Table of Contents

Task 1. Understand the information required to produce a tender

1.1.Explain the clients involvement in the tender process
1.2.Identify the constraints that apply to the tender
1.3.Describe the contractual documentation required to support the tender process
Task 2. Be able to apply the principles and techniques of estimating
2.1.(a) Identify the factors to be considered when collect the data required to build up
unit costs
(b) Collect the data required for building up unit costs of at least two civil
engineering activity of your choice.
2.2.Describe the standard data documentation and measurement rules in estimating
2.3.Produce the method statements suitable for compiling unit costs of at least two civil
engineering activity of your choice.
2.4.Calculate unit costs for given items [Classroom Activity - 2 hours]
Task 3. Be able to formulate an estimate for construction operations
3.1.Explain how the bill of quantities format may be used to build up estimates
3.2.Determine the critical factors that affect profit margin in any construction project.
3.3.Describe how the health, safety and welfare plan affects the tender in construction project
Calculate the cost of preliminaries using following data- Water for the work.

1
TASK 1: UNDERSTAND THE INFORMATION REQUIRED TO PRODUCE A TENDER

1.1. Explain the clients involvement in the tender process

Client organisations are divided into private, public (Government), and Quasi-Government
bodies. The private clients include residential, industrial, commercial, social, charitable and
professional organisations, and individuals. The public client means Government which may
consist of various government departments. In Sri Lanka, examples of government departments
involved in major construction works include: Architectural Services Department, Highway
Department, Drainage Services Department, Water Supplies Department, Civil Engineering and
Development Department.

Some of the clients are well experienced in construction works and might have their own project
management teams of designers, quantity surveyors and site supervisory teams, etc. On the other
hand, some of them, particularly those small individual developers, may have development only
once in their lifetime.

Clients may identify their needs in terms of commercial or social pressure to change; by an
examination of primary objectives such as:

1. Space requirements: the need to improve production levels, add to production capacity,
accommodate new processes or provide domestic or social accommodation;

2. Investment: to explore opportunities to invest in buildings; to look for income generating

investment like hotel, commercial buildings, etc.

3. Identity: to enhance the individuals or organizations standing in its market or society;

4. Location: effect of and improvement to the facilities of the neighborhoods; consideration of

better use of resources

5. Politics: particularly in the government sector

There are two client organizations as private and public sectors.

2
The private sector consists of industrial, commercial, social, charitable and professional
organizations and individuals. And the public sector means government departments,
nationalized industries, statutory authorities, local authorities and development agencies.

Clients will usually identify their involvements in terms of commercial or social pressure to
change such as

a. Space requirements: to improve production levels and production capacity, to provide

domestic or social accommodation

b. investment: to exploit chances to capitalize in buildings

c. identity: to develop the individuals or organizations standing in its market or society

d. location" to lead a better use of capitals, capture a new market or improve facility

e .politics: mainly in the public sector

The main aim of the client organizations is to accomplish a degree of certainty in the building
process. On the other hand, individuals and inexperienced clients are led by their advisers and
contractors.

Clients have one of the biggest influences over the way a project is run. They have substantial
influence and contractual control and their decisions and approach determine.

a. The time, money and other resources available for projects

b. Who makes up the project team, their competence, when they are appointed and who does
what

c. whether the team is encouraged to co*operate and work together effectively

d. whether the team has the information that it needs about the site and any existing structures.

e. The arrangements for managing and coordinating the work of the team.

In general, a client aims to choose a team that he can trust and depend on to reduce uncertainties
during a buildings design, construction and use. They are

a. The design: by designing to a budget

3
b. The time: by contractors accepting more responsibility for meeting completion dates,

c. The cost: by achieving realistic cost estimates and tenders which reflect the final cost

Because of this, they are made accountable for the impact their approach has on the health and
safety of those working on or affected by the project. Clients are not required or expected to plan
or manage projects themselves.

Nor do they have to develop substantial expertise in construction health and safety, unless this is
central to their business. Clients take on additional responsibilities. If they specify materials or
methods of working they may well become designers in relation to those specific matters.

They will also legally be contractors if they directly manage or carry out construction Work.
Clients should consult with appointees to find out how much time they will need for planning
and preparing before work is expected to start in order that both parties can agree a suitable time
period. Clients must inform their appointees how much time the client has allowed for planning
and preparation before the work starts. Clients often employ more than one designer, for example
architects, civil, structural and services engineers.

In such cases they all need to $now who does what, and the timing of the appointments needs to
enable the design work to be co-ordinate from an early stage.

When deciding whether management arrangements are suitable and maintained throughout the
project, clients will need to make a Judgment, taking account of the nature of the project and the
risks that the work will involve.

