Factors that Govern to bid a tender going below In Nepal

Factors that Govern to bid a tender going below In Nepal

January 7, 2020


Every year we hear construction works are ongoing throughout the world. All such projects are first gone through the bidding procedure where number of parties speaks their bids. Construction bidding is the process of submitting a proposal (tender) to undertake , or manage the undertaking of a construction project. On bidding a tender the international practice followed is: The bidder whose speak to construct the project with lowest cost among the competing parties (provided remaining within the standard required i.e. technical part) gets designated to do the particular construction work.  Following the same practice, on the context of Nepal We also often keep hearing any particular tender has been bidden going more than 50% below. On hearing all this it may sound some unusual but it’s the true fact.

There is no any scientific methodology to exactly figure out, what percentage one can go below to get elected to perform the tender. The tender to be undergone is governed by many factors which may vary from bidders to bidders. And that’s the reason for variation in bidding amount, regardless the tender being opened is at same location and situation to every bidders. Let’s figure out some possible factors that bring variation on bidding amount which are bidden going varying percent below. Amongst the factors one most governing factor is the market fluctuation. The fluctuation term is very vast, which does occurs due to lots more sub-factors and depending upon those factors, range of fluctuation is indeterminate, since fluctuation is independent to the situation, which only depends upon favorable /unfavorable conditions and which are very much dynamic in nature. Let’s figure out some of them detail.

Any project can be conducted by the joint efforts of a contractor, technical personals, and labors. Further, the project completion is also dependent upon the local community peoples, rules and regulations that are in practice in the project sites. There are three factors on which a project totally depends upon: TIME, COST & QUALITY. Here, we are mainly focusing unto the cost factor of the project. There is no doubt about the direct relation of cost of a project related with the project duration and the quality. Besides, there can also be other factors which are taken in considerations while bidding. We are to under those governing factors.

Just to bid a tender at as low as possible, and to get the project is not an achievement of a construction forms. But on the context of Nepal the mal practice has been implanted. The scenario going on in Nepal is: an inexperienced bidder may even go more than 50%, but the thing to be considered is, has he maintaining the quality required and completed the project on specified duration. Lots many projects in Nepal are in the state in pendulum.  We heard news about few renowned construction companies in Nepal, which used to take almost all projects related to bridge, going unbelievably below rate, and just see how the projects are. On the context of Nepal, a fact related to going high rate below, is every projects are gone under settings, meaning, bidding at lower rate, sharing some amount to different peoples( governmental employees, political and local peoples, so that everyone remains silent , and project gets run, keeping the quality and time factor as a virtual things.

Any bidding party who has very good experiences  on bidding, taking in consideration of the as many  risk factors that may occur in recent future figure out  almost exact bidding amount, regardless of the % they go below or not. The most important factors an experienced bidder should take into considerations to make  a logical bidding are : labors availability, materials and equipment availability, local  community supports, prevailing rules and regulations, projects under going near by the surroundings, time of  construction, weather conditions, project location, reputation of the company, and lots other more factors. Let’s breakdown and go some more detail.

The project cost is dependent upon the labor charge. Any project may need different level of workers, to make the project successful, from unskilled labors to specialists as per the project. Any project may go to a heavy loss if the project needs to be done again and again because of the absence of required manpower at the right time.  There is tough competition on the market for the rate of works, so, a bidder who has manpower working fine but at lower cost, who can manage these opposing two factors can bid at lower rate. Accordingly a bidding company who has own equipment required for the construction can also bid lower. They can operate the assets they have with themselves at lower rate, as compared to hiring from outside. In the meantime the bidding amount may also vary, if the similar type of project is going on nearby, since the mobilization charge will be saved to a great extent.

Similarly, the material availability for the construction also plays very vital role for the cost of project. In the context of Nepal, the cost of construction material goes at lowest point during December-January and meets the highest peak during June-July. So time of construction can also play crucial role for the cost of the bid and accordingly the cost of project.  Also, the availability of local materials nearby plays very important role to go a bid as lower as possible.  Further, the good will of the bidder party with different vendors also helps to reduce the cost of construction. Cost depends upon the credit availability also.

Many projects have been ran successfully by the joint assistance of local peoples. Unless a construction team gets full support from local community, to complete the project may be too difficult. So, the relation between constructor and locality people is also important factor needed to be considered. Another important factor needed to be considered is the location of the project. As we all know about the topographical variation of Nepal. The cost of the bidding amount surely depends upon the transportation of every aspects to the site, which depends upon the location of the site.  In addition, on the context of Nepal some rules and regulations are varying from one local government to another government also. So, before bidding one must also go through the ongoing practice for the proposed site.

Let us take one construction project “Bridge construction”. A bridge is to be constructed at two sites, one on the terai district (Bardiya), other in a Himalayan district (Jumla).  The bidding amount varies with the labor cost available, local materials available (say sand, aggregate, stone), rate for other materials with easy transport, equipment availability. Despite the same type of project, keeping many factors constant like time of construction, own district rates, weather condition, the amount of the bid may vary from place to place, time  and the experience of bidder on same field.

To sum up, we can’t setup a limit to fix the bidding amount for any project. There are unlimited many factors which needs to be considered to get accurate bidding amount. More the factors one bidder party can be able to undergo detail, can get accurate bidding amount. On the context of Nepal, there is a malpractice on competition on going lowest bid, a bidder goes even more than 50% below, and construct the project also, but the quality of such  the projects have never met the required standard . The construction forms are so lucky that there are no active governing agencies to undergo to check the quality. Else such malpractice would not have been implanted deeply. Let’s construct and build the nation remaining within the standards. There must be competition on cost, maintaining the quality of the project. 

The build the nation permanently, the concept of sustainable projects can only be possible if the quality factor is not kept in shade.