Saturday, November 23, 2019

Difference between Tender and Contract Documents

In order to understand the difference between tender documents and contract documents, we must first understand what they contain.

Tender Documents:

A tender is a written offer to contractors to conduct such specified works or to supply specified materials within a specified time period and in compliance with contract and contractual conditions between the contractor and the owner or department or party.

The tender documents contain the bill of quantities (BOQ), work specifications to be performed, time frame for completing the work, contract conditions and plans and drawings. On the payment of certain fees, these documents are given to the contractor. The contractor who offers the lowest or appropriate rates for the works as a whole is offering the contract to do the work.

It's a document pre-bidding. This document mainly describes four issues, i.e. 1 Contractor Eligibility Criteria, 2 Project Timeline 3 Contract Working Procedure and 4 Quantity Material Specification(BOQ).

In order to obtain tender papers, there are also some limitations. In some cases, only the tender document is available to the contractor who is eligible.

Once the rate is quoted by the contractor in BOQ, it is sealed in cover and submitted to Tender Inviting Authority Panel. At the date of tender opening, the panel will unseal the cover and start to name L1, L2 & L3 respectively to the contractor, who quoted the lowest or appropriate value of three members. Then the negotiation process will take place, the contractor who comes for the lower price to him the tender will be awarded.

Contract Documents:

Contract documents are the arrangement between the owner or the party or agency and the contractor to conduct the works as stated in the tender documents on the rates quoted by the contractor in compliance with the contract conditions.

It is a Post – Bidding Document. This document is a total of an agreement. Once the bidding is over the contractor and client will undergo an agreement that the Project will be completed in scheduled time, with the same specification and working procedure as mentioned in the Tender document. If the project is delayed due to the contractor, then the penalty will cover some percent of the total project cost. This agreement is documented as a Contract Document.

Tender and Contract Documents difference:

The difference to remember here is that tender contracts are given to as many suppliers as possible to receive the lowest offers for the stated work, whereas contract agreements are only signed with the contractor with the appropriate or lowest bid or rates and technical skils.

While the tender documents include the contract terms and all the information for the stated work, in terms of content, there is not much difference between the two. But it is not possible to send tender documents as Letter of Acceptance (LOA) since these are two different types of documents. While a tender document can not bind the contractor to do the work, the contractor is bound by a contract document to complete the work as per the contract.

Simple Example for understanding the difference between tender documents and contract documents:

When you are selected for a job in a company you are offered an offer letter to join the company. But getting selected in a company does not mean that you join the same company, you may have other offer letters as well. But when you sign the letter of acceptance (LOA) for the job, you are bound to join the company. So, here offer letter from the company is a tender document and LOA is the contract document.