Tender & Contract Documents

1. What is the civil engineering procedure for Government Project?

1.1 Need for a Project
To meet planning and development requirements;
The capacity of the existing vehicular boundary crossings is insufficient to cope with
the present and expected future traffic demand;

1.2 Client department to prepare the client project brief.

1.3 PPFS Stage

Appropriate works department then carries out Preliminary Project Feasibility Study
(PPFS) to ascertain the feasibility, determine the scope, formulate an implementation
strategy, and prepare cost estimates. PPFS can be carried out by in-house resources or
hire consultants by obtaining funding from block allocation approved by Finance
Committee.

1.4 Category C Stage Investigation & Feasibility Study

Upon the approval of PPFS report, the project will be in Category C of the PWP. The
project is accepted in principle by Finance Bureau, with PPFS (ensure the project is
feasible and its scope is well-defined) satisfactorily completed.
No work commitment and funding are incurred. Only provide an indication on the
completion of conceptual design and preliminary cost estimation.
Public Works Project PWP is a list of all public works projects and is financed from
Capital Works Reserve Fund (CWR).

1.5 Category B Stage Design Stage

Successful inclusion of the project in the Resource Allocation Exercise will entitle it to
Category B status. Works department is entitled to carry out further planning and
design.
Once the detailed design and working drawings are substantially complete, the director
of works department will seek funding for the project through the presentation of
Public Works Subcommittee PWSC Paper to Finance Committee of Legislative
Council.
PWSC Paper: problem, proposal, project scope, financial implication, public
consultation (District Councils; Gazette), environmental implication, land requirement.

1.6 Category A Stage Tender Stage

Upon the approval, the project will be upgraded to Category A status and ready for
calling for tender.
Tender assessment commences and three successful tenders would be recommended to
Central Tender Board (CTB) for approval.
The letter of acceptance would be issued to the successful tenderer.

1.7 Construction Stage

Construction commenced and when it is completed, it is handed over to the relevant
department and maintenance authority for ongoing operation and maintenance.

2. Which procurement methods would you choose for your project?

Characteristics Pros Cons

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Lump Sum Contract milestone payment

The Ctr undertake to Client has a firm Design should be fully
complete the work and financial commitment; completed;
he is to be paid by a Save measurement Provided the lump sum
lump sum; effort. contract with BQ,
The Works are well variation is difficult
defined at the time of valued and agreed;
tender; Risk posed to the Ctr
Suitable for projects and he has to increase
involve little his price accordingly;
underground works.

Re-measurement Contract progress payment

The Ctr undertake to Share the risk between Uncertainty of the
complete the works and client and ctr; project cost upon its
he is to be paid by re- Facilitates changes or completion;
measurement of necessary modification Client might suffer
quantity based on the to suit the actual site from the errors in BQ
priced BQ. conditions. (pricing strategy from
Suitable for projects Variation of works can the C)
involve many be valued based on the Duplicated effort in
underground works priced BQ. preparing the BQ at
(uncertainty, tender stage and final
complexity). measurement of
quantities.

PPP BOT Contract (private funding)

A company Satisfy the client Huge amounts of
(consortium) is immediate demands for money that is required
responsible for infrastructure without to be provided by the
arranging all the incurring the initial consortium.
financing for the capital expenditure. Public might suffer
project, its design and Less risk to the client; from the high road toll
construction, and Ctr Receive revenue

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finally its operation and from operating the

maintenance for a fixed facility for a fixed
number of years. number of years;
Government Unity of responsibilities
responsible for the for delivering services;
necessary enabling Provide an incentive for
legislation and the Ctr to adopt
associated land. sufficient quality in
EHC:1986-2016, WHT design and construction
to ensure that he
experiences low
maintenance and repair
costs during operating
period;
An incentive to focus
on the whole life costs
of delivering a service
to find optimal balance
between capital and
recurrent expenditure
and looks for ways of
reducing both.

Design and Build Contract

The Ctr responsible for Certainty of Any construction
doing the design and construction cost. changes found
construction works; Design and necessary are the Ctrs
Design checked by an Construction can be responsibility
independent checker. overlapped; increase in tender price.
Wants the works Direct lines of May not produce the
operating as soon as communication cheapest building in
possible. between Ctr and terms of life cycle cost
designer (poor quality).
Cooperation between Unsuccessful tenders

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designer and Ctrs can would spend money to

reduce the Ctrs cost engage consultant to
such as avoiding undertake design for
complicated formwork, tender which is not
tailoring dimensions to reimbursable.
suit reuse of the Ctrs
equipment. If the Ctr
foresees at the tender
stage that some of the
practices will be
possible, he can reduce
the tender price.
Site problem can be
resolved immediately
without additional
paperwork.