For example, a client was aware that there were electrical and gas services passing under the site.
He arranged for plans for these to be provided by the relevant utility suppliers, and confirmed the
exact location of the services by carrying out on-site tests. This information was then provided to
contractors who were asked to tender for the work so that they could take account of the
presence of the services when bidding for the work.

Clients must provide designers and contractors who may be bidding for the work, with the
project-specific health and safety information needed to identify hazards and risks associated
with the design and construction work.

4
Many clients are prepared to pay for a good service. The client has traditionally employed an
inactive role in the construction process. Standard forms of contract require the employer to pay
for work properly performed. The client is the most important member of the team because he is
the patron for the organization, he identifies the need for the building and he must pay everyone
who is directly or indirectly involved in the construction process.

5
1.2. Identify the constraints that apply to the tender Process

There are many constraints in a tender including clients objectives, clients constraints, financial
constraints, physical constraints, legal constraints, design constraints, etc. Before preparing a
tender for a project, the client must have his own objectives in developing the project. Examples
of objectives may include: building a hotel, re-provisioning of the pump house, constructing a
railway, etc. Usually, the ultimate goals of most of these objectives are to make profits.

Client may also have his own constraints in developing the project. For instance, he needs to
build the building within a specific period. Sometimes, there may also construction constraints of
a project like restricted time period for noisy operation in a site adjacent to a school. Financial
resources are also very important to the development of a project. Even a project with good
profit, the project needs to be financed at the initial and early stage of the development. Client
may therefore need to arrange finance from banks in order that the project can be executed.

Physical constraints usually mean the physical characteristics of the site for development. Such
characteristics include:

The site: lot area, proportion of width to depth, shape, site geology, site contamination,
topography, hydrotropic characteristics, site fronting large area of water, etc.
The building improvements: the maintenance conditions of the building, e.g. cracks,
leaks, etc.

Non-building improvements: fencing, position and depth of utility lines, retaining walls,
swimming pools, footpaths drainage culverts, paving, tennis court, refuse collection point,
transformers, etc. presence of services provision like water, gas, electricity, sewer, telephone,
cables, etc. Legal constraints include restrictions on the title, restrictions on use of the site,
restrictions on profits and income flows, etc.

Sometimes, they may also mean community influences associated with the ownership and use of
land. Design constraints are rules or regulations that the designers have to be followed in their
designs. For instance, usually the construction of the project is subject to height limit, plot ratio,
building regulations on fire escape route, etc.

6
For D1, your analysis should take the form of constraints for the tender.

The Common Arrangement of work sections (CAWS) was developed to align packages of work
more closely with the pattern of sub-contracting in the industry. Two of the objectives of
(SMM7)

Standard Method of Measurement of building Works: seventh edition, 1988) were

1. To simplify bills of quantities and

2. To develop a method which could help with computer applications.

To an extent, modern bills of quantity have been accepted by estimators because they have
developed an understanding of the coding system and descriptions have not been shortened by
the amount envisaged when SMM7 was published.

Many quantity surveyors have avoided a total reliance on specifications, they are aware that
estimators need more than an abbreviated description. The move towards computer-aided billing
and estimating has been difficult, and many doubt whether SMM7 has helped.

On first sight, the tables of measurement rules appear to be an aid to all those involved in
computer-aided bill production and pricing.

Unfortunately there have been some problems:

1. Many specifications have no page numbers. The explanation is that the estimator must use the
national building

Specification (NBS) codes to find the relevant clauses. The problem for the estimator is
that the page numbers are needed for printing and distributing pages to sub-contractors

2. There is confusion with the way work section numbers are used in specifications. The work
category numbers must be repeated on each new page if this problem is to be solved.

3. Some sub-contractors have argued that they received the bill but not the specification, with
SMM6 (Standard Method of Measurement of building Works: sixth edition, 1978), the bill
description often had enough detail to price the work.

7
This may be the estimators fault but in some cases the specification references are more
complex. The estimator might find the correct clause referred to in the bill but not notice the
specification clause includes references to other clauses. For example, a patent glazing
specification could itself refer to a separate glazing specification, which the estimator must also
send to the patent glazing sub-contractor.

4. Defined provisional sums are being used incorrectly. The tender documents should provide
information about the nature of the work, a statement about how and where the work is fixed,
quantities to show the scope of work, and any limitations.

It is common to see defined provisional sums such as: drainage outfall to culvert or
additional dry-rot treatment

5. The number of drawings needed by sub-contractors at tender stage has increased dramatically.
This is due to the reduction in the number of bill items; or as some would say, the quantity
surveyor doing less work many contractors have incurred an increase in printing costs since
the introduction of (SMM7).

