Lesson # 3 - Successful Tendering and Contractor Selection

And this time: Tips for Successful Tendering and Contractor Selection

Successfully complete a construction project

Hello,

after the planning phase where we, together with the project manager, formulated the various consultant programs (electricity, air conditioning, plumbing, etc.) according to the project program, comes the third stage.

The third phase is coming

Tendering and selecting a contractor for the work

It is important to understand that the tender documents will later become the contract documents. It is therefore imperative to attach at this stage the wording of the legal agreement that will form the basis of the agreement. Of course, the legal agreement has no meaning without the engineering part - the plans / specifications / quantities, etc.

When we prepare the tender documents, we have two basic questions to face:

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The first question we ask ourselves is

Are we interested in one contractor to do all the work (key contractor) or split the project between several contractors.

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The second question we ask ourselves is

Will the auction be distributed in the form of "bulk quantities" or in the form of "Powell"

It is important to understand

Regarding the first question

Splitting the work between several contractors will increase your bargaining capability ("segregate and govern"), generally reducing your overall cost and allowing you to better control events such as

Take care of keeping tight schedules

On the other hand, improper control opens the door for every contractor to reduce his responsibility and thereby increase the "holes" between the contractors (holes which usually mean exceptional payments) and delay the execution of the work. Managing a very professional and experienced project working with contractors.

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Regarding the second question:

Contracting agreements can be classified into two main types:


A. "Fauschley" contract -

An agreement in which the parties agree a total and final price for works to be completed and completed, without measuring quantities of materials and labor.In this type of agreement, the contractor draws on the work plans and specifications, estimates the costs and submits to the bidder. 

The contractor takes the risk that he may have misjudged the scope of work and materials required and submitted the bidder too low. 

The commissioner is also at risk, since in case it becomes clear that a particular job is not detailed or mentioned in the technical specifications, in writing the quantities and in the plans he may be required to pay an additional fee for it.

B. "Measurable Contract" ("Quantity Writer") -
An agreement whereby the contractor's salary is determined by calculating the actual amount of work (such as a square meter of color of a certain type ...). With respect to each section. Payment to the contractor according to the actual quantities. 
In a measurement agreement, it may turn out that the quantities required to do the work are higher than the design estimate and hence the final cost will be higher than planned.

Tips and rules of thumb for decision

In many projects, instances of additional work and / or anomalies not included in the original agreement (whether "pausal" or "quantities") are created and because the execution of these works by the contracting contractor will generally be cheaper and faster than their execution by another contractor, it is desirable to include a pre-agreed mechanism. Regulating the manner in which additional work is performed by the contractor.

  • When it comes to the casing of the building - it is never better to take one contractor.

  • An urgent project on a tight schedule is better to split and "pay" on augmented site management inputs, as each contractor is easier to expedite.

  • Split the work between no more than 5 different contractors.

  • Split contractors allow you to work directly with any expert in their field. When you employ one contractor in charge of the subcontractors, we actually "give up" the ability to select them according to their professionalism, and the ability to control diminishes because of a change in power relations.

The solution

Hiring a professional project manager (if we don't have one yet) to be involved in any decision will explain the implications and take full responsibility for the behavior with the contractor or contractors of their choice. 

The legal issue should be noted - the lawyers' lack of knowledge, etc.… 
The next step is to submit to the contractors where we are interested in the tender details on the tender content form (attached below) with an accompanying letter (attached below). 
After a specified period of time, contractors submit detailed bids. 
Caution! This is the opportunity for contractors to find distortions or clauses where the quantity requested does not match the actual situation, and take advantage of this mistake to their advantage.
Needless to say, the job of the project manager is to compare the bids, locate the biases and identify the "game" with the numbers and thus of course save you a lot of money. 
After aligning all bids, negotiate and select the contractor or contractors.

Yaron Ben-Menashe and Eli Gottlieb

Maof Engineers Ltd.

Invitation to make offers

Tender distribution material

Material for signing a contractor

List of material for tender

נזכרנו במשפט יפה

"כשאתה הולך לנהל אין לך ידידים, יש לך מטרה. אם אתה רוצה חבר, קח לך כלב"

(אל דנלופ)