What is a bid package?

A bid package is a set of all documents, often known as bid documents necessary to be submitted by a general contractor before participating in a competitive construction bid to receive tender of execution of any construction project.

Tender

A tender is an invitation for a construction bid for execution of some specific work at certain rates, within the fixed time, and under some specific conditions of the contract and agreement between the general contractor and the owner or party.

Types of Tendering (Bidding)

The various types of bidding processes that take place to award tender of construction projects are as follows:

• Open tendering
• Single-stage selective tendering
• Two-stage selective tendering
• Selective tendering

Open tendering

Open tendering is a process in which the owner advertises the bid proposal and invites the interested contractors to submit their bids for the construction projects. Any general contractor who wishes to participate can submit their bid in open tendering.

Single-stage selective tendering

Single-stage selective tendering is a process in which the owner selects a few contractors and invites them to bid for a construction project. The contractors are selected based on their previous experiences. Owners award the contract to the contractor with good quality work.

Two-stage selective tendering

The two-stage selective tendering is also known as negotiation tendering. In this type of tendering, some contractors are selected in the prequalification stage and asked to submit bids. The owners view the bids thoroughly before procurement of contract to the deserving contractor.

Selective tendering

Selective tendering is a process in which the owner selects only a few, one or two contractors and asks them to submit the project designs and bid collectively for a construction project.

Currently, the submission of tenders is mostly done on an online basis. Due to the COVID-19 pandemic, it had become necessary to submit the tenders online. Various electronic websites and applications are developed to submit the tenders and perform electronic biddings online.

Process of bidding

The bidding process involves the following steps-

• Bid invitation
• Bid solicitation
• Bid submission
• Bid selection
• Contract formation

Bid invitation

A bid invitation is a process of advertising the tender and inviting the interested contractors to participate in a construction bid for executing a project. The invitation is generally done in the form of advertisement released in newspapers or on websites, where contractors can easily view it.

Bid solicitation

Bid solicitation is the process in which the owner or client provides documents and other packages of material related to the project to the interested contractors.

Bid submission

Bid submission is the process of submitting the tenders. The contractors or bidders submit their tenders before the due date along with all the required documents and participate in the construction bid.

Bid selection

The owners or the clients note the details of all bidders on a bid sheet, view all the bids thoroughly, and award the tender to the deserving bidder.

Contract formation

In contract formation, all the legal documentations are completed and the terms of the construction projects are finalized before procurement of the contract to the contractor. In a contract, all the works and rates, the detailed specification of work to be done, the cost estimate, the time limit in which the work will be completed, and various other conditions are stipulated. Before the procurement of the contract, performance bonds are also signed by the contractor. The general condition of the contract is that the contractor needs to deposit 10% of the estimated cost as a security deposit before moving on to the next steps. The client awards the contract to the contractor only after all these legal procedures. In case if the contractor fails to commit the terms and conditions, this security deposit is forefited.

The various types of contracts that are undertaken are given below-

• Lump-Sum contract
• Lump-sum and schedule contract
• Item Rate contract

Lump sum contract

In a lump sum contract, a maximum probable amount is fixed and the contractor receives the contract to complete it within a specified period of time for that fixed amount. The contractor needs to submit the drawings and plans, but the quantities and schedule of items are not provided by the contractor.

Lump sum and schedule contract

This contract is similar to the lump sum contract, but the detailed schedule of items and quantities are also mentioned in the contract. In case of any addition or deduction in the items, the extra money can be provided or withdrawn.

Item rate contract

In this contract, the amount a contractor receives is based on the quantities of various items. The contract agreement includes a detailed schedule of all the items and materials to be used, their quantities, and so on. The detailed measurement of all works is done before the procurement of payment of the contractor.

Bid package

A bid package is necessary for bidding purposes. The bid package contains all the necessary documents. A bid package needs to be submitted during the bid opening. A bid package contains the following documents-

• Bid invitation / tender notification
• Technical bid documents
• Financial bid documents

Technical bid documents

The technical bid documents are an important part of the bid package. The technical bid documents contain the following-

• Brief description of the firm, which includes-

a) Name and constitution of the firm.

b) Name, phone number, and email address of the owners, partners, and directors.

c) Full particulars of the office, which include information about the address, telephone number, email address, and fax number of the office

d) Full particulars of the bankers of the firm, which include the information about the name of the bank, account number, and account type of the professional bank of the firm.

e) Registration details of the bidder, which include information about the PAN/GIR number, service tax registration number, EPF registration number, ESI registration number, and Labour License issued under the Contract Labour Act of 1970.

f) Details of Earnest Money Deposit, which includes the amount of money deposited, DD/BC No. and date, Drawn on bank number, and validity.

• Details of staff deployment

It includes the information about the name, qualification, employee code, designation, experience in respective designation, health check, ESI no. and EPF no. of the staff working on the project.

• Details of machinery and equipment that will be used by the firm

It includes information about the name of the machine/equipment to be used, its year of manufacturing, the purpose for which it will be used, the facility for which it will be used and a number of items to be deployed.

• Details of materials and aids that will be used by the firm

It includes detailed information about the materials to be used, the quantity of material to be used, cost per unit of the material, and total cost of the materials.

• Details of existing contract

It includes details of all the existing contracts of the firms, details of the client, the total cost of the contract, and the duration of the contract.

• Declaration

Financial bid documents

The financial bid documents are an important part of the bid package. The financial bid documents contain the following-

• Facility wise Manpower Deployment schedule and quoted rate

It includes the designation, number, qualification, and per month rate of all the manpower deployed for the project. It also includes the total material cost of the project.

• Consolidated statement of facilitiwise financial bid submitted

It includes the information about the category of work to be done, the per month rate of the work, and the total quoted cost of the work for a year.

• Declaration

All the documents in a bid package need to be signed on each page. It is necessary that all the documents of a bid package are true and subject to the terms and conditions.

Context and Applications

The bid package is useful for students studying the following courses-

• Bachelors in Technology (Civil Engineering)
• Masters in Technology (Quantity Surveying and Construction Management)
• Masters of Science (Construction Management)

Practice Problems

Question 1) Which of the following is an invitation for a construction bid?

Tender noticeBid packageLump sum contractEMD

Answer : a)

Explanation: Tender notice is an invitation for a construction bid.

Question 2) In general, how much percentages of the estimated cost is deposited as a security deposit by the contractor?

1. 10%
2. 30%
3. 50%
4. 60%

Answer : a)

Explanation: In general, 10% of the estimated cost is deposited as a security deposit by the contractor.

Question 3) – Which of the following is not included in bid packing?

1. Tender notice
2. Technical bid documents
3. Financial bid documents
4. Lump sum contract

Answer : d)

Explanation: Lump sum contract is not included in bid packing.

Question 4) – Which of the following is the process of submitting the tenders?

1. Bid solicitation
2. Bid submission
3. Bid invitation
4. Bid selection

Answer : b)

Explanation: Bid submission is the process of submitting the tenders.

Question 5) – In which tender the owner selects only a few, one or two contractors to submit bids?

1. Open tender
2. Selective tender
3. Single-stage selective tender
4. Two-stage selective tender

Answer : b)

Explanation: In selective tender, the owner selects only a few, one or two contractors to submit bids.