CONTRACT & ESTIMATING

Types of tender

Pre-
qualification

Tender

SELECTED Advertisement (x)

Tender

Advertisement (x)

Types of tender

1. Open Tender

o Offered to all contractors
client - select qualified contractor based on suitable
and reasonable tender cost.
Client - may receive many tenders if there are many
contractors attending tender invitation.

Client - advertises a notice in the mass media to invite
contractors to quote a cost on the proposed project.

Advantages
 Provide opportunity to newly registered or

inexperienced contractor
 Client may select the lowest cost.

Disadvantages
 Process takes longer time. Therefore, it is

not suitable for urgent work.
 High risk in accepting the lowest biding

cost.

2. Limited Tender

Client offered limited tender to the
qualified contractor in the
specified class stated in the tender.

Bumiputera Only

Advantages
 Number of contractors bidding the tender is limited to

the specific class, therefore selection process is faster.
 Provide opportunity to contractors in specified class to

attend bidding.
 Create a competitive environment among the equal

class or equal category of contractors to obtain the
tender fairly.

Disadvantages
 Expert or skilled contractor from other classes have no

opportunity to attend the tender.
 Less competition due to fewer participants from other

class of contractor.

Selected Tender

Selected tender is offered only to a few
contractors selected by the client.

Only among the selected contractors.
Based on their expertise and experience

in a specific work.

Advantages
 Contractor participating in the tender have been previously

selected.
 Client is more confident in attaining high quality work.
 Organization and equipments of the selected contractors

are more established.
 Only good performance and wide experienced contractors

will participate in the tender.

Disadvantages
 Tender obtained is limited; therefore the opportunity to

the unselected contractor is closed.
 Less Competition to bid tender.
 Possibilities of having cost conspiracy among selected

contractors.

Negotiation Tender

 Negotiation tender is used for complex and
difficult project which the client has not yet
decided on its scope.

 it is a tender offered to the contractors
identified by client based on the contractor’s
expertise, experience and good work record

 The client will select and give the tender
form to the contractor based on this
negotiation.

Advantages

 Only contractors with experience and expertise will
participate in negotiation tender.

 Tender processes are easier and faster as there is no
advertisement.

 contractors should acquire the capability to execute
the project with high quality work product.

Disadvantages

 Contractors who are not invited by the client have no
opportunity to negotiate.

 Tender competition is limited.

Pre-qualification Tender

 The client offers the prequalification tender to the
contractors prior to advertising tender notification

 Pre-invited contractors are required to fill the
qualification form and return it to the client

 To get information on the contactors capability,
background and work record

 The conditions that contactors should have wide
experience, high expertise in the specific field related
to the project, high work skill, high financial capital
and high skill in utilization of specific constructions
technique

 for complicated construction project.

Advantages
 The client can precisely select qualified contractor

because the contractors attending the tender have
undergone the screening process at the pre-
qualification level.
 The client can select qualified contractors in terms of
experience, capability and good work record.

Disadvantages
 Require screening process and advertisement cost at

the pre-qualification stage, therefore process needed is
longer.
 Quotation may be high because of fewer qualified
contractors.

TENDER PROCESS

Tender process is a procedure on how tender is carried
out from beginning towards the end, and involves the
following stages:

TENDER

TENDER ACCEPTANCE-

awarded to qualified contractor

SELECTION -
TENDER evaluation, report

INVITATION-

TENDER submission of completed
tender document

ADVERTISEMENT-

statement produced by the client

1. Tender advertisement

 Tender advertisement is a statement produced by the
client, inviting contractor to participate the tender and
build the project as planned.

 Tender advertisement is advertised in printed or electronic
media

 In this statement, the name of tendered project,
contractor’s class, head, and other information related to
the proposed project are stated here in.

 The time and venue to collect tender form/document and
its closing date is included in tender advertisement

 types of tender advertisement : (Open tender, Limited
tender, Pre-qualification tender)

Tender advertisement

Tender advertisement

Tender advertisement

2. Tender invitation(submission)

 Tender invitation involves the process of looking
through the printed and electronic advertisements and
submission of completed tender document.

