the above factors and the following reasons we bid the ‘Design and Build’ project.

This new project is technically simpler than the previous

The greenfield location of the project is favorable compared to the city center

With careful cost analysis as outlined above, we can win the tender considering our close second position in the previous tender from the same client.

Works Cited

Chan P. C., Scott D., Chan P.L. “Factors Affecting Success of A Construction Project.” 2013.

Cunningham, T. Factors Affecting The Cost of Building Work - An Overview. Dublin Institute of Technology, 2013.

Joe Martin, Theresa Burrow, Ian Pegg. Predicting Construction Duration of Building Projects. Munich: XXIII FIG Congress, 2006.

Oyewobi L. O., Ibrahim A. D. , Ganiyu B. O. “Evaluating the Impact of Risk on Contractor’s Tender Figure in Public Buildings Projects in Northern Nigeria.” Journal of Engineering, Project, and Production Management (2012).

Oyeyipo O. O., Odusami K. T., Ojelabi R.A., Afolabi A.O. “FACTORS AFFECTING CONTRACTORS’ BIDDING DECISION FOR CONSTRUCTION PROJECTS IN NIGERIA.” Journal of Construction in Developing Countries (2016).

Xia Bo, Chan Albert. “Measuring complexity for building projects: a Delphi study. Engineering, Construction and Architectural Management,” 2011.