Management Contracting
a management contractor's knowledge Uncertainty of the
contractor is appointed of construction project cost at signing
to manage the designer methods can be up the management
and S/C brought on board early contract
no direct contractual and fully in the design employer cannot have
relationship between of the project satisfactory method of
client and designer / continuous design evaluating offers put
S/C process allows the forward by
postponement of management
finalised design to a contractors
later stage so that more rushed design of early
time is available for phases and constraints
perfecting it on later parts of the
flexibility for design design leading to
change during the early additional cost, longer

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construction period to construction time and

meet the needs of both reduced quality
the client, to improve difficult to monitor the
the fitness of the performance of S/C and
project for his needs, evaluate the associated
and the contractor to claims
improve its
constructability
management contractor
has direct contact with
both the designer and
the client

Term Contract
Contract lasts for fixed Risks to Ctr less in the the Ctr would have
term. sense that they works steady workload and no
Ctr to provide the to order. overall planning.
services as ordered by
the Engineer during the
term (Works Order).
Payment by schedule of
rates.
Usually for
maintenance contract.
Maintenance schedule
to be formulated via
asset management
study
3. What is re-measurement contract? (refer to Question 2)
N/A

4. Have you considered partnering of the contract?

Functions
Based on a common target, all parties work together to achieve project outcomes
through openness and mutual trust and eventually lead to a win-win outcome.
Achieve through open communication, early risk identification (NEC: early warning +
risk register) and managing it cooperatively (NEC: risk reduction meeting).

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5. Can you compare lump sum contract and remeasurement contract in

terms of risk? (refer to Question 2)
N/A

6. If you are the designer, how do you decide to use lump sum or
remeasurement contract in general civil works? (refer to Question 2)
N/A

7. What contract form do you use? (refer to Question 2)

N/A

8. What are the common forms of contract in Hong Kong? (refer to Question
2)
N/A

9. What is the advantage of lump sum contract? (refer to Question 2)

N/A

10. When is design and build contract used? What is the implication to the
Employer and the Contractor (risk)? (refer to Question 2)
N/A

11. Why you choose to use re-measurement type for your contract? Does it
contradict to what (lump sum bill of quantities) is suggested by the
government in previous years? (refer to Question 2)
N/A

12. What is FIDIC? What is NEC?

FIDIC
The International Federation of Consulting Engineers (commonly known as FIDIC,
acronym for its French name Fdration Internationale Des Ingnieurs-Conseils) is an
international standards organization for the construction industry, best known for the
FIDIC family of contract templates. The fact that the organisation has a Frenchtitle
bears testimony to its foundation in 1915 by three countries each wholly or
partly francophone. The founding member countries of the FIDIC
were Belgium, France andSwitzerland.
FIDIC is best known for its range of contracts that includes the: Dredgers Contract;
Short Form of Contract; Construction Contract; Plant & DB Contract; DBO Contract;
and EPC/Turnkey Contract. Details are available in the FIDIC Bookshop. FIDIC also
publishes the Client/Consultant Model Services Agreement together with the Sub-
Consultancy Agreement and the Joint Venture Agreement. FIDIC publishes the MDB
Harmonised Edition of the Construction Contract that is used by Multinational
Development Banks including the World Bank for their projects.
Until 2002, FIDIC was responsible for FIDICdirect, the International Directory of
Consulting Engineers. This printed and online directory listed international
construction companies including engineers, contractors, architects, surveyors and
their professional advisors including banks, lawyers, risk managers and security from
the fields of infrastructure, development and environmental projects worldwide. In
2002 this service was transferred to a new website, ICONdirect.

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NEC
The New Engineering Contract (NEC), or NEC Engineering and Construction
Contract is a formalized system created by the Institution of Civil Engineers that
guides the drafting of documents on civil engineering and construction projects for the
purpose of obtaining tenders, awarding and administering contracts. As such
theylegally define the responsibilies and duties of Employers (who commission work)
and Contractors (who carry out work) in the Works Information. The Works
Information consists of the Contract Data part one (Data provided by the Employer)
and Contract Data part two (Data provided by the Contractor). Several approaches are
included making it a family of options. It is used in the UK and internationally
including New Zealand and South Africa. There have been three editions, the first in
1993, the second in 1995, and the most recent in 2005. The June 2005 edition of the
NEC3 was amended in June 2006.
Engineering and Construction Contract (ECC):
Option A: Priced contract with activity schedule
Option B: Priced contract with bill of quantities
Option C: Target contract with activity schedule
Option D: Target contract with bill of quantities
Option E: Cost-reimbursable contract
Option F: Management contract
The Engineering and Construction Subcontract Contract (ECS)
The Engineering and Construction Short Contract (ECSC)
The Engineering and Construction Short Subcontract (ECSS)
The Professional Services Contract (PSC)
Framework Contract (FC)
Term Service Contract (TSC)
Supply Contract/Short Supply Contract (SC/SSC)
Adjudicator's Contract (AC)
Guidance Notes and Flowcharts

13. What is the contract type? (refer to Question 2)

N/A

14. What contract form is adopted in the contract, why? (refer to Question 2)
N/A

15. What are the disadvantages of using price quoted in other contracts? (not
up-to-date & pricing strategy) What is the best method to do the estimate?
Accuracy of Project Estimate
- S for Ws concern about the persistent over-estimation of Pre-tender Estimates against
tender awarded and the unacceptable magnitude of the over-estimation
- Works departments are required to take measures to improve the accuracy of the Pre-
tender estimates and project estimates before calling for tenders and PWSC
submission.

