Guideline 3.2 - Request for tender contents

(1) Standard terms and conditions

The recommended standard terms and conditions are found in the New Zealand Standard Conditions Of Contract For Building and Civil Engineering Construction (NZS 3910:1987), together with addenda for Roading Construction Contracts, and for Roading Maintenance Contracts. These addenda are published as Standards Association of New Zealand Miscellaneous Publications (NZMP 3911 and NZMP 3912).

(3) Project scope and specification

Wherever practicable, tendering authorities should specify end results and should avoid specifying the methods to be used.

The reason for this is that results specifications promote the objectives of an efficient CPP better than methods specifications. A results approach requires the tendering authority to specify the target outputs to be achieved and it is then up to the tenderer to propose the method to be used to achieve the tendering authority's objectives. For example, a tendering authority would specify a project in terms of outputs such as:

"No potholes to remain unfilled for more than X hours".

The specification would not tell the contractor how to go about doing the job.

At the present time, there are some limitations on the practicality of a complete results-based approach. For example, a tendering authority's objective may be the construction of a road with X traffic flow capacity, Y load bearing capacity and Z life-span. Present techniques do not permit some of these features, particularly Z, to be definitively tested on the completed road; testing techniques have still to be developed that can determine durability of a work immediately after completion. In the early years of this CPP environment some tenderers may be disadvantaged or quality compromised if methods are not specified. As the confidence and skills of road contractors grows it will be possible to progressively adopt end result specifications without inhibiting competition.

When methods have been specified, tendering authorities should receive alternative tenders and properly evaluate them, providing the scope of the work specified in the RFT is not altered. However, note that Section 2.8.4 of this Manual states that a tendering authority is not bound to accept any alternative tender.

(4) Price models

1. The following price models are considered efficient:
2. (1) Contractor-Specified Lump Sum (where the contractor submits a fixed dollar price to undertake the contract).
3. (2) Priced Schedule of Quantities (where the contractor submits a price based on a schedule of rates multiplied by the tendering authority's estimated quantities of each unit of input or intermediate output, summed to give an indicative lump sum).
4. (3) Schedule of Rates (where the contractor submits a unit price per unit of input or per unit of intermediate output).
5. (4) Any combination of the above.

It is expected that the most common form of price model will be one that combines lump sum for some components with priced schedule of quantities for other components. This gives an overall lump sum to enable comparison of tenders but moves some risk (in terms of quantities) to the tendering authority and also gives information which can be used to calculate variations to cost.

Transfund New Zealand has a preference for maximising the use of the contractor-specified lump sum price model. Tendering authorities should specify a lump sum price model where the work content can be reliably gauged in advance. When used appropriately, the lump sum pricing model brings greater competitive pressure to bear to minimise costs, and hence price. Another advantage is that the administration costs of a lump sum pricing model are comparatively low.

Where the work cannot be precisely defined prior to tendering, a priced schedule of quantities price model will be more appropriate. A pure schedule of rates price model is generally inappropriate for physical works.

Where the work content of some components of a contract can be reliably gauged prior to the contract, but the work content of other components cannot, a tendering authority may specify a combination of lump sum, schedule of rates and/or priced schedule of quantities within any one RFT. Tendering authorities should ensure that RFTs for different projects of a similar type and size are consistent and specify price in the same way whenever practicable.

Inefficient price models such as cost-plus should not be used.

The use of provisional sums should be minimised so that as many parts of the job as possible are competitively priced. Any provisional sums must be removed when calculating the price grade under Section 2.7.2(2) of this Manual.

(5) Quality Assurance

Contractors undertaking physical works that are financially assisted by Transfund New Zealand must be quality assured suppliers. Transfund’s quality assurance system requirements for physical works suppliers are found in Transfund’s Programme and Funding Manual.

(6) Late Tenders

Tendering authorities should have an established policy on late tenders. It is recommended that this policy be to not accept late tenders under any circumstances.

If a tendering authority's policy is to accept late tenders, then such tenders should only be accepted in exceptional circumstances which are clearly specified in their late tenders policy.

One major reason for this wariness in accepting late tenders is that competing tenderers may disclose the contents of their tender to the "late" tenderer who could then alter their tender accordingly.

This refusal to accept late tenders unless there are exceptional circumstances ensures that the onus remains on the tenderer to do everything possible to ensure that the tender is received on time.

If a late tender is accepted this should be clearly indicated in the tender evaluation details recorded on the contract file.