LECTURE NO.4

OFFER – TENDRING – PLANNING

Building Construction Technology I

International Burch university

Architecture department

Sarajevo

Course : Building Construction Technology I

Date : xx / xx / xxxx

Professor : Prof.dr.Nerman Rustempasic

Assistant : M.Sc. Ahmed El Sayed

INTRODUCTION

Offer – tendering and construction site are very important

themes for every engineer. Without understanding these

terms and process, a lot of problems will occur such as :

why we didn’t get this project? Why the other company or

designers are getting the jobs and not us?

This kind of questions can be answered if the designer (

engineer ) learns the realtion between designing and

winning in tender.

Without the tenderation there are no projects, which means

that designers will have no jobs to do.

TENDER OFFER FROM THE CLIENT'S AND

ARCHITECT'S PERSPECTIVE

Perception of the stages of a construction project oftenvaries between the client/architect and the contractor.

Client and architect are involved in the project for monthsbefore the actual construction work commences, for acontractor however stages of the project include only thetender offer and construction stages.

Tender procedure, from client’s and architect’s point of view,is regulated by NJCC (National Joint ConsultativeCommittee for Building).

TENDER OFFER FROM THE CLIENT'S AND

ARCHITECT'S PERSPECTIVE

Most small projects apply the "Single Stage Selective

Tendering” which can be characterized in the following way:

Invitation to tender – the contractors are contacted if they would be

willing to tender. The enquiry is issued in writing 4-6 weeks before

the tender and it should contain a brief description of the investment

and the commencement date.

Number of contractors tendering – recommended maximum

number of contractors is 6, with additional in reserve. The limitation

is due to the fact, that the tenders tend to be expensive and it is

irresponsible to unnecessarily inflate prices in the construction

industry.

TENDER OFFER FROM THE CLIENT'S AND

ARCHITECT'S PERSPECTIVE

Tender documentation – the aim of tender documentation all offers

will be presented on the same basis, so the competition may only be

about the price. It is assumed that each contractor will complete

works in a way specified in documentation.

Time to prepare tender offer – in smaller projects it is usually 3-4

weeks, in bigger and more complex investments it can take longer.

Changes in tender documentation – contractors should not make any

changes. They should instead send an enquiry min. 10 days before

the tender date. Architect should send a reply to all contractors to

provide them all the same chances.

TENDER OFFER FROM THE CLIENT'S AND

ARCHITECT'S PERSPECTIVE

It is often disregarded in practice, due to the short time

allowed to prepare an estimate or vagueness.

Withdrawal of the offer – tender offer can be withdrawn by the

contractor at all times, as long as it has not been chosen by the

investor. Acceptance of an offer constitutes an agreement between

the investor and contractor.

Tender offers analysis – tender offers should be analyzed soon after

they were returned. After the contract is awarded architect should

inform all participants about the offers received, without naming the

companies, which put them forward. Even though it gives contractors

an insight into competitor’s pricing policy, it is often disregarded.

TENDER OFFER FROM THE CLIENT'S AND

ARCHITECT'S PERSPECTIVE

Error check – the winning estimate is checked and the erroneous

calculations are sent back to the contractor. There are two

procedures to resolve those: "Alternative 1" – where the contractor

can confirm or withdraw the offer and "Alternative 2" - where the

contractor can confirm the offer or correct mistakes.

Price negotiation – procedures allow pricing negotiations leading to

lowering the prices if the lowest offer exceeds investor’s budget.

BASICS OF COST ESTIMATE PREPARATION

Preparation of tender offer requires various documentation

types, as specified by an architect or an investor. They

involve different terms of settlement and risk.

Regardless of the type of documentation one should take

into account costs not directly connected with corresponding

construction works, e.g. cost of the toilet, on-site safety,

company standing costs etc. Those costs are usually

included in the "Preliminaries", at the beginning of the

estimate.

SPECIFICATION & DRAWINGS

This type of documentation contains drawings and

specification; it can also contain a separate scope of works

to clarify the full costs.

Contractor is responsible for surveying the works. Any errors

in measurements and cost estimates will not be taken into

consideration and the contractor will be required to conduct

all the works indicated in the documentation, regardless of

whether they are specified by the scope of work. It means

that contractor needs to check all documentation carefully,

since each its element included in any part of

documentation constitutes part of contract and needs to be

completed.

BILL OF QUANTITIES

In case of bigger projects, tender documents often consist of

"Bill of Quantities" (BoQ). It is a list of all required works

(with all measurements already made) – the contractor

needs to provide their rates for each of the works.

BoQ is prepared by "Quantity Surveyor" employed by the

investor, according to Standard Method of Measurement -

SMM.

The latest version is SMM7, but the smaller project still often

use.

BILL OF QUANTITIES

The rates given in BoQ will be used to calculate the cost

of additional works of the same type during the project,

it is therefore worth to try to foresee potential additional

works and raise the rate for the corresponding type of

works.

The errors in the BoQ are the liability of the investor – the

contractor needs to be paid for all works required, even if

they are erroneous or if some works are omitted. Because

of that BoQ is not used often anymore.

If the investor cannot state exact measurements, the

approximate quantities are applied.

SCHEDULE OF RATES

"Schedule of Rates" is the list of the rates and it’s used veryrarely, only in case if the scope of work is impossible to define.

The contractor is accountable for completed works according tothe time and agreed hourly or daily rates.