CURE (Committee to Update and Review Estimate)

- Not all the contract need to be examined by CURE, it is only necessary for the contract
sum larger than 20 millions.
- Internal committee in DSD to examine the project estimates before submission of the
PWSC paper to Policy Bureau.
- CURE meeting is held regular. Divisions should plan their submissions and inform the

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Secretary the proposed schedule accordingly.

Project Estimates
- Prepared in accordance with Section 5 of Chapter 4 of the PAH
- Prepare the BQ with reference to SMM
- Measure the quantity from the dwgs
- Pricing the BQ on contract basis using the latest contract rates or recent quotations
from prospective suppliers
- Estimates should be as fully detailed as the available information permits, and shall use
the most recent relevant prices updated in line with the appropriate Cost Index or
Tender Price Index (Civil Engineering Works Index CEWI) for the month or quarter
in which the estimate is done, to ensure they are valid prices which reflects current
market conditions
- Programme CF on yearly basis
- Estimates should be compiled to a constant price level and then converted to a money-
of-the-day (MOD) value by applying adjustment factors to the cash flow
- The project estimate should include, if appropriate:
(i) works contracts under the project (e.g. civil contract, E & M contract)
(ii) diversion of utilities
(iii) consultants fees and expenses with resident site staff costs
(iv) landscaping
(v) site safety and environmental measures, etc
- Adequate contingency based on the assessment of risks and uncertainties should be
allowed in accordance with WBTC No.22/93 Estimating using Risk Analysis
- Recurrent cost estimates shall be prepared prior to seeking upgrading of a project to
Category A. It should be prepared in sufficient detail and manner to allow assessment
of the full financial implication of the project in the immediate and long term.

ERA (Estimating using Risk Analysis)

- Traditional contract: All too often risk is either ignored or dealt with in an arbitrary way
by simply adding (about) 10~20% "contingency".
- HATS2A DC0923: 10%
- LT Valley Sewerage DC1207: 20%
- Risk analysis is a formal decision-making technique that helps identify and measure
uncertainty
- The main activities in ERA are
(a) identifying significant risks,
(b) assessing the probability (10~90%) and extent of those risks occurring, and
(c) establishing appropriate $ values for the risks.

16. Why do you use remeasurement contract for the service reservoir
contract? If the ground condition is uncertain, why dont add more
boreholes to minimize the uncertain quantities and use lump contract
instead? (refer to Question 2)
More boreholes possibility of wasting time and resources + impossible to
mitigate all the associated risks
Preferred to re-measurement contract suitable provisional item for additional
borehole when necessary + easier in valuation of variation

17. Why do you choose to use lump sum contract? What are its advantages
and disadvantages? (refer to Question 2)

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N.A

18. Is this a remeasurement contract? Have you heard of what is Milestone

contract? Can you tell me what is you understanding of milestone
contract? (refer to Question 2)
N/A

19. What procurement methods have you considered for your project? (refer
to Question 2)
N/A

20. How to estimate the project cost? Both initial and recurrent project cost?
(refer to Question 15)
N/A

21. How to calculate the contingency? What is it typical range? (refer to

Question 15)
N/A

22. Are there any procedures required for assessing risk in the service
reservoir? (I mentioned in the design there is no such requirement but for
preparation of project estimate, risk analysis method under WBTC No.
22/93 has been adopted.) (refer to Question 15)
N/A

23. What is ERA and how it works for calculating the project estimate? (1st)
(refer to Question 15)
N/A

24. What is LD and how it is calculated? (1st)

Liquidated Damages [ETWB(W)TC No. 4/2003]
- LD's is a sum agreed by the Employer and the Contractor in advance as the amount to
be paid by the Contractor as damages if the Contractor breaches the contract by
failing to complete the work in time.
- shall be incorporated in the tender documents Special Condition of Tender (SCT) and
the department shall notify the tenderer of the rate of LD's so calculated before tender
acceptance and a copy of such notice shall be incorporated in the contract documents
forming part of the contract.