This may also be due to smaller margins and the need to ensure that sub-contractors will tender
on exactly the same basis as the main contractor.

now that main contract bids rely heavily on quotations from sub-contractors, the estimator must
exercise great skill and care in dealing which changing procedures and new methods of
measurement for bills of quantities.

The private quantity surveyor (PQS) still has the responsibility to provide adequate information
for the estimator to price.

8
1.3. Describe the contractual documentation required to support the tender process

9
The tender document issued to the tenderers for tender may include the following:

Notes to Tenderer
General Conditions of Tender
Special Conditions of Tender
Conditions of Contract
Special Conditions of Contract
Form of Tender
Drawings
Specifications
Bills of Quantities
General Summary of Tender

Documents used as the basis of a tender

The basis of the tender will dictate the way in which the contractor will be paid and the relative
accuracy of the estimate.

The contractors bid will be for one of the following:

Fixed price contract: where the sum of money is stated in the contract as payment for work, the
payment may be adjusted according to strict conditions in the contract.

Measurement contract: will allow the contract sum to be calculated later, usually as the
aggregate of various rates submitted by the contractor. The contract sometimes includes a target
price.

Cost-reimbursement contract: an arrangement whereby the cost, whatever it may be, will be
paid by the client on the basis of the actual incurred by the contractor, plus overheads and profit.

Fixed price contracts

The price is fixed in advance but is subject to variation under the terms of the contract. This
could include a fluctuations clause to pay for the increases caused by inflation. Lump-sum
contracts are the simplest type where a lump-sum offer is made by a contractor to carry out the

10
work which might be outlined on drawings and described in a specification but no quantities
have been prepared.

This is the usual form for a small job carried out by a local builder.

Bills of quantities provide the most detailed basis for estimating cost.

Each contractor tendering for work will be familiar with their use and can save wasteful effort in
preparing quantities for the same building.

They represent a clear list of items included in the contract and a schedule on which variations
may be valued.

Bill of quantities gives a fair basis for competition and a firm contract sum is known in advance.

The contractors proposals include a contract sum analysis.

The purposes of the contract sum analysis are:

1. To value changes in the employers requirements;

2. To value provisional sums given in the employers requirements;

3. To allow the use of price adjustment formulae where they apply.

The contract sum analysis should be divided into sums of money for design work carried out
before and during construction, and the following:

1. Preliminaries

3. Provisional sums

3. Trade headings similar to those in SMM6 or SMM 7.

Measured contracts

The total cost of a contract can be calculated by measuring the work as it advances onsite and
pricing the measured items using the rates given in an agreed schedule of rates or approximate
bill of quantities. A schedule of rates lists all the items likely to arise, in a similar way to a bill of
quantities, but no quantities are included. A schedule of rates is also used with drawing and
specification contracts to value additional work. There are two principal types of schedule.

11
Cost reimbursement contracts

The basis of this method is for the contractor to be repaid with the prime cost of complete work
as defined in the contract, and a management fee to cover over-heads and profit. The fee can be
based on a percentage of cost 0cost plus percentage contract1 or a lump sum based on the
estimated project cost.

The advantages of this method are: the project can start quickly, the contractor can contribute to
the design, competition can be introduced through the size of the fee, and the contractor is
unlikely to cut corners.

The disadvantages may be: the contractor has little incentive to save on time and resources, the
client is unable to predict the total cost accurately, and it can be tedious to calculate costs during
the construction stage.

It should be remembered that most of the work is carried out by package contractors who tender
for work on a traditional bill of quantities.

Provisional sums

Provisional sums for work which will be paid at current prices 0e.g. day works, work carried out
by statutory undertakers and other public bodies1 are not allocated to work categories but are
separately identified as not subject to adjustment.

provisional sums for work to be carried out by the general contractor are not allocated to work
categories in the bills, but when the work has been executed, the measured items set against the
provisional sum will then be allocated to appropriate categories or, if relating to specialist work,
will be adjusted using the appropriate formula.

The Contract documentation relates to all pre-tender and contractual documentation. Contract
documentation provides builders with sufficient information to be able to construct required
work to meet the service delivery requirements. Consideration is to be given to the terminology
used when translating the service plan in to tendering and contractual documentation for building
and construction consultants.

The preparation of the tender documentation can take up to six months or more to develop,
depending on the project complexity and the resources available. The tender preparation and

12
documentation consists of developing complete and properly co-ordinate documents, some
documents include:

Working drawings and specifications, suitable for tendering and construction

Pre-tender estimate (cost plan D)
Bill of quantities

Formal tender documents

Formal invitation

The Code of Procedure for Single Stage telective Tendering provides an example letter. The
letter is to tell the contractor which drawings have been sent, arrangements for site visits, date for
return of tender and how the tender should be submitted. The client should issue the tender
documents on an agreed date in order to plan the contractors estimating workload.