 Contractors need to obtain tender document at
specific time that is required by the client

 Contractors should complete the document by
referring tender table document.

 The completed document should be placed in the
tender box provided by the client before the closing
date.

❑ Semua borang-borang
berkaitan, BQ, lukisan
dan speksifikasi disusun
dalam satu naskah

❑ Dokumen Meja Tender-
sebagai rujukan
kontraktor sebelum
membeli dokumen

Document tender

 Borang tender JKR 203B-Pin 2/2002(bedasarkan bill of
quantity)- projek2 besar

 Borang tender JKR 203C- Pin 2/2002(berdasarkan
lukisan dan spesifikasi)- projek segera( projek
selenggara segera)

Tender document

1. Document Tender Based on 2. Document Tender Based On
Quantity. Drawing and Specification.

- Tender notice/notis tender - Tender notice/notis tender
- Tender form/borang tender - Tender form/borang tender
- Instruction to tenderers/arahan kepada - Instruction to tenderers/arahan kepada

pretender. pretender
- Latter of acceptance/ surat setuju terima.
- Contract formJKR 203A/ borang Kontrak - Latter of acceptance/ surat setuju terima
- Contract formJKR 203A/ borang Kontrak
JKR 203A.
JKR 203
- Work specification/ spesifikasi kerja.
- Bil of quantity/senarai kuantiti - Works pecification/ spesifikasi kerja
- Summary of tender/ jadual ringkasan - Schedule of rate/ jadual kadar harga
- Summary of tender/ jadual ringkasan
tender.
tender
- General Tenderer information/
- General Tenderer information/
maklumat Am Petender
maklumat Am Petender
- Drawing/ lukisan
- Drawing/ lukisan

Isi Kandungan Dokumen Tender

•Muka Depan
•Surat Akuan Pembida
•Notis Tawaran Tender
•Arahan Kepada Pentender
•Syarat-Syarat Tender

•Borang Tender
•Surat Setujuterima Tender (L.A)

•Borang Kontrak JKR 203A
•Speksifikasi Kerja

•Senarai Kuantiti (BQ)
•Jadual Ringkasan Tender
•Maklumat Am Pentender
•Lukisan (Jika Berkenaan)

Muka Depan Naskah Tender Surat Akuan Pembida

Senarai Kuantiti (BQ) Jadual Ringkasan Tender

Schedule of Rate

3. Tender selection

 The tender committee meets to open the tender box
witness by at least two officers.

 The tender opening committee will list down the
contractor’s bids from the highest to the lowest

 The bids list and tender document are submitted to
the tender evaluation committee to evaluate and
analyses

 After evaluation, the committee prepares a report and
suggests the qualified contractor to be considered

 The reports are later submitted to the tender board for
final selection

Evaluation

Evaluate- No error, financial status,
price, experience, technical support,
machinery.



4. Tender Acceptance

After the tender selection process, the
qualified contractor will be awarded
with the tender and letter of
acceptance will be issued

The letter contains the contract
particulars, tender price, date to start
work, the amount of security money
and the insurance policies required.



Rejecting Tender

 A contractor offers very high tender price, resulting in the
client paying more than the project financial allocation.

 A contractor offers very low tender. There is a tendency for
the contractor to find ways to reduce the cost to prevent
loss. It results in low quality project.

 A contractor is still in the process of completing other
project. Therefore, client assumes that the contractor will
not give full commitment to the new contract due to
financial capability, labour, plant and restricted equipment.

 A contractor with unsatisfactory work record.
 A contractor does not comply to the terms in the tender,

such as hiring unregistered workers to CIDB.