Calculation of Liquidated Damages

- Definition of Terms
C = the contract value of the Works (including preliminary items and the Provisional
Sum for price fluctuations (if any) but excluding the payment for site safety,
Contingency Sum and daywork) or, as the case may be, the contract value of the
Section (including a share of preliminary items and the Provisional Sum for price
fluctuations).
D = the assumed delay in days for the completion of the Works, or the delay in
completion of a Section. (reference to department's record of similar or equivalent
contracts completed in the past 5 years)
E = the estimated lump sum cost for providing professional and site supervisory staff.
(exclude contingent sums such as allowance for supervisory costs during extended

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contract periods)
F = the assumed annual change in the Price Fluctuation Factor applicable to the
Contract. (based on the past 5-year record)
P = the assumed lending rate (% per annum) during the course of the Contract.
(quoted best lending rate (% per annum) of the Hong Kong Monetary Authority
recorded in the latest issue of the Hong Kong Monthly Digest of Statistics published
by the Census and Statistics Department, Hong Kong)
S = the estimated lump sum site supervisory costs. (exclude contingent sums such as
allowance for supervisory costs during extended contract periods)
T = the time in days for completion of the Works, or time for completion of a
Section.
V = the assumed value of outstanding works in percentage of C at time for
completion.
- Recovery on Capital Invested

- Site Supervisory Costs

- Fluctuation

LD for LT Valley Sewerage

Special Damages
- There may be situations where the Employer will suffer some special losses as a
result of a project not being completed on time. For example, where a contract is on
the critical path any delay may result in an ultimate delay to the completion of
another contract (e.g. a separate demolition or piling contract can delay the
completion of the whole project). The Employer will suffer a loss on the following
contract(s) if delayed by the late completion of the contract in respect of which the
calculation is being made. LD's for special damages cannot be imposed if there is a
float period between contracts, because there cannot be any genuinepre-estimate of
the special damages. However, in many cases contracts are programmed so that there

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is no float. This should be confirmed before a calculation is made.

special loss of running a less cost efficient facility until the replacement facility
is available
opening of a school or offices may depend on the completion of a road access
loss of interest on capital invested in an adjoining sewage treatment plant which
cannot be commissioned until the sewer tunnel is completed
site formation of a leased land and is liable to damages for delay
pay its consultants additional fees and expenses arising from delay in
completion of the Works
- If any such special damages can be identified at the project planning stage, it is
essential that the rationale behind the calculation (but not the calculation itself), is
clearly stated in the tender documents as a SCT and the appropriate sum representing
the special damages included as part of the genuine pre-estimate of loss in the event
of late completion of the Works or, as the case may be, the relevant Section.

25. What is the purpose for retention money? When will it released to the
Contractor?
Retention money (not more than 5%, LT Valley Sewerage: 1%)
- A percentage of payments (quoted in FOT) will be retained by the Employer until a
specified period (maintenance period / defect liability period) after taking over the
works.
- The amount is then released if the contractor has completed his obligations such as
rectifying defected work.
- The potential advantage to the Employer is that a contractor should have the
incentive to complete his obligations.
- In some cases, the contractor may even realise that his resources can earn more if
used instead on work for other contracts. To anticipate this the employer can have
specified a larger percentage retention of payments when inviting tenders, but at the
risk that the tender prices will therefore be higher to meet the greater costs and risks
to the contractors.
- The contractor does not cease to be liable to the Employer or to other parties for
defects or their consequences by being paid the retention money.

26. What is the typical range of overhead and profit? How does this figure
come?
30~35% (30~32% for individual Contractor; 33~35% for JV)
HATS2A DC0923: 34.37%
LT Valley Sewerage: 35%

27. If the project sum is going to exceed the project estimate, what will you
do? (Ch.7, PAH)
MONITORING AND ESTIMATING EXPENDITURE
- Once the Contractors programme is known, it is possible for the ER to produce a
detailed curve of expected expenditure.
- It is necessary to recognise that this record will show the value of work done on the
date to which the interim statement refers as opposed to the date of actual payment
by Treasury.
- When monitoring expenditure, the ER should give an early warning in liaison with
the PE controlling the project vote if it appears that the contract sum will be exceeded
and, if so, by how much, to enable action to be taken for the provision of funds.
Changes in Quantities

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Contractual Claims
Variation Orders
Contract Price Fluctuations (CPF)
Items omitted from the Bill of Quantities

AUTHORITY TO INCREASE CONTRACT SUM

- When any event occurs, which will probably cause the original contract value to be
exceeded, approval has to be given by officers who can authorise increases in
contract sums for payments in accordance with the terms of the contract subject to
the Approved Project Estimate (APE) not being exceeded. This authority is also
applicable to variations essential for the completion of the works as defined in the
original contract.
- In no circumstances may a contract sum be increased if such an increase would result
in the APE being exceeded, or if the works which necessitate such an increase are
outside the approved scope of the project, unless prior approval from the Secretary
for Financial Services and the Treasury (SFST) has been obtained for an increase in
the project estimate, or for a change in the scope of the project, in accordance with
FC No. 23/82
- If the increase in contract sum will exceed the departmental cap of the project, the
internal procedure as set out in FC No. 23/82 for securing approval for increase in
additional allocations in excess of the departmental cap should apply. However, there
is no need for submission to Public Works Subcommittee (PWSC) or Finance
Committee if the APE is not exceeded. See the SFSTs memo ref. FIN
CR1/6/581/87(02) Pt.65 dated 12 September 2002 for details.