Bill of quantities

The bill of quantities is a vital tender document; a contract document should be an accurate
description and quantification of the project. There should be a cross-reference to the tender
drawing and architects notes or specifications. We have to send two copies of the bill of
quantities, the general arrangement drawings, health and safety plan, two copies of the form of
tender and to envelope for the return of the tender to the contractor.

In the bill of quantities the work agreed to be done under the contract are listed as each item
along with the quantity of material needed and quality specified for the work. Contractor is
usually paid according to the quantities of items completed each month.

One of the advantages of this method is that it induces performance. It can be effective because
the Contractor is paid as soon as possible after incurring costs and the Client gains by reducing
the total cost of the construction. The disadvantage is that this method is more complex and
expensive for all parties when compared to the basic lump sum contract.

Drawings

13
The bill of quantities will list the drawings which were used in preparing the documents. With
standard methods of measurement aimed at producing shorter bills of quantities, there is a
greater reliance on drawings by the tenderers. The tenderers are great reliance on drawings,
aimed at producing shorter bills of quantities with standard methods of measurement. Tendering
costs could be cut if copy negatives or reduction prints can be produced. For large projects,
drawings are often issued electronically. This might be on CD-ROM, by e-mail or with tenderers
downloading drawings from a secure website.

Form of tender

The form of Tender is a form where the tenderer can fill in details relating to their offer,
including the lump sum for which they are offering to complete the works. A form of tender is a
pre-printed formal offer, usually in letter form, which ensures that all tenders are received on the
same basis and should be simple to compare.

It may be sent with a collusive tendering certificate and appendices that are used for declarations
about fair wages basic lists of materials

Health and safety plan

A pre-tender health and safety plan is a requirement of the Construction (design and
management) regulations 1994.

During its development, the plan can provide a focus at which the health and safety
considerations of design are brought together under the control of the planning supervisor.

The plan plays a vital role in the tender documentation.

Prospective principal Contractors are made fully aware of the projects health, safety and welfare
requirements, giving a level playing field on which to provide tender submissions. The plan
provides a template against which different tender submissions can be measured.

such information that the planning supervisor has, or can easily obtain, that a contractor would
need in order to meet any of the requirements imposed on them byte regulations. Information
that any contractor will need to $now about any welfare provisions that will be required.

Return envelope

14
Each contractor should be provided with a pre-addressed envelope clearly marked

Tender for.

They are to be marked so that they will be easily recognized and not arrive to the wrong person.
The Construction industry board, (CIB) has published a comprehensive list of tender enquiry
documents in its Code of practice for the selection of main contractor 1997.

15
Form of Tender

16
Insert Contact details

The University of Aberdeen

Kings College

Aberdeen

AB24 3FX

For the attention of (insert name)

Dear Sir,

Tender for (insert description)

Having carefully examined the subject invitation to tender dated and the documents detailed
therein: we confirm that we have fully satisfied ourselves as to the nature of the requirements of
the university. We hereby offer to supply the goods and related services in accordance with your
invitation to Tender and its enclosures as follows:

Instructions to Tenderers
Form of Tender (including Certificate of Tender)
Specification of requirements

In the event that our Tender is accepted we undertake to execute a formal contract with the
University of Aberdeen embodying all of the terms and conditions contained within this offer.
Unless and until a formal agreement is executed, this Tender together with the universitys
written or telefaxed acceptance shall constitute a binding Contract between us.

We agree to abide by our Tender for a period of 90 days fixed from the lodgment date of tenders,
and it shall be binding upon us at any time before expiration of that period.

We understand that you are not bound to accept the lowest or any Tender received, nor assign a
reason for the rejection of any Tender.

We accept that any costs incurred in Tender preparation are for our own account.

17
We understand that this shall be deemed to be our only and final offer, and unsolicited re-tenders
shall not be considered.

We confirm that the person whose signature is appended to this Tender is a duly authorized
signatory of our Company and has full and formal legal authority to sign this Tender on behalf of
our Company.

We understand that if our Tender is accepted we shall be reimbursed for the goods and services
in accordance with the terms and conditions of the Contract to be executed between us.

Certificate of Tender

we certify that this is a bona fide Tender, intended to be competitive, and that we have not fixed
or adjusted the amount of the Tender in accordance with any other person, body or association.

Signed:
....................................................................................................................................................
................

Name

Title:

..

