What is a “Tender Enquiry Document”?
Used to inform tenderers of what is required at invitation to Tender stage.
What is Tender Documents?
Form the tenderer’s offer.
What is “Contract Documents”?
- Used in the acceptance and selection of the contractor.
- Used in the management of the subsequent contract.
- Must include all amendments to Enquiry and Tender documents.
How are the contractors selected for invitation to tendering?
- Open competition.
- Pre-qualification: select competition.
- Two stage.
- Negotiated.
The contractors can be selected using something called “Two Stage”, what is this?
- Contractor(s) invited well before tender stage.
- Contractors who contribute to design may go forward to next stages.
The contractors can be selected using something called “Negotiated”, what is this?
- Negotiation is in essence an informal tender process.
- Can therefore involve more than one contractor.
- Promoter will already have a list of potential contractor from past experience.
What are some key points to look for when evaluating a tender?
- Responsiveness to the Tender Documents. (The response to the tender and the quality of the tender documents can be a good indicator of the suitability of any particular tenderer.)
- Acceptability of Alternative or Qualified Tenders.
- Arithmetical Errors.
- Adequacy of Resources.
- Differences in Timing and Payments
- Reasonableness of Advance Payments.
- Different Contact Duration.
Name the broad stages in contract management.
- Determine contracting strategy (three classifications).
- Prepare documentation.
- Select correct contractor.
- Award the contract.
- Implement the contract.
What is a “Letter of Acceptance”?
A letter of acceptance is used to inform the successful tenderer, after they have been evaluated.
This is an unconditional acceptance and constitutes a legally binding contract.
If an original offer has been amended in any way through negotiations, the amendments must be documented and referred to once an offer is accepted.
What should a Letter of Acceptance contain?
- Nominate what will constitute the contract documents.
- Confirm that an Instrument of Agreement will be prepared and forwarded, and whether this IoA is to be formal.
- Point out that the Specification and the Drawings already issued are provisional.
- Indicate who will represent the Principal in all matters dealing with the contract (Principal’s Representative).
- Nominate that the date of the Letter of Acceptance is the Date of Acceptance of Tender or the Date for Commencement of Work, as appropriate.
- Indicate that the Letter of Acceptance will form the contract until the IoA is signed.
Why would a Letter of Intent be used instead of a Letter of Acceptance, and what does this do?
A LoA effectively forms a contract. If the Principal isn’t in a position to actually form a contract at this stage a Letter of Intent can be used instead.
A LoI advises the tenderer so that they may initiate construction mobilisation and should:
- Advise that full acceptance will be by a certain date.
- If contract not formed, expenses will not be paid unless specifically stated.
BEWARE, LoI is not legally binding!
Except the LoA or LoI, what else should be done to notify the tenderers?
- All unsuccessful tenderers should be informed individually of their failure to win; this should be undertaken concurrently with the letter of acceptance/intent.
- It is up to the promoter to decide whether to inform unsuccessful tenderers of the winning amount and / or the amounts of the other tenderers.
- May provide a list:
Contractor A: £ 6.52M
Contractor B: £6.72M
Contractor C: 7.21M - Contractors not named - the directors can see where their bid came and thus see by how much they have missed winning the project.
What is “Instrument of Agreement”?
Also called “The agreement” and”Form of Agreement” and is a simple document
- Pro-forma may be used or Principal’s lawyers may draft it.
- Date is date of commencement of contract, unless this is indicated elsewhere.
- Must be signed, sealed and delivered in the presence of witnesses to be formal
What are the Conditions of Contract document?
The conditions of contract document relates to the contract between the Principal and the Contractor to construct the works. In essence, it identifies the parties involved in the contract and defines their roles and responsibilities.
It will also lay down how to Contractor is to be paid and will allocate responsibility for some of the construction risks that are known to occur frequently.
It contains all the clauses relating to the respective rights and obligations of the parties of the contract. Mostly administrative provisions as distinct from technical requirements. Technical matters related to the nature of the project should be strictly kept to the drawings and specifications.
Many engineering contracts are related to projects of a similar nature. They should therefore be conducted using Standard Conditions of Contracts. Give some examples of these.
FIDIC, Federation Internationale des Ingenieurs-Conseils (Power plant installation project)
IChemE. (“Red book” - Lump sum, “Green Book” - Reimbursable and “Burgundy Book” - Target Cost).
MF/1 (ImechE/IET)
However, all projects are in some way unique and will therefore require particular requirements. Therefore there are two parts to any set of conditions:
Part 1: General conditions (With Annexure).
Part 2: Supplementary Conditions.
What are the three main pillars of “New engineering contracts” published 1993?
- Stimulate good management.
- Be clear and simple, written in plain English, in the present tense and without legal terminology.
- Be usable in a wide variety of situations from minor works to major projects.
Name some variants to “New Engineering Contracts”.
- ECC Engineering and Construction Contract.
- ECSC Engineering and Construction Short Contract.
- ECS Engineering and Construction Subcontract.
- ECSS Engineering and Construction Short Sub-contract.
- FC Framework Contract.
- TSC Term Service Contract.
TSSC Term Service Short Contract.
Name some different options for contracts.
- Priced contract with activity schedule.
- Priced contract with bill of quantities.
- Target contract with activity schedule.
- Target contract with bill of quantities.
- Cost reimbursable contract.
- Management contract.
- Term contract (for the appointment of a consultant based on a priced schedule of tasks). a
What are the main clauses?
- General terms
- Contractors main responsibilities.
- Time
- Testing and defects.
- Payments.
- Compensation events.
- Title.
- Risk and insurance.
- Termination.
What are “Compensation Events”?
Events that occur during the course of the works that cause the completion to be delayed usually result in additional payment being made to the contractor and may result the change to the completion date. However, it must not be the contractor’s fault.