28. The Contract Sum is only 30M, but the Approved Project Estimate is 41M.
Dont you think its a bit low? Do you know why? What do you specify in
Contract Documents (Tender Documents)?
(i) APE
(ii) Sum allowed in APE for the Contract
(iii) Contract Sum
The accepted tender price is lower than the sum allowed in APE for the contract.
- This is due to keen competition under prevailing market conditions, which resulted in
lower rates in the returned tenders.
- Pricing strategy
GCT 17 Unreasonably low bids
- Without prejudice to the generality of other General Conditions of Tender and
Special Conditions of Tender, the Employer may reject a tender which in the opinion
of the Employer is unreasonably low in terms of price and may therefore affect the
tenderers capability to carry out and complete the Contract and/or deliver work of
the quality required in accordance with the terms of the Contract.

29. What are the elements of contract documents?

Articles of agreement:
- To execute the articles of agreement under seal

Letter of acceptance:
- To accept the offer (tender) as submitted by the tenderer

Form of tender (FT):

- This form provides a model letter to the employer from a tenderer offering to enter

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into a contract for the works.

- The appendix provides a document for listing contract data, particularly the time for
completion of the whole works (and for different sections, if required), amount of
insurance, rates of payment for liquidated damages, and period of maintenance.

General conditions of contract (GCC):

- Conditions of contract which set out the responsibilities of each party.
- GCC consists of clauses expected to be relevant to a range of type of project and are
intended to be used in conjunction with drawings, specifications and other documents
that define the particular scope of the works.

Special conditions of contract (SCC):

- SCC will cater the need for advancement or changes in the emphasis of policy, e.g.
the emphasis on safety, so we have the pay for the safety scheme in most contracts
nowadays; use of insurances; delayed possession so as come round with the
fundamental breach position as stated earlier; sections subject to excision, etc.
- We wish that by virtue of such SCC, the prescribed measure of damages and the
situations upon which a deletion is ordered will make the contract subsisting i.e. not
repudiable on the volition of contractors.
- Government maintains a library for these standard special conditions of clauses.

General specification (GS):

- The GS lays down the quality of materials, the standards of workmanship, the testing
methods and the acceptance criteria for civil engineering works undertaken for the
government.

Particular specification (PS):

- Since the GS provides only the requirements on the quality of materials, standard of
workmanship, methods of testing and the criteria of acceptance for typical civil
engineering works, amplifications and modifications to the GS were necessary to suit
particular circumstances of individual contract by means of the PS.
- The PS clauses elaborate and supplement the requirements that are not shown in the
drawings.
- The specifications also stipulate the general obligations and special responsibilities
the contractor has to observe and take up respectively in addition to those stated in
the Conditions of Contract.
- Compatibility of all changes must be ensured by the department preparing the
contract documents.
- It is essential to ensure that the PS does not alter or conflict with the GCC or SCC.

Standard method of measurement (SMM):

- The SMM standardize the layout, structure and content of BQ, the rules and units of
the measurements, as well as the descriptions of the items and the requirements of the
unit rates.
- The SMM provides detailed measurement methods and item coverage for most items
in the Bills of Quantities (BQ) of the Contract.
- It provides a guidance to agree to the exact technical manner in which the quantities
are to be measured; to secure uniformity of tendering practice; to facilitate valuation
of extra works and assessment of claims; and to facilitate interim payment.

Particular preamble:

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- For items which are not included in or deviated from the SMM, PP is given to specify
the particular requirements in the method of measurement, itemisation and item
coverage.

Bills of quantities:
- The BQ would be issued with the invitations for tenders.
- The BQ helps the tenderers to realize the nature of the works, and to price their rates
for each item of work.
- In addition, it allows the Employer to compare different contractors by looking into
the rates inserted by different tenders on respective items.
- The priced BQ forms the basis for future valuation of the works, and cost control
during construction stage by comparing the percentage of work completed with the
time elapsed.

Drawings:
- The drawings which show what is to be constructed need to be listed in the tender
documents.
- The tender drawings become the contract drawings unless others or modified
drawings are agreed in tendering period.
- The drawings provide the tenderers with a good perspective of the nature and extent
of the Works.
- The requirements of the works are highlighted in form of notes on the drawings to
supplement or amplify the specification.

30. What is the Particular Preambles to the Bills of Quantities? (refer to

Question 29)
N/A

31. I notice that your submitted cost estimate only includes a part of the
structure, how about others? How did you prepare the BQ? (refer to
Question 15)
N/A

32. How do you prepare the tender documents? (refer to Question 39)
N/A

33. What is the typical range of preliminary items?

10~30%
29% (LT Valley Sewerage, Stage 2, Phase 1: 34.7M/119M)
10% (KT Development, Stage 2: 25M/260M)

34. You incorporated requirements of application of a Construction Noise

Permit for piling works conducted outside 7am 7pm in the PS, is it a
legal requirement? (Yes, under Noise Control Ordinance) As it is a legal
requirement, why did you incorporate it in the PS? (refer to Question 29)
N/A