For and on behalf of:

..
.
.

Date:
..

......

18
Full address, including postal code, to which all communications relating to this Tender should
bedespatched:

Telephone number:

......

Facsimile number:

...
..

List of documents included with form of Tender:

Example of Form of tender

..

19
 TASK 2: BE ABLE TO APPLY THE PRINCIPLES AND TECHNIQUES OF
ESTIMATING

Classroom Activity

20
 TASK 3: BE ABLE TO FORMULATE AN ESTIMATE FOR CONSTRUCTION
OPERATIONS

Classroom Activity

21
 TASK 4: UNDERSTAND THE TENDERING PROCEDURES AND CONTRACTUAL
ARRANGEMENTS

4.1. Describe the stages of open and selective tendering

Open tendering

A tender is a submission made by a prospective supplier in response to an invitation to tender.

It makes an offer for the supply of goods or services. In construction, the main tender process is
generally the selection by the client, of a contractor to construct the works.

However, as procurement routes have become more complex, so tenders may now besought for a
wide range of goods and services.

Irrespective of the nature of the goods or services that are being sought, securing tenders
generally follows one of a number of basic procedures:

Open tendering
Selective tendering
Negotiated tendering
Serial tendering
Framework tendering
Open tendering allows anyone to submit a tender to supply the goods or services that are
required. Generally an advert will be placed giving notice that the contract is being tendered,
offering an equal opportunity to any organization to submit a tender.

On larger projects, there may then be a pre-qualification process that produces a short-list of
suitable suppliers from the respondents expressing interest in the contract. This short list will
then be invited to prepare tenders. The selection of a short list can include pre-qualification
questionnaires and interviews. This sort of pre-qualification process is not the same as selective
tendering.

Selective tendering only allows suppliers invited from a pre-selected list to take part in the tender
process. Open tendering has been criticized for being a slow and costly process, attracting
tenders or expressions of interest from large numbers of suppliers, some of whom may be

22
entirely unsuitable for the contract and as a result it can waste a great deal of time, effort and
money.

However, open tendering offers the greatest competition and has the advantage of allowing new
or emerging suppliers to try to secure work and so can facilitates greater innovation.

The number of firms tendering can be reduced by a pre-qualification process, and it this uses a
standard pre-qualification questionnaire, then the time wasted by unsuccessful applicants can be
minimized. Whilst often seen to be more efficient, selective tendering can exclude potential
suppliers, it can be seen to introduce bias into the process, and it can result in prospective
suppliers continually contacting clients and consultants to check that they are on the appropriate
lists. In public projects, or projects that include an element of public funding, it may be necessary
to advertise contracts as a requirement of the public Contracts regulations.

This is intended to open up public procurement within the European Union and to ensure the free
movement of supplies, services and works. Open tendering can be either single stage or two
stages. Two-stage tendering us used to allow early appointment of a supplier, prior to the
completion of all the information required to enable them to offer a fixed price. In the first stage,
a limited appointment is agreed allowing them to begin work and in the second stage a fixed
price is negotiated for the contract.

Selective tendering

Selective tendering only allows suppliers to submit tenders by invitation. A pre-selected list of
possible suppliers is prepared that are known by their track record to be suitable for a contract of
the size, nature and complexity required. They might then be asked if they would be interested in
tendering for the contract, and then based on the responses received, a number of them invited to
tender. From the tenders received, a preferred tenderer is selected based on criteria such as price
and quality and negotiations entered into.

Consultants or experienced clients may maintain approved lists of prospective suppliers

appropriate for particular types of contract and then regularly review performance to assess
whether they should remain on the list.

23
Selective tendering may be particularly appropriate for specialist or complex contracts, or
contracts where there are only a few suitable firms. Selective tendering will tend to be faster than
open tendering and can be seen as less wasteful, as there is no pre-!qualification process as part
of the tender procedure itself, and only suppliers that are known to be appropriate for the
proposed contract are invited to prepare tenders. It can also give clients greater confidence that
their requirements will be satisfied.

However, it can exclude smaller suppliers or those trying to establish themselves in anew market,
it can reduce the potential for innovation, and it can be seen to introduce bias into tendering as
firms may be excluded from approved lists for unknown reasons, because of a lack of awareness
or because of personal preferences. It can also result in prospective suppliers continually
contacting clients and consultants to check that they are on the appropriate lists.

In public projects, or projects that include a publicly-funded element it may be necessary to

advertise contracts. This is a requirement of the public Contracts regulations, intended to open up
public procurement within the European Union and to ensure the free movement of supplies,
services and works.

