Negotiated Construction Bids

What is Construction Bids?

Construction Bids are written offers from contractors to undertake a construction job in return of a certain sum of money. Bids can be either Negotiated Bid, Limited Competition, Selective Bid or Open Competition Bid. This article will talk about Negotiated Bid while the other will be written in upcoming articles.

Negotiation Bid

In this method the price to be paid in return of the work to be done is negotiated with a single contractor. This , obviously, does not provide the owner with a comparative prices. Though the cost of a work will be higher in this method, an owner may expect some advantages from employing a particular contractor whose policies and methods are known and who has in the past proved capable of fulfilling his obligations. The higher cost may be offset by better quality , early completion, and smooth administration. The negotiated construction bid procedure can be adopted to the owner’s advantage if the chosen contractor is one in which the Owner and the Engineer have confidence, and which is of known integrity and reliability. Moreover, the work to be carried out is within his special scope and experience.

The procedure of the negotiated bid is as follows:

  • The Engineer. on behalf of the owner, invites a contractor to submit a bid. The initial invitation includes information regarding the proposed contract procedure, a brief description of the work, the approximate dates of commencement and completion of the works as well as other essential information.
  • The Engineer or the contractor prepares the priced bill of quantities. In many cases it would be more practical that the contractor do the original pricing, as he is in a better position to judge the correct price, which may depend on construction equipment and methods of execution to be adopted by him.
  • The priced bills are then handed over to the other party for consideration.
  • The rates are examined by the other party. Rates in dispute are compared with current rates for similar work, obtained in competitive tendering after allowing for the special features of the situation.
  • When the Engineer and the Contractor reach agreement, the agreed schedule of prices is sent to the Owner for his approval and assent.