Retendering

 Error in the contract document.
 Very high tender price.
 Very low tender price

Contoh kesilapan Error in the contract document

Sekiranya
tak sama

Tender validation period and extension of tender validation period
/tempoh sah laku tender

- Bermula dari tarikh tutup tender sehingga 90 hari.
- Dalam tempoh tersebut, laporan penilaian harga perlu

disediakan dan j/kuasa memperakukan 1 syarikat untuk
laksanakan kerja.
- Boleh dilanjutkan maksimum 180 hari sekiranya proses
tersebut gagal.
- Petender mestilah bersetuju. Sekiranya kontraktor
menolak tawaran setelah tempoh sahlaku dilanjutkan, ia
boleh dikenakan pengantungan dan disenarai hitam.

Exercise

1. Define :
i. Tender
ii. Tender box
iii. Tender award

2. Discuss about limited tender.
3. Discuss the advantages of open and negotiation tenders.
4. List the content of tender advertisement
5. List six(6) contents of tender document
6. What is the difference between limited and selected tenders?
7. Briefly discuss the factors that need to be considered in selecting the
qualified tenderer.
8. Prior to sealing a contract, client and contractor need to know the
estimated construction cost. Why is this necessary?
9. One of the requirements in obtaining a government project is the
contractor must register its company with CIDB. What is the purpose of
this requirement?
10. State the reason of retendering.

Jenis Syarikat

TENDER RESULT

TENDER RESULT

Tender table documents





CHAPTER 3:
THE CONTRACT PROCEDURE

Contract is:

 A legally agreement between two or more parties with
mutual obligation.

 An agreement sealed when a party agrees to accept the
bid from another party.

Purpose of contract:

 To bind a relationship between client and contractor
that make clear terms, statement and condition .

 Client needs and interests towards the contractor are
explained in writing in the contract document.

 In case dispute, the contract document is served as a
reference.

PRINCIPLES DESCRIPTION

Tender Client states intention and invites
contractor to build the planned project.

Acceptance Contractor accepts the client’s proposal
without other conditions imposed other
Response than as stated in the contract.
Intention
Contractor takes verbal or written action on
the clients proposed tender.

Client and contractor intent to bind sincere,
responsible and will not breach all the
conditions stated in the contract.

Principle Of Contract In Contract Act 1950 (Amendment 1974)

PRINCIPLES DESCRIPTION

Agreement legally Agreement between client and
bound by law contractor is legal according to
the government’s law.

Bond contract executed Bond contract does not burden
client and contractor, and will
Flawless record on both not create problems during its
parties execution

No record such as careless work,
breach of contract, or bad work
performance before binding the
contract.

Types of contract

 Lump Sum Contract
 Cost Reimbursement Contract
 Measure and Value Contract
 Turnkey Contract
Depending on: method of Payment,
size of work, and project management.

Type of Contracts

Lump Sum Contract

 Lump sum contract is a contract where the contractor
executes the project based on the work shown in the
drawing or the scope of work.

 Payment can be lump sum or in stages, depending on
the size of work.

 The lump sum project is normally adopted for small-
scale construction projects such as the construction of
drain, fence and small building.

Measure and Value Contract

 Measure and value contract is a contract where the
client makes payment based on the quantity of
completed work.

 To determine payment, the current work quantity is
measured and evaluated.

 Building: bank, prison

Cost Reimbursement Contract

 Cost reimbursement contract is a method of payment to
the contractor based on actual work cost and management
fees.

 Generally, this type of contract is carried out through:
Prime cost : Materials, labour, plant and equipment costs.
Fees: Peratusan tambahan yang dipersetujui sebelum
tandatangan kontrak. (tambahan kos pengurusan)

1. Prime cost plus fixed fees ( dah tetapkan fees)
2. Prime cost plus percentage fees ( kira ikut %)
3. Prime cost plus targeted fees( jika projek siap cepat dpt

bayaran tambahan)
Project: Siap segera / sulit /sukar

Turnkey Contract

 Turnkey contract is carried out when the client
assigned complete responsibility to plan, design and
manage the project, to the contractor

 The method of payment to the contractor is through
fixed work, cost reimbursement or payment through
negotiation

 Hospital /hostel/ big-scale project