Selective tendering can be either single stage or two stages. Two-stage tendering is used to allow
early appointment of a supplier, prior to the completion of all the information required to enable
them to offer a fixed price. In the first stage, a limited appointment is agreed allowing them to
begin work and in the second stage a fixed price is negotiated for the contract.

In conclusion, maximum competition and lowest price obtained are advantages of open
tendering. But there are also many disadvantages such as:

a. Large waste of effort because too many contractors are tendering

b. Contractor submitting lowest tender may not be properly equipped to undertake the contract

c. Client may be inclined to accept lowest tender irrespective of reputation of contractor

d. Poor quality building or bankruptcy may occur

Another one is selective tendering.

24
There are advantages and disadvantages of selective tendering. Advantage is that selection of
cheapest submission is not as high a risk as in an open tender as tenderers are known.
Disadvantages are that limiting the number of tenderers may exclude new bidders who may offer
more innovative ideas or solutions.

25
4.2. Analyse the factors that are used to create select lists of contractors

Analyze the factors that are used to create select lists of contractors.

The contractor needs to consider the criteria the client will use for selection.

These can be:

1. Price: will the lowest price alone be the basis for selection?
2. Time: will a programme show the client that the contractor has thought about how the job
can be finished on time, or ahead of time?
3. Allocation of money: will the way in which money is distributed in the priced bills help or
irritate the client?
4. Method statement: would the client wish to $now the methods to be adopted before
accepting the offer?
5. Safety and quality: does the client expect a statement of safety or quality showing how the
contractor will manage this particular contract
6. Construction team: is the contractor proposing to supervise the job with experienced staff
who will work as an effective team with the consultants?
7. Presentation: how important is an accurate, well-presented offer?

Completion of priced bills

The Tender summary form produces a tender sum which must be transferred to the bills of
quantities for submission. If a priced bill of quantities has to be submitted with the tender, then
the way in which money is spread in the bill should be decided at the final review meeting.

The contractor often changes the actual break down of prices in a priced bill of quantities to:

1. Produce a reasonable cash flow from interim valuations.

2. Apportion duty in a way which the client will find acceptable.

26
 3. Increase the money set against under measured items and decrease the price of over
measured items.
The example tender analysis forms given earlier show the first bill total was $ 664 705 before the
project overheads were added and any adjustments were made. The tender sum arrived at after
final review was $ 698 437.

If the bill was inked in using the first pricing level, the amount remaining for project overheads
would be:

$ 698 437 - $6640705 = $330732

This is not the true project overheads sum but is the amount needed to bring the bill total up to
the tender sum. An unpriced bill of quantities (sometimes referred to as the tender pricing
document) is issued to tenderers, who will estimate their price for each item. This priced bill of
quantities constitutes the tenderers complete offer.

It is the unpriced bill of quantities, but the tenderers rates, costs and totals added. The
preparation, by the clients consultants, of an unpriced bill of quantities assists tenderers in the
calculation of construction costs for their tender, and as it means all tendering contractors will be
pricing the same quantities, it provides a fair and accurate system for tendering. The priced bill
of quantities will also:

Assist with the agreement of the contract sum with the successful tenderer.
Provide a schedule of rates assisting with the valuation of variations.
Provide a basis for the valuation of interim payments.
Provide a basis for the preparation of the final account.
Taking the example a stage further, if the estimator had the use of a computer and had made the
tender adjustments before inking in the bill for the client, the break$ down would be in line with
the tender summary below.

$ $

Measured ork and 529 398

provisional sums:
(including $260 fluctuations

27
on labour

Project overheads 12960

Labour 37890

Plant 5780

Materials 3300

Sub-contracts 3300

Staff 37619

Fluctuations 1675

Water 650

Insurances 5000

Risk/opportunity 10 000

Bond 1050

Overheads and profits 18000 133924

Provisional sums and day 45100

works

Total tender 708 422

The client should not be surprised to see this large sum ($ 133 924) for project overheads
because it is based on the true allowance.

If the contractor anticipates a problem with this breakdown, he can move some money, either:

1. Into safe items in the measured work portion of the bill, looking for work which will be
carried out early in the contract (safe items are those which appear to be measured
correctly or are judged to be under measured at tender stage), or
2. By using a computer system to add a percentage to all the rates in a bill of quantities.

28
Contractor A priced both items at $ 18.00/M3 and Contractor B priced the rock in open
excavations as nil and in drains at $ 36.00

The overall effect on the tender sum was the same but contractor B had discovered a serious and
under measurement in the drainage bill, he was hoping the drainage bill would be remeasured
and valued at the higher rate. This might appear to make sense but, as many contractors have
learned to their cost, plans can go wrong. If the quantity of rock in open excavation increased
substantially, the contractor would suffer a serious financial loss.

