Reference no: EM131192163

(a) State what factors need to be considered when tendering an estimate for a contract.

(b) Before tendering as a contractor supplying materials and equipment specified by the client, state briefly some checks that should be made prior to compiling the tender in order to determine any contract clauses, contingencies or unforeseen circumstances that may affect future profits.

(c) Prepare a tender/estimate for the installation of 20 steel street lamps in 5 streets of a small town to replace ageing concrete lamp standards, using the following information:

The holes for the lamp standards have to be excavated using manual labour.  The old concrete lamps need to be removed using a lorry mounted crane or 'Hiab', which also serves as an extendable  high platform. 

The old lamps are first disconnected by the Supply Authority, which does not form part of the contract.  Removal of old standards to contractor depot is part to the contract.  The new lamp standards consist of the lanterns (lights) complete with the ballast, ignitor, capacitor and lamp already fitted.  The main materials then are the column, the lantern, the cable to wire it, a photo-electric cell, tarmas and the concrete.  The lamps are supplied by the contractor to the client's specification.  The lamp standards have to be erected then concreted (6 metre columns specified require a 1.3 m buried root depth) then the luminaires/lanterns fixed to the top and connected to the connection box at the base of the column.  In order to keep the street lighting disruption to a minimum during lamp standard replacement, arrangements are made with the supply authority to disconnect old standards and connect the 'tails' (i.e. loose cable one end of which is connected to the lamp standard to be used to connect to the supply cable) of new standards.

Connection and disconnection by the Supply Authority is not part of the project tender.  This means that the new standards have to be wired ready for connection.   In order to do this holes have to be excavated adjacent to the old standards to accommodate the new standards and they have to be concreted with tails brought out before connection can take place. 

When connection is complete, the old concrete standards are removed and temporarily stored for disposal in the contractor's depot and the holes of both new and old standards reinstated.  Generally the new standards can be placed within 2 metres adjacent to the old standards.

A mobile crane or 'Hiab' lifts the columns and sets them in the holes and is also used as a platform for working at height.   The lanterns, which contain an infra-red detector for automatic switch-on are pre-wired by the contractor to avoid damage during installation and are attached at height using the  'Hiab' lorry mounted crane to the columns after column installation.  Cables and wiring are passed from the lantern and threaded down the column to the connection box at the bottom.  The lamp standards have to be connected at the base connection box by cable 'tails' to an existing lighting cable run along the pavement.  Identification of existing underground cables is performed by the Supply Authority and drawings passed on to the contractor prior to work commencing.

Connection, made by the Supply Authority, is arranged by the client. Students may assume that the lamps are delivered to the contractor storage depot and are paid for or enter a cost for purchase and delivery in their tender.

Students are at liberty to assign their own labour, ordinary and overtime rates and costs/values for:

• materials, such as concrete, cabling and accessories and paving stone replacement or tarmac reinstatement
• hire of equipment, such as cranes, HIABs, concrete mixers, etc. or other hired equipment
• times for excavating and the size of excavations
• cable measuring, cutting, laying, connecting and testing of lantern and column cable connections prior and post erection
• contractor overheads, including depot security, management, clerical (wages, etc.) and contract manager's time compiling tender document and so on
• any contingencies (e.g. bad weather, vehicle breakdown, vandalism, strikes, difficult terrain, etc, production of As-Built drawings detailing position of new lights and connections underground etc, if any)
• any other contractor costs that the student may consider necessary. Costs can calculated without considering VAT.

Students should endeavour to use sufficient labour to complete the work within three to four weeks and without interruption of street lighting availability.

All assumptions on which the tender is based regarding quantity of labour and type, duration of manpower employed, times for excavation, positioning and concreting of new standards, removal of old standards, etc.  should be stated.

Note: There are many options to consider when tendering.   For example, students may opt for excavation of all holes before commencement of new column installation as this will cut down on the duration of the Hiab hire.   Alternatively students may consider it more profitable for the contractor to excavate so many holes for old and new standards, then install the new and remove the old standards before proceeding with more excavations.  It should be remembered that the street lighting has to be maintained during the replacement of the standards and the Supply Authority will only disconnect two old and connect two new standards per day.  It is recommended that the best way to execute the contract is to leave as few excavations open as possible and to leave as many columns in lighting as possible.  Temporary reinstatement usually takes place after standard positioning and connection and permanent reinstatement of flags or tarmac in a street will be performed after street completion.   If costs for materials are estimated (for such as paving stones or tarmac, etc.) allowance should be made for some wastage.

The tender should include labour materials, overheads and contingencies, and need not include financial arrangements between contractor and client.   As the tender is a preamble to a project plan, these can be assumed to be interim payments with adjustments and final settlement and it is not necessary to prepare a cash budget, etc.

Constraints should be recognised, as for example the minimum time the Hiab will be required will be 2 weeks if it installs 2 new and removes 2 old standards per day.  All such modes of working should be clearly stated and reasons briefly given for the assumptions on which the tender is costed, for the benefit of the client. 

If a contractor has a long term arrangement as preferred contractor with a local authority or Highways Agency Area, there would usually be a rate or price agreed at the tender stage for the erection of a new column. There would also be a number of rates to cover the different lantern types and column sizes.  Alternatively some contractors tender on a 'cost plus' basis where the client is charged the material and labour cost plus a percentage for the contractor's overheads and profit.  This is the form the student's tender should take, which requires work activities, amounts of labour and rates to be specified and the costs of activities, equipment, contractor's overheads, etc.  to be estimated.   From this a project plan will emerge.

If a tender is pitched too high with profit it may lose out to another contractor.  If too low, it will lose money.  It's a fine line.

(d) A Project plan is required to be prepared for the work tendered for in part (c) using Microsoft Project 2000 Software, or later, or any other suitable project software.   Notes should accompany the project assignment describing the details and thinking behind the project form.

The project should show such features as:

• Gantt chart with tasks, dates, bar charts, etc. showing linked tasks with any lead or lag times
• critical path
• resources list completed
• resources usage
• task usage
• tracking Gantt chart
• resource fixed and task costs
• project % completion and cost report(s)
• tasks that can start simultaneously or prior to the finish of their predecessor, if any.

Task usage with associated costs (resource and task costs) should be simulated for the project at 100 % completion and reports produced.