Getting the tender right

Abernethy_square.jpgBy Malcolm Abernethy
Executive Officer, NZ Contractors' Federation

We are told that the infrastructure construction industry is being presented with one of the largest infrastructure development spends we have seen. For that reason, and given that it is a competitive market that contractors work in, I felt it was important to have a look at some key points a contractor should consider when preparing a tender.

Every contractor has a different approach to preparing a tender and that approach is dependent upon the type of contract being tendered.

The following are some points that a contractor may consider when preparing the bid:

  • Read the documents carefully to gain a thorough understanding of the job. Understand fully exactly what is required to be submitted with your tender and follow the instructions to the letter.

    Recently a contractor failed to include a copy of their health and safety certificate for ACC accreditation with its submission and was rejected from the tender process. The contractor had previously worked for the authority and assumed it had all the information it needed with respect to the contractor’s safety record and management systems. Assume nothing, if you are unsure of what is required, then ask the principal for clarification.

  • Make sure you know what risk you are accepting.

    As the civil construction industry matures, contractors are more aware of the risks they expose their business to based on the stand forms of contract and the types of contract used. Where standard forms of contract have been extensively modified the risk apportionment can be significantly altered. Apparently simple amendments can shift the risk profile of the project significantly, placing greater risk on the contractor than would occur under the standard conditions of contract.

    Unfortunately, many local authorities are employing lawyers who are substantially altering standard forms of contract to reduce the risk the principal is exposed to.
  • Plan how you may approach the job, particularly the sequence that the work will be completed in.

    Consider new technologies and work methods that are innovative and may provide the commercial edge to your tender. If the innovation leads to a tag then it is wise to submit a conforming tender along with the alternative. Often contract documents require a programme of the work to be submitted with the tender to show how the completion date will be achieved.

  • Ensure the time frames are realistic and achievable with the resources you have, and include how you may access additional resources if required.

    Any subcontractors should be identified and prices obtained from them. Add a percentage to cover administration of the subcontractors remembering that some subcontractors require more time and costs to look after than others. Prepare a subcontract agreement that both parties will sign if your tender is accepted and make sure they have a copy of the head contract agreement.

    Ensure subcontractors have the resources to do the job when you need them and evaluate their management systems for quality, environment and safety. If they do not have systems, be prepared to induct them into the management system you use, and build that time and cost into your tender.
  • Prepare your unit rates for the work using your knowledge of the industry, the work required and the specification. Take special note of the specification requirements to ensure that all your costs are recovered.
  • Remember to value the on-site overheads, off-site overheads and profit, day works rates and a processing percentage that you will apply to variations.
  • Ensure you can obtain insurances and bonds, and allow for them in your pricing. Have an insurance broker check the insurance requirements and give you a price to place the insurance.

  • With your tender submission provide copies of your quality assurance plan and any certificates that verify you are following the procedures.

    Most tenders require some evidence of a health and safety plan in place for your business and may require a site-specific plan to be produced at the time of tender. The contract documents may also request a specific quality plan for the project.

    The project may also require materials and work testing to ensure compliance with the specification. Make sure you have allowed for this in your pricing and programme and that you understand the requirements fully by preparing a test and inspection plan.

  • The majority of tenders ask for non price attributes in some form to allow for assessment of your capability. Write non price attributes clearly and specifically for the project and, above all, stay within the requirements of the request for tender document.
  • Have an independent person check your submission thoroughly and make sure you get it into the tender box on time.

Contractor Vol.33  No.9  October 2009
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