Understanding Construction Tenders/Bids

Hey, Construction Legends. So in this video or podcast, we're going to tell you exactly what's included in tender bid documents so you can understand what you're receiving, what you're trying to do, and what the other guy on their side is trying to, you know, get from you guys. It's going to help you win more tenders, hopefully. Hi, my name is Cian Dillon Brennan. I'm the CEO of Quantum Contract Solutions. The reason I make these videos and podcasts is there's so many construction companies out there that are losing money and they don't have to if they just know a few little things. Hopefully by watching these videos, you're going to understand a little bit more and make more money. Just a quick one. If you're on the podcast right now, there is a slide deck that I'm going to run through in the video. So it might be better to hop over to YouTube and just check it out there, and then you'll be able to see everything that's happening. All right, enjoy. Let's go. Hey legends, how are you going? I hope well so far. Take your time. We'll get there. It all makes sense, and you'll be able to speak the construction contracts language very soon, I promise. Okay, so now we're going to talk about tender, the bid document, right? So as we say in Australia, New Zealand, UK, Ireland, it's referred to as tender, right? So you're tendering for work. In the US, it's bidding for work. So tender or bid document, this is basically the document that the company who wants the work completed issues to the market, and basically people run to it with their price. And that's what we're talking about here. Okay. So I'll go into it a little bit more in detail. So let's go. Let's remember that we are in this section here, right? So in the tender portal, or a client invites you to join the bid, right? You are going to be given tender documents, receive tender documents. This is the stage that we're talking about right now. Okay. Receiving these tender documents. There's two things really. Okay, so the instructions to the tenderers, the bidders. This is a document with 4 or 5 pages that lists out exactly how they want to receive your bid. It's basically a list of instructions. It needs to be issued to us on this date at this time. Before this date and this time in this place. Here's where you need to provide the documents. You need to give us 2 hard copies, 1 CD or 1 USB key, or you need to transfer it to a particular place. You need to give us 1 submission that is priced and 1 submission that is unpriced so that we can open up the unpriced first, make sure, and then if you are, then we can open up your priced version so we can do it in an ethical way. So they're not opening the prices first and trying to then look at a company who isn't technically qualified and try and get them across the line because they're cheaper, right? It's the whole point of that. So this basically lays out all of what needs to happen. Okay. The next thing really that they give you is very simple, is a draft contract. They're giving you a contract. This thing is going to be the contract that you're going to sign. The whole thing called the contract. Okay. We'll get into it in a second, but basically it is the terms and conditions, the scope of work— I'll explain that in a second— a blank pricing section because you're gonna price, and then all of their construction schedule maybe, or the policies, whatever it is. Okay, that's the draft contract. It's ultimately what you're going to sign. They want to start populating it with real figures and stuff so it's easy, it's easy to sit there. Okay, so there are the two things. Next thing is what is included in a draft contract. Right, so the contract is the whole thing, right? Here we go. The IOA or the FOA, that stands for the Instrument of Agreement or the Form of Agreement. All that is, it just lays out who the two people are. It's like a one or two pager that says it's this company and this company entering into a contract. That's all it says. Very simple. So it's the Instrument of Agreement laying out who's in the agreement. What's also included is a term called, um, order of precedence, which I'll get to in a second, at the end actually. Now, the next thing is the terms and conditions. So you got who's— who are the parties to the contract? Then you have the terms and conditions of the contract, right? These are all, you know, basically all the terms and conditions that you see on Facebook or wherever. All of the terms in the contract that lay out what happens when this happens, what happens when this happens, what happens when this— and all the risk items, anything that can be related to cost, and what happens if there's a dispute. All of the terms and conditions, right? Pretty straightforward. That's what we're concerned with, right? We're very concerned with the terms and conditions. Okay, what else is in there? Next thing is the scope of work. The scope of work is basically a job description. It's saying, here's the work that we want you to do. Essentially, here's the work that we want you to price up. Here's the type of work that we want you to do. Then the pricing schedule is here's how we want you to price it. Okay, now a couple of different ways of pricing things, and we'll talk about that in another video, but that's the pricing schedule. And then we have appendices, other things that come after that, which are like HR policies, health and safety policies. You might have the actual— they might ask you to propose a construction program, how you're going to go about doing the work that you want to have include in the final at the end of the day. So all of those things are called the contract. So you got the instruments of agreements or the form of agreements. I'm putting both options because they're sometimes called different things. Instrument of agreement, form of agreement. That lays out the who's who in the zoo and the order of business in the end. Then we have the terms and conditions, all of the mechanisms. What happens when this happens? What happens when this happens? Who's at fault? Who, you who's to blame, blah, blah, blah. Then we have the scope of work. What's the job description? What are we trying to do here? What are we building? How do you want us to build it? Is there a particular way? And they'll issue you with the scope of work. I will say though, sometimes they won't issue you with a scope of work and they'll ask you to design it, create your own scope of work. Essentially, we want you to design and build it, right? So when they give you the scope of work, they go, here's the scope of work, we designed it already, we want you to build it. Sometimes they say, hey, we want you to design the bridge and also build a bridge. Okay, so that could be— they could ask you to do that in the instructions to tenderers. Then we have the pricing schedule itself, is where you, you break down how you're going to cost it up. And then you have the appendices. Okay, now appendices differ depending on the company. That's why it's always a little bit different. Okay, now the key term here that we're having is order of precedence. That's included in the instrument of agreement. And it lays out which of these 5 documents takes precedence, which is more important in the event of a conflict. So what can happen sometimes is the terms and conditions, the scope of work, and pricing schedule might all refer to, say, something like liquidated damages, and they might all have different figures, right? They've just been included in the wrong sections. There might be one in the scope of work, there might be one in the pricing schedule, and there might be one in the terms and conditions. So which one prevails? Which one is more important? And the order of precedence lays out the importance of the documents. So clearly whichever one is in the higher one is more important, and that's the one that we agree that we rely on. Okay, that's it. Chat to you soon.