4.3. Evaluate the different forms of contract used in the construction process

Forms of contract

Clients have a wide choice of standard contracts for construction work, in particular the forms
used for building, which cover most of the common procurement systems.

Essentials of a valid construction

Construction contracts are the same as any other contract, and in the end, will depend on general
principles of law.

A short definition of a contract is an agreement between two or more parties which is

intended to have legal consequences.

In construction, the contract is generally for producing a building or part of the built
environment, and can be entered in one of four ways:

1. Implied by conduct of the parties, a contractor may submit an offer and later have access
to the site.
2. By word of mouth, typically where an offer is accepted by telephone.
3. By exchange of letters, common for small domestic works of extension, alteration or
repair.
4. Using a written contract, the contract documents often include the enquiry documents, the
written offer, and minutes of meetings, tender-stage correspondence, a programme, a
method statement and a formal contract with the agreed terms

29
A main contractor, awarded a contract, could lose a large sum of money it a sub-contractors
tenders taking into account the requirements of the main contract and possible delay in placing
contracts.

Standard forms of contract

The standard printed forms of contract have been developed over many years. This contract
accounts many events which could occur during and after a construction project.

Contract law will deal with many problems but there are many matters peculiar to construction
which needs clarification.

Some clients require a contract to be achieved under seal; the standard forms have provision for
this after the Articles of Agreement.

However, all contracts take effect by agreement and so standard contracts can be amended.

The standard form contracts currently in use between client and contractor are;

1. standard form of building Contract - with or without quantities (JCT 98)

2. Standard form with Contractors Design (WCD 98)
3. ACA Project partnering Contract (PPC 2000)
4. JCT major project form (MPF 2003)

New editions of most standard forms have been published in the late 1990s. This was in response
to the Latham report 1994 and many changes brought about by the housing Grants,
Construction and regeneration Act 1996.

1. Electronic Data interchange, EDI

2. CDM regulations

3. Third party rights

4. Sum of money for liquidated damages and insurances

5. Periods of time for carrying out the work and making payments

30
6. Percentages for retaining parts of the interim payments

7. Statements giving the options which apply to the contract, an important example would be to
show which clause has been selected for dealing with price fluctuations.

This information must be given to tenderers; otherwise they will make their own assumptions.

Sub-contract forms

There are three main types of sub-Contractor:

Nominated sub-contractors; are persons whose final selection and approval, for supplying and
fixing materials or goods has been reserved to the architect (clause 35 JCT 98).

A sub-contractor selected by the client to carry out an element of the works.

The client negotiates a price with the nominated sub-contractor and then instructs the main
contractor to appoint them for those works. The main contractor will include the sub-contractors
price as a prime cost sum in the contract sum for the main contract, to which they add overheads,
profit and attendance. Some forms of contract such as (Joint Contracts Tribunal (JCT)
Contracts) no longer include provision for the nomination of sub-contractors.

Named sub-contractor: A sub-contractor for a particular package selected from a list of

acceptable sub-contractors provided by the client.

Named sub-contractors are allowed for in the tender documents for the main contract in the form
of a provisional sum for which the main contractor makes allowances for mark up, attendance
and programme within its tender offer. Once appointed, the main contractor seeks tenders for the
package from the named sub-contractors, places a sub-contract with the successful tenderer and
the provisional sum is replaced with the tendered figure.

Domestic sub-contractor: Sub-contractors are appointed by main contractors to carryout part of

the works on their behalf. As construction has become more complicated and more specialist
construction techniques have been developed, it has become increasingly common for
contractors to sub-contractor others rather than employing a large workforce themselves.

The use of sub-contractors enables the main contractor to undertake more complex projects
whilst not unacceptably increasing their risk, however, concerns have been expressed about the

31
prevalence of sub-contractors because of a perception that the main contractor has less control
over the skills and training of sub-contractor employees and so there may be a negative impact
on quality and health and safety on site.

Domestic sub-contractors are engaged where a contractor elects to sub-let part of the work with
the written consent of the architect (clause 19 JCT98).

Contract for professional services Employer NSC/W Warranty

Architect/Contact JCT98
Administrator

Contractor

Nominated Sub -
NSC/A & NSC/C sub - contract Contractor

DSC/A & C sub - contract

Domestic Sub
Contractor

Named sub-contractor is the term used in IFC98 and ACA84 where the contractor is
required to enter a (domestic) sub-contract with a firm named by the architect.

