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Notes of Engineering Professional Practice [CE 752]

Sector Contract Management


Methods of work execution

National Competitive Bidding

- All the eligible bidders are invited to participate in bidding.
- Tender noticed is published in national newspaper giving a period of at least 30 days.
- It is necessary if the estimated amount of work is greater than 20 lakhs or estimated goods is greater than 10 lakhs.

International Competitive Bidding

- Eligible bidders from all over the world are invited if the amount of work can not be performed by domestic contractors.
- Tender notice should be published in national newspaper giving at least a period of 45 days.

Sealed Quotation

- According to Public Procurement act, the goods and other services valuing up to 1 million rupees and construction work valuing up to 2 million rupees may be procured by inviting a sealed quotation.
- Sealed quotation means the statement, accompanied by the quoted price, in a sealed envelope, submitted by an interested person, firm or organization in respect of provision of any goods or other services in response to a notice of a public entity.

- The provision related to sealed quotation are as follows:
1. Before inviting a sealed quotation, a form stating every specifications clearly shall have to be prepared.
2. A notice shall be published in national or local newspaper giving at least a period of 15 days.
3. The sealed quotation, once submitted, can not be withdrawn or amended.
4. The sealed quotation with the lowest cost estimate shall have to be approved.

Direct Procurement

- Capital goods valuing up to 3 lakhs and construction work valuing up to 5 lakhs rupees may be directly procured.
- Direct procurement involves procuring the necessary services from the supplier directly without any bidding or sealed quotation process.


- Contract is an agreement between two or more than two persons to do or not to do something, which can be enforceable by law.
- Contract Act is formulated in 2056 BS.
- After entering a contract, if any party breaches the contract, legal action can be taken as per the contract act 2056.

Elements of a Contract

1. Offer and Acceptance:
- Contract exists whenever a person advances a proposal to a person, who accepts it.
- Offer can be specific or general.
- Contract does not exist if no acceptance is received within the specified period of time.
- The person who offers a proposal can not bind the person with the statement that if the notice of rejection is not given then he shall be deemed to accept the offer.
- No contract exists if the offerer dies or becone insane before the proposal is accepted.

2. Consideration:
- It includes the cause, motive or impelling influence that induces a contracting party to enter into contract.
- It is defined as something with value that is exchanged by the contracting parties.

3. Capacity to Contract:
- For a contract to be legal and valid, all the parties entering into contract must be capable.
- According to contract act, idiots, drunkards, insane and children below 16 years are not capable of signing a contract.

4. Lawful Purpose:
- The contract is invalid if the two parties agree to perform a job against the law of country.

5. Possibility of Performance:
- If two parties agree up on impossible jobs, the contract is invalid.

6. Free Consent:
- Contract should not involve fraud, undue influence and deceit.

7. Certainty:
- The contract that can not be carried out because of various reasons are not valid.

8. Legal Relationship:
- There should be a clear intention of parties to enter into a contract with all the necessary documents.

9. Written:
- Verbal agreement can not be considered as a contract.
- Contract should be written agreement.

10. Two or More Competent Parties:
- Contract is made between two or more parties.

Types of Contract

1. Valid Contract:
- If all the elements of contract are present, it is said to be a valid contract.

2. Voidable Contract:
- The contracts that will not be valid if the concerned party desire to make it void are called voidable contracts.
- The following contracts are voidable:
a) Forceful contract
b) Contract due to undue influence
c) Contract involving fraud or misstatement.

3. Void Contract:
- A contract that is not considered as a valid contract is known as void or null contract.
- The following contract are void:
a) Contrary to statutory law
b) Impossible job performance
c) Contrary to public policy and welfare
d) Signed by incompetent parties

Importance of Contract

1. It makes legal agreement between the parties.
2. It specifies what the contractor must do and what the owner must pay.
3. It specifies what will be done if any party fails to perform.
4. It defines what is and what is not included in a contract.
5. It specifies how the contract will be terminated.
6. It states the responsibilities of all the parties involved.

Tender (Bid)

- Tender is an offer in written by the person who offers the tender to execute some specified work or to supply some specified goods at a certain rate within fixed time frame under certain conduction of agreement.
- It is the first step in formulation of contract.

Necessity of Tender

1. Tender is performed to select the best contractor.
2. It helps to achieve quality output.
3. It helps in gaining work at competitive price.
4. It maintains transparency.

Tendering Process

1. Determine tender process:
- The organization requesting the tender determines the type of tender to be used.
- It may be open tender, select tender, multi stage tender or invited tender.

2. Prepare request for tender:
- The request for tender is prepared which must include what is required, the contractual requirements and how the contractors should respond.
- It is the invitations for the suppliers to provide a competitive offer to win a contract.
- It may be RFT, RFP, EOI, CFB or ITT.

3. Invite tender:
- The invitations are send to the contractors.

4. Suppliers respond:
- The supplier should collect all the required documents.
- The supplier then submits the response in the right format on time and at the right location.

5. Evaluation and selection:
- Each tender will be checked for compliance.
- The tender will then be evaluated against the criteria specified in the tender documentation.
- The tender that offers the best value of money will be selected.

6. Notification and Debriefing:
- The successful contractor will be notified and advised to write the outcome.
- The unsuccessful tenderers are also advised and offered a debriefing interview.

7. Contract Establishment:
- A formal agreement between the successful contractor and the relevant agency is established.

Tender Notice

- Tender notice is the information inviting bids from competent contractors.
- It should be published in national newspapers.
- It should include all the necessary detail information about the project.

Information in Tender Notice

1. Name and address of the public entity inviting bid.
2. Nature of work and its location.
3. Place of delivery of goods to be supplied, the services to be delivered and the construction work to be performed.
4. The amount of bid security and validity period of the bid.
5. Data, time and place where and when the tender document is available.
6. Cost of tender document.
7. The place, manner, deadline for the submission of the bidding documents.
8. Provision of e-bidding and its process
9. The place, date and time for the opening of bids
10. Expected date of acceptance of successful bids

Bidding Document

- Bidding document is a document prepared by the concerned firm making invitation to bid for submission by bidders by filling up the price or rate.
- It includes instructions for bidders, specifications, evaluation criteria, conditions of contract and other similar documents.

Earnest Money

- Earnest money is the amount of money deposited while bidding a tender as a guarantee of a party's interest in performing the work awarded to him/her.
- Bidder shall have to submit the bid along with bid security of 2 to 3 % of the estimated amount of the bid in cash or equivalent bid security issued by a commercial bank.
- Earnest money is refunded to the unsuccessful bidders.

Performance Security

- Performance security is the amount of money deposited by a successful bidder as a security for satisfactory performance.
- Successful bidder should submit 5 % of the contract amount as performance security.
- It is refunded after defect liability period.
- It is forfeited if the contractor fails to perform his/her duty.

Pre Qualification

- Pre qualification is the process in which assessment is done by the implementing agency to check the suitability of the firms to carry out a particular contract before inviting for a bid.
- It is the process of short listing of eligible bidder that ensures that the invitation to bids are provided to only perspective bidders with adequate capability and resources to perform the contract.
- It includes assessment with respect to experience, past performance, capabilities, financial position and litigation (process of taking legal action) history.

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