Many disputes arise as a result of misunderstandings and misalignments regarding what the works entail, what the basis of pricing is and what the duration of the works are. This article highlights some good practices that may be implemented when preparing or pricing tenders in order to aid unambiguity and clarity. It should be noted and recorded that the information provided may not be exhaustive and should only be referred to as a general guide.

When preparing a tender

The party preparing the tender should ensure that the following information is made available and should keep the following considerations in mind:

• The scope of works, what is required, the specifications that are applicable and the extent of the works. This is usually covered in a separate document. It is recommended to be clear and unambiguous as to what exactly the parties invited to submit a tender are expected to do. Often, the party preparing a tender only includes bills of quantities which is not an accurate reflection of the works to be done. When the works are executed, a number of items reflected in the bills of quantities are reduced or not done, leading to disputes around the scope requirements. It is therefore recommended that a scope of works document be drafted and implemented. It is recommended to include “tender” drawings as part of the scope of works so that this aspect is understood by those pricing the tender.

• Bills of quantity or pricing documents should be unambiguous. The pricing considerations of the applicable SANS code for example should be stipulated in the bills of quantity. It should also stipulate whether the quantities are provisional or non-provisional. This assists in the measurement of the works as to what is included or excluded. A further good practice would be to include preambles to the bills of quantities. These would stipulate what each corresponding item on the bills of quantities include. This will eliminate / reduce the opportunity for dispute as to what a particular line item on a bill of quantity requires in terms of work execution and how to measure the works.

• It is recommended that safety standards are included. Many employers may have their own safety standard applicable, particularly if the works are executed at a factory or site which is high risk. These must be included in the tender document inviting others to tender so that they may price the adherence to any special requirements including the requirements of a safety file. In the case of private employers, it is recommended to state that the minimum legislative requirements are applicable and are for the contractor’s costs.

• It is recommended to include a master schedule especially where there is an integration of multiple contractors of different disciplines to ensure that the party pricing the works is aware that there are others working on the site and that access shall be granted according to the master schedule. It is highly advisable to include the expected start date, key milestone dates and completion dates expected of the contractor pricing the tender including any penalties if applicable. It is the employer’s responsibility to provide access, therefore a well thought out master schedule or statement of dates required is recommended.

• Contract document – the applicable contract should be included in its draft state in a tender invitation. The reason for this is simply that the those pricing the works should understand the nature of the contract that they are signing up for, understand the risk profile of the contract and any applicable special terms so that when the tender offers are submitted, they are submitted on the basis of the applicable terms and conditions. A well thought out set of commercial requirements should be included, especially where there are retentions or bonds that are applicable including the terms of payment.

When submitting a tender

When submitting a tender, some considerations to keep in mind are:

• Ensure that the scope is understood, submit questions for clarity where required and where an assumption is made, include this in your tender offering.
• It will be good practice to include a covering letter to your tender and in this cover letter include any qualifications or assumptions you have made in your tender offer.
• Whilst in most instances, site visits are required prior to submitting a tender, ensure that you familiarise yourself with the site and the area so that any difficulties working on the specific site are identified and that you may adequately allow for them.
• Ensure that you complete and submit all returnable documents.
• Understand the pricing documents and basis thereof and ensure that your pricing is unequivocal and unambiguous.
• Understand the applicable contract document and take note of the special requirements and the commercial terms. Where penalties are stipulated, ensure that you take note of them.
• Put together a schedule for the works and once the works commence, ensure that you have the schedule approved and baselined without delay (should you be awarded the works). A well thought out schedule is imperative as time is one of the three foundational elements of a successful project, with the other two being quality and budget. Consider the start and completion dates as well as the key milestone dates, works of others where stipulated and ensure allowance is made for this in your schedule. If there is a deviation, capture this on the list of qualifications.
• If time permits, obtain provisional amounts and rates from subcontractors for works you will enlist from a subcontractor in order to adequately cover this in your tender offering. You may negotiate with them to hold these rates / prices firm for the tender you are preparing.
• When pricing the works, ensure that the pricing is unambiguous and any qualifications are listed. Often there are mistakes with the pricing which cause losses for the contractor. Check and double check the pricing and rate build ups.
• Submit the tender on time and understand the period for validity and ensure that your tender is valid for the said period.

Whilst it is trite that when works are awarded, the signed contract is applicable (parole evidence rule), parties often refer to the tender invite and the tender submission to provide the basis of the contract.

It is recommended that the requirements of the parties are recorded in unambiguous terms to avoid dispute or confusion. It is our assessment that should the parties conduct themselves in accordance with good practice in this regard, there is little room for dispute.

The above is the writer’s opinions based on their experience and is not an exhaustive list but merely a guideline. This should therefore not be construed as legal advice. Should you require legal advice, please contact a legal practitioner.

Bilaal Dawood | Bilaal Dawood Attorneys