It is of course an ideal basis for cooperation from contractor'spoint of view, because they are not at any risk and all thematerials and employees working time is being paid for.

In case of such cooperation form it is crucial to keep a detailedrecord of time and resources spent during the project. Those arenecessary to establish the payment and eliminate potentialconflicts between contractor and investor.

SCHEDULING AND PLANNING CONSTRUCTION

WORKS

Without proper planning it is difficult to make a constructionproject run smoothly and be completed on time and withinbudget. Of course, smaller and less complex projects very oftendo not have a formulated formal plan or schedule, since allplanning takes place in manager’s head.

It is an acceptable solution, however everyone’s perception hasits limits, and in most cases it is impossible to manage all aspectsof a months-long project without the use of additional tools. Themain reasons for planning in construction works can be summedup as: Improved management of works and resources, their sequence and

consequences of any changes that may take place

Ability to establish a realistic completion date

Improved efficiency control

Facilitated risk assessment process of the project

Basis for solving contractual claims resulting from delays

SCHEDULING AND PLANNING CONSTRUCTION

WORKS

Appropriate schedule of works allows to establish

completion dates for all stages and elements of works, e.g.

when will the electrician be needed, when will the garden

door be installed, floor panels delivered etc. Of course,

scheduling is not about planning works a week in advance –

this can be done by every skilled worker.

A correctly designed work schedule allows such information

to be provided months in advance. Such information often

proves crucial, especially when orders have to be made

long before the delivery.

PLANNING TECHNIQUES

The only technique commonly applied in small and middle

sized projects is “Gantt chart" or "Bar chart” (both names

refer to the same method).

Other techniques (arrow diagrams, precedence diagrams,

line of balance, time-chainage diagrams) are only applied to

large projects, often involving infrastructural works. Please

contact us for further information about these methods.

GANTT CHART

Gantt or Bar chart is the easiest available planningtechnique, and probably the only one commonly understoodwithout prior training. Despite its simplicity, a correctlydesigned chart will provide a lot of information necessary tocomplete the project.

Each line on the chart indicates a task or group of tasksnecessary in the project. The length of a bar is relative tothe time necessary to carry out a task.

Individual tasks stand in dynamic dependency relationshipsthat reflect the order of completion. This allows for a fastcheck of how, e.g. a delay of task A will influence thecompletion of task C, taking place 2 months later.

GANTT CHART

Appropriately prepared chart indicates the critical tasks, i.e.

the ones that determine the timely completion of the entire

project. These form a "critical path". This allows for more

attention to be given to the most important tasks.

Each task can be assigned necessary resources, workers,

equipment and material, which facilitates the procedures of

placing orders and workforce management.

Additionally, the chart may include, or be the basis for a

detailed analysis of financial flow in the project and risk

management.

GANTT CHART

TYPES OF SCHEDULES

Schedules can be classified depending on the type and precision of

information provided.

Master program : It is a general project plan, which does not include

any details, and only shows the main stages of works. It is mainly useful

for the clients and architects supervising the completion time. The

master program must be provided to architect by the contractor.

Detailed program : It is an expansion of a master program, which

includes all activities and details of works completion. It is used by the

contractor to manage works and resources. Usually it is not passed on

to client or architect. Due to the large amount of information it contains,

the detailed program is often prepared to only embrace a specific period

of time (e.g. 1 or 2 weeks of works).

TYPES OF SCHEDULES

Purchase Schedule : Additional schedules are created as

necessary by filtering the data included in “Detailed

program”. The most popular is "the purchase schedule",

which indicates the deadlines for making orders. All data is

dynamically related, and therefore if the installation of

windows, which have to be ordered 4 weeks in advance, is

delayed, the schedule will automatically suggest new order

date.

Using schedules greatly facilitates site management and

reduces risk of making a mistake or missing out important

tasks.

SOFTWARE

The development of computers and scheduling software has madepreparing and updating of schedules much easier. There are manyprograms available, differing in functions advancement, user-friendliness and price.

Probably the most popular tools available for MS Windows are:

MS Project

Asta PowerProject

Primavera

Choosing appropriate planning software depends on individual needsand preferences. It’s worth to have a look around and choose amongmany available additional options. One very useful additional feature isthe possibility to synchronize tasks with calendar, or sharing the planamong several employees.

RISK MANAGEMENT

Using planning software makes it possible to expand the functions of schedules to include project risk management. Easy scenarios analysis processes allow preparation of many variants of project, e.g. what will the consequences of a delay for a particular task be and how to deal with them. This kind of theoretical analysis allows better understanding the mechanisms behind the project and preparing alternative plans, should problems emerge.

Risk analysis can be summed up with the following:

Hazard identification ( Identification of dangerous things )

Probability and consequences estimate

Deciding on risk management method (avoidance, reduction, sharing and retention)

Management and supervision

Conclusion and report

PROBLEMS WITH SCHEDULES

Planning and schedules are not problem-free and, as it happens, their

benefits are not fully used.

One must bear in mind that schedule is a dynamical tool which needs to

be regularly updated in order to serve us most efficiently. Every

construction plan is appropriate only until the project has started. It can

be often seen, that our plans do not reflect reality, in which case the plan

must be updated, otherwise it will lose its adequacy.

Plan is only as good as the person who created it. Software is only a

tool, not a magical solution to all our problems. If the project deadline we

set is not realistic, there is no plan which will make completion on time

possible.

THANK YOU