35. What would you put in the contract provisions in order to ensure the civil
contractor can complete the works on time and then handover to the
building contractor? Anymore? (refer to Question 24)

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N/A

36. How do you ensure no people would enter the groins during construction
stage? What contract provisions would you put in the contract?
Anymore?
PS the C shall erect hoarding surrounding the site
BQ pay for the erection, dismantle

37. What would you put in the contract provisions to ensure the ground
condition complies with the design assumptions?
PS verify ground condition on site via site investigation (i.e. bored log; plate load
test for shallow foundation)
BQ item for site investigation (if uncertainty is large include provisional sum for
additional bored log/tests)
BQ more contingency (if risk is large more contingency for variation)

38. Can you describe different tendering methods for public works projects?
Open tendering:
- Tender invitations are published in the Government of the Hong Kong
Administrative Region Gazette, on the Internet, and if necessary, in the local press
and selected overseas journals.
- For procurement covered by WTO, the procuring departments should also consider
notifying consulates and overseas trade commissions of the tender invitations.
- All interested suppliers/contractors are free to submit tenders.

Selective tendering:
- Tender invitations are published in the Government of the Hong Kong
Administrative Region Gazette, or are sent by letter to all suppliers/contractors on the
relevant approved lists of qualified suppliers/contractors established and approved for
the purpose of selective tendering.
- For procurements covered by the World Trade Organization (WTO) Government
Procurement Agreement (GPA), suppliers/contractors not already on the lists may
also be considered provided there is sufficient time to complete the qualification
procedure.
- Suppliers/contractors who wish to apply for admission may approach Government
Supplies Department (GSD) or ETWB. Normally, they are required to meet certain
qualification criteria or technical assessment to ensure suitability. Applications for
inclusion may be submitted at any time and will be dealt with expeditiously. Up-to-
date lists and the method of application for inclusion in the lists are published in the
Government of the Hong Kong Special Administrative Region Gazette annually and
are reviewed regularly.

Prequalified tendering:
- Tender invitations are sent by letter to those prequalified suppliers/contractors
approved by the Secretary for the Treasury (S for Tsy).
- Invitations to apply for prequalification (EOI) may take the form of open tendering or
selective tendering and the respective procedures will apply.
- Projects with the following specialty may be necessary to adopt this tendering
method:
(1) Pre-testing of equipment is required to determine its suitability;
(2) An extreme complex project nature;

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(3) High value projects;

(4) Very rigid completion programmes;
(5) A high level of coordination and technical expertise are required; or
(6) Non-standard forms of contract are involved, e.g. BOT, D&B.

Single or restricted tendering (limited tendering as specified in WTO GPA):

- Tender invitations are sent to only one or a number of suppliers/contractors approved
by the S for Tsy or the Director of Government Supplies. This procedure is only used
when circumstances do not permit open tendering.
- Projects with the following specialty may be necessary to adopt this tendering
method:
(1) Extreme urgency or security;
(2) For proprietary products or for reasons of compatibility; or
(3) No response to an open tender and selective tender.

Selection of tendering methods:

- As laid down in the Stores and Procurement Regulations (SPR), government
procurement exceeding HK$3million (for construction and engineering services) in
value is normally done by the use of open and competitive tendering procedures so as
to obtain the best value for money.
- Limited or restrictive tendering procedures are, in line with the WTO GPA
provisions, only permissible under specified exceptional circumstances.
- Where the nature of the contract (such as a contract that is time critical or one that
requires particularly high levels of skills and proven reliability) dictates that tenders
have to be invited from qualified supplies/contractors, selective tendering or
prequalified tendering may be used.
- For most of the PWP contracts, selective tendering is used.

39. Can you describe briefly the tendering procedures?

Preparation of tender documents:
- The functions of the tender documents are to provide all necessary information to
assist the bidders to prepare their tenders, and to form the basis for subsequent
contract documents.
- In drawing up the tender specifications for goods or services to be procured,
departments are required to ensure that the characteristics laid down for the products
or services are based on functional and performance requirements.
- Where standards are referred to, these should, where practicable, be international
standards.
- Tender specifications should not be drawn up to suit a particular brand or country of
origin.
- Tender documents should include standard contract forms covering the general
aspects of tender and contract requirements, special conditions of contract, detailed
price schedules, additional information and instructions application to a particular
contract.
General / Special Conditions of Tender - set out the responsibilities of each
party in the tender, i.e. time frame for tender, rules for tender assessment,
statement of convictions under Ordinances
Form of Tender - time for completion of the whole works (and for different
sections, if required), amount of insurance, rates of payment for liquidated
damages, and period of maintenance
Article of Agreement - execute the articles of agreement under seal

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General / Special Conditions of Contract - set out the responsibilities of each

party in the Contract
General / Particular Specification - quality of materials, the standards of
workmanship, the testing methods and the acceptance criteria
Bills of Quantities
Drawings

