Question

Please advise on both of tendering method and contractual arrangement for the construction of a 5-Star Hotel in Tung Chung new town. Since the proposed project is to be a major development, the Client is anxious on the cost aspects.

The Client wishes to have indication of the amount of investment before signing the formal contract with the selected contractor and he is also concerned on the cost-control aspect. He also intends to commence the work at a reasonable time.

Suggest to the client with reasons, for choosing both of the most appropriate tendering method and contractual arrangement for this particular project for client’s consideration.

Answer 1

There exists 3 methods of  tenderings in construction :

Open tendering : under this an advertisement is published for the project and contractors starts bidding and minimum bid is selected.

Selective tendering : under this employer invites only the selective reputed contractors and discusses the project with them and the one who employer finds reliable is selected.

Tendering by negotiation : under this one contractor is called and employer negotiates face to face and give the contract to him.

So, for the construction of a 5 star hotel it needs a very experienced and reliable contractor who dealt with similar type of projects in past as 5 star hotel needs to be sound structurally, architecturally and every fine detail needs to be taken care off here we need not to select the minimum construction cost but we need a better design. Use of selective tendering will do the job.

Under selective tendering :

The advantage to the employer is that he can select only those contractors, who have adequate experience, are financially sound, and have the resources and skills to do the work. Also, since only half a dozen or so contractors are selected, each contractor knows he has a reasonable chance of gaining the contract and therefore has an incentive to study the tender documents thoroughly and put forward his keenest price. So the issue of price is solved as the contract is at its best possible price.

Before giving contract in addition to the cost the contractors put their time and effort to submit a report in which the details of the design, cost and the time required for the construction wheather he needs money in installments or in one go everything then only the client which he feels comfortable with is selected and in formal contract every single point is mentioned.

And if contractor fails as per stated in the contract it comes under offense and jurisdictionary actions may be taken.

Generally clients also hires a experienced petitioner to take care of all the regulations and formal contract which contains all the details of completion time and cost. And once it gets finalized contractor can't delay the project, can't make false promises and never compromise the quality for his profit.