Under clause 19 of JCT98, there are two arrangements for sub-letting work to domestic sub-
contractors:

1. The architect approves the sub-letting of the works to a firm of the contractors choosing
2. The contractor must choose a sub-contractor from a list of at three names which have
been included in the specification, schedules of work or contract bills.
32
The standard form of contract does not allow the architect to choose a specialist who is to
become a domestic sub-contractor.

Most sub-contract forms are printed in two parts: the articles of agreement and conditions.

This could be to save money since only the articles of agreement are needed each time contracts
are signed.

Non-standard forms of sub-contract are sometimes used by main land management contractors to
impose extra obligations and ensure the sub-contractor is bound by the same conditions found in
the main contract.

The practice of nominating sub-contractors has declined to the point of extinction because
although the main contractor is contractually responsible for all the works there is a reduced
liability for the work sub-let under the nomination system.

The JCT98 form of Contract makes the following provisions:

1. Delay by a nominated sub-contractor is a relevant event that can lead to an extension of

time under clause 25
2. Breach by the nominated sub-contractor imposes a duty on the architect to nominate a
new sub-contractor if the first is incapable of performance.
3. Failure of design by nominated sub-contractor under clause 35.
4. Delay caused by a nominated sub-contractor who gives late information.

The main documents for nomination introduced by the JCT80 contract are:

1. NSC/1: JCT standard form of nominated sub-contract Tender and Agreement is used to
invite tenders from potential nominated sub-contractors which gives the sub-contractor
information about the contract, allows the sub-contractor to submit his tender and later
agree programme and attendance details with the main contractor.
2. NSC/2: JCT standard form of Employer/nominated sub-contractor Agreement which
sets out the obligations of the sub-contractor to exercise reasonable skill and care in the

33
 design of the works and perform satisfactorily when under contract to the main
contractor.
3. NSC/3: JCT standard form of nomination is an instruction from the architect for the
contractor to enter a sub-contract.
4. NSC/4: JCT standard form of nominated sub-contract that should be read in conjunction
with clause 35 of the main contract form.
For example, there is no longer a discount retained by the contractor from PC sums for
nominated sub-contractors.

Valuations made monthly by reference to a pre-determined stage payment chart would

undervalue the work at the beginning of a contract.

Comparison of forms

Contract documents all include the various parts of the standard forms plus:

JCT98 Contract drawings, contract bills

WCD98 Employers requirements, contractors proposals (including contract

sum analysis)

MW98 Contract drawings, contract specification, priced specification or

schedule of rates

IFC98 Contract drawings, contract specification, schedules of work or bill of

quantities

MC98 Project drawings, the project specification, Contract cost plan and the
schedules

GC/Works/1 Drawings, specification, bills of quantities or schedule of rates

ICE Drawings, specification, bill of quantities, tender and the written

acceptance.

Selection of contract forms

34
Contract selection checklist

Procurement method Lump sum

Measurement

Cost reimbursement

Specialists

Design Employer

Part by contractor

Contractor

Cost control document Bills of quantities

Schedule of rates

Priced specification

Contract sum analysis

Payment Stage

Time related

Turnkey

Roles and relationships Client

Contractor

Design team

Specialists

35
Time Open

Fixed

Acceleration

Damages

Fig. Simplified checklist for the selection of a contract

A contractor offering his services to design and build a factory until will suggest the standard
form with Contractors design WCD98. In particular he must decide whether to commission a
bill of quantities or as$ for tenders on a lump sum.

36
REFERENCES

http://www.qs4freshers.com/horizontalcurves.html

http://www.ctre.iastate.edu/educweb/ce353/lec05/lecture.htm

http://theconstructor.org/surveying/modern-surveying-instruments/16/

http://www.technogenome.com/2013/03/application-of-gps-in-civil-

engineering.html

http://www.godfreyhoffman.com/Civil-Engineering-Blog/bid/247519/What-are-

the-Benefits-of-GPS-Survey-tools

https://en.wikipedia.org/wiki/Digital_geologic_mapping

http://www.landsurveyors.com/tools/land-surveyor-software/

http://remarksoftware.com/products/office/

http://theconstructor.org/surveying/methods-of-contouring/6451/

http://surveying2012.blogspot.com/2013/08/contours-characteristics-and-

uses.html

https://www.kublasoftware.com/knowledge-base/cut-and-fill/estimating-

earthworks.html

http://www.scribd.com/doc/106782145/LS-Extra-Assignment-

TRAVERSE#scribd

37
 https://moodle.unitec.ac.nz/pluginfile.php/244794/mod_resource/content/3/LS2_1

%20-%20Introduction%2C%20Setting%20Out.pdf

http://www.boeingconsult.com/tafe/ss&so/survey1/Module4/equipment-s1.htm

Lecture notes

Books

38