Precaution for drafting tender documents

- Remember when you draft the contract documents, you must draft the clauses
clearly. Say what you intended to say and check the objective meaning of your words
accord with your intention.
- Do not insert clause which have conflicting meaning. Therefore when you say draft a
section of PS once it is completed, you must read it again. Then you may have to
read the section again with the remaining parts of the document.
- There is a rule called priority of document i.e. the SCC prevails the GCC. Similarly
drawing and its notes prevails the PS and BQ.
- It is always correct to conclude that the objective meaning of the contract has to be
deduced from whole of the contract. The judge will not try to find out what is your
real intention but interpret the objective meaning of the clauses.
- Do not rely on the force of an exemption clause too much. There is always a limit of
such an exemption clause, i.e. one cannot exclude all liability of an event from
whatsoever situation.
- Remember general words will be overruled by specific words, and also remember
that very often a term in the contract is defined. The defined meaning or application
will have discrepancy from the common meaning of the general words.
- In some cases do not over elaborate too much or amplify too much of a clause. You
may say something redundant and may obscure your true intention.
- Do not try to be too clever in making so-called all-embracing clauses, i.e. clauses
which cover all situations. In this situation write general words. The more general
you write, the more situation you may cover but of course with less force.
- Never try to dictate what the contractor should do in the contract. What you stipulate
is what he cannot do or what he must do. The contractor is always a better person to
construct his works than the consultant.
- However, if something which must not be done or you cannot allow it to happen, say
so clearly. If it is something forbidden by Law, then better not repeat it again.

Tender notice:
- The function of a tender notice is for tender invitation.
- It should include a broad description of the requirements, estimated quantities and
timing, the closing date and time for tenders, the place for lodging tenders, whether
the procurement is covered by the WTO GPA, where to obtain tender documents,
and name of the office or officer and a telephone contact for enquiry.
- Normally, we allow at least three weeks for tenderers to submit their bids.
- Where the procurement is covered by the WTO GPA, the time allowed for
submission of tenders is 40 days except in the case of extreme urgency.

Submission and opening of tenders:

- Tenderers must submit their tenders before the tender closing date and time stipulated
in the tender notice. We will not open any tenders received after the tender closing
dates.
- Tenderers must also ensure that their tenders are deposited correctly in the tender box

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specified in the tender notice.

- At the closing time of tenders, the designated tender opening team, comprising
members who are not involved in the procurement process, will open the respective
tender box. Only tenders which are due are opened and authenticated by the tender
opening team.
- The tender opening team will make appropriate records on file of the tenders
received and then send the originals of the authenticated tenders to the procuring
department for evaluation.

Evaluation of tenders:
- The procuring department is responsible for evaluating the tenders to determine
whether they meet the conditions and specifications laid down in the tender
documents.
- In the event of a tenderer discovering an error in his tender after it has been
deposited, attention in writing may be drawn to the error and an amendment
submitted which, provided that the amendment shall have been deposited before the
time fixed for receipt of tenders, shall be accepted.
- If errors and/or omissions are found in a tender during tender examination, such
errors and/or omissions shall be dealt with in accordance with the principles and rules
contained in Environment, Transport and works Bureau Technical Circular (Works)
No. 41/2002
- To ensure the best value for money, these conditions and specifications may include
the time of delivery/completion, quality of goods offered, designs proposed,
maintenance and spare parts provision, warranty and guarantees as appropriate.
- Usually, the department will recommend acceptance of a tender which fully complies
with the tender conditions and specifications and is the lowest in tender sum.
- It is not in the interest of the Government to accept an unreasonably low bid.
Enquiries (The tenderer shall be asked to provide explanations) must be made with
the tenderer before the procuring department decides not to award the contract to the
tenderer (letter to the tenderer on unreasonably low bids) if a procuring entity has
doubts (arising from the unreasonably low bid) on the capability of the tenderer.
- Where pre-determined factors other than price are included in the tender assessment,
the recommended tender is the one which attains the highest combined technical
(35~40%) and price (60~65%) score (marking scheme). The procuring departments
will then submit their recommendations in the form of a tender report to the relevant
tender boards for approval.

Tender boards:
- The Financial Secretary has appointed the following tender boards, each consisting of
not less than three persons, to consider and decide on the acceptance of tenders.
- Central Tender Board chaired by the S for Tsy to deal with high value tenders which
exceed those values specified for the subsidiary tender boards. Currently tender for
supplies and general services exceeding $10million and tenders for construction
services exceeding $30million are considered by the Central Tender Board.
- Public Works Tender Board chaired by the Deputy Director of Architectural Services
to deal with tenders for works and related contracts of a value not exceeding
$30million.
- On considering a departments tender report, the tender board takes into account the
departments recommendation and justifications. The board may seek clarification
from the department before accepting the departments recommendation. The
decision not to accept any tender in a tender exercise must be made by the relevant

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tender board.

Award of tenders:
- Upon notification of tender boards approval, the procuring department will inform
the successful tenderer in writing of the acceptance of his tender and invite the
supplier/contractor to execute a contract with the department.
- The procuring department will also inform unsuccessful tenderers of the outcome of
their bids and generally the reasons why their tenders are unsuccessful.
- Given our commitment to respect commercial confidence, we ensure that the details
given will not disclose tender information provided by another tenderer in
confidence.
- We publish the name of the tenderer awarded the contract and the contract sum of all
contracts awarded in the preceding month in the Government of the Hong Kong
Special Administrative Region Gazette and on the Internet in the following month.

40. Please describe your work in the prequalification exercise for the
tendering of lighting contract. (refer to Question 39)
N/A

41. How do you justify the criteria for the selection of tenderers? (refer to
Question 39)
N/A

42. Is prequalification exercise a normal practice for all tenders in the

Lighting Division? (refer to Question 38)
N/A

43. How do you evaluate tender and deal with unreasonably low bid? (refer to
Question 39)
N/A

44. Have you conducted prequalification? What is the purpose and use of it?
What is the difference between prequalification and selective tendering?
(refer to Question 38)
N/A

45. Tell me something about the tender assessment procedure and what are
the important steps when assessing a tender? (1st) (I told them I didnt do
the tender assessment and I will try my best to explain the procedure to
you) (refer to Question 39)
N/A

91. You have just been involved in the design of the sewerage system? Any
preparation of contract documents? An engineer very often needs to prepare the
contract documents. Can you name the tender/contract documents and their
purpose? (The same question asked in Wilsons Professional Assessment in 2006)
(Ip)
Contract Documents for all drainage refer to PS5, dwgs and BQ(PP).

Articles of agreement:
- To execute the articles of agreement under seal

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Letter of acceptance:
- To accept the offer (tender) as submitted by the tenderer

Form of tender (FT):

- This form provides a model letter to the employer from a tenderer offering to
enter into a contract for the works.
- The appendix provides a document for listing contract data, particularly the
time for completion of the whole works (and for different sections, if required),
amount of insurance, rates of payment for liquidated damages, and period of
maintenance.

General conditions of contract (GCC):

- Conditions of contract which set out the responsibilities of each party.
- GCC consists of clauses expected to be relevant to a range of type of project
and are intended to be used in conjunction with drawings, specifications and
other documents that define the particular scope of the works.

Special conditions of contract (SCC):

- SCC will cater the need for advancement or changes in the emphasis of
policy, e.g. the emphasis on safety, so we have the pay for the safety
scheme in most contracts nowadays; use of insurances; delayed possession
so as come round with the fundamental breach position as stated earlier;
sections subject to excision, etc.
- We wish that by virtue of such SCC, the prescribed measure of damages and
the situations upon which a deletion is ordered will make the contract
subsisting i.e. not repudiable on the volition of contractors.
- Government maintains a library for these standard special conditions of
clauses.

General specification (GS):

- The GS lays down the quality of materials, the standards of workmanship, the
testing methods and the acceptance criteria for civil engineering works
undertaken for the government.

Particular specification (PS):

- Since the GS provides only the requirements on the quality of materials,
standard of workmanship, methods of testing and the criteria of acceptance
for typical civil engineering works, amplifications and modifications to the GS
were necessary to suit particular circumstances of individual contract by
means of the PS.
- The PS clauses elaborate and supplement the requirements that are not
shown in the drawings.
- The specifications also stipulate the general obligations and special
responsibilities the contractor has to observe and take up respectively in
addition to those stated in the Conditions of Contract.
- Compatibility of all changes must be ensured by the department preparing
the contract documents.
- It is essential to ensure that the PS does not alter or conflict with the GCC or
SCC.

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Standard method of measurement (SMM):

- The SMM standardize the layout, structure and content of BQ, the rules and
units of the measurements, as well as the descriptions of the items and the
requirements of the unit rates.
- The SMM provides detailed measurement methods and item coverage for
most items in the Bills of Quantities (BQ) of the Contract.
- It provides a guidance to agree to the exact technical manner in which the
quantities are to be measured; to secure uniformity of tendering practice; to
facilitate valuation of extra works and assessment of claims; and to facilitate
interim payment.

Particular preamble:
- For items which are not included in or deviated from the SMM, PP is given to
specify the particular requirements in the method of measurement, itemisation and
item coverage.

Bills of quantities:
- The BQ would be issued with the invitations for tenders.
- The BQ helps the tenderers to realize the nature of the works, and to price
their rates for each item of work.
- In addition, it allows the Employer to compare different contractors by looking
into the rates inserted by different tenders on respective items.
- The priced BQ forms the basis for future valuation of the works, and cost
control during construction stage by comparing the percentage of work
completed with the time elapsed.

Drawings:
- The drawings which show what is to be constructed need to be listed in the
tender documents.
- The tender drawings become the contract drawings unless others or modified
drawings are agreed in tendering period.
- The drawings provide the tenderers with a good perspective of the nature
and extent of the Works.
- The requirements of the works are highlighted in form of notes on the
drawings to supplement or amplify the specification.

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