How to use bid rejection to curb unbalanced bidding by construction firms

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How to use bid rejection to curb unbalanced bidding by construction firms. Overview: As is well known, unbalanced bidding is a price war aimed at the listed prices; it involves strategic adjustments to those prices in order to maximize profits. Bid rejection, on the other hand, functions like a sword that severs the path for such unbalanced bidding. In this price war, the tenderer uses bid evaluation to analyze whether the bid prices meet the requirements specified in the tender documents, whether there are any unbalanced pricing issues or arithmetic errors, etc.; it identifies these problems, analyzes their causes, and provides professional advice. This is done to curb the practice of unbalanced pricing by construction firms. Table of contents for this issue: 1. What is bid rejection? ； 2. Tasks and process of bid rejection ； 3. Precautions and techniques during bid clarification ； 4. How to write a bid rejection report. 01 What is bid clarification? The term “bid clarification” appears in both the “Specifications for Construction Project Cost Consulting” (GB/T 51095-2015) and the “Procedures for Whole-Process Cost Consulting of Construction Projects” (CECA/GC4-2017). Bid rejection is a preliminary data analysis and organization process of bid documents carried out by the tendering party or engineering cost consulting firm after the bid opening but before the bid evaluation, using methods such as verification, comparison, and screening. Its purpose is to identify data in the bid documents that may be ambiguous or exhibit significant anomalies, providing a basis for raising questions during the preliminary and detailed evaluations. http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/028a03b3225b2acff83b9aa744fa4cf1.jpg02 Tasks and procedures for bid evaluation 1. Tasks involved in bid evaluation According to the \"Specifications for Construction Project Cost Consulting\" (GB/T51095-2015) and based on my relevant experience, bid evaluation primarily involves the following aspects of analysis: ① Substantive response to the tender documents ； Experience: Reviewing elements in the bid documents such as project duration, price, penalty clauses, quality, etc., to determine their alignment with the requirements specified in the tender documents. ②Analysis of errors and omissions ； Experience: Analyze the omissions, additions, and errors in the bill of quantities by referring to the tender control price; the analysis of errors mainly includes checking whether they conform to the descriptions, units, and quantities specified in the bill of quantities. As shown in the image at http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/82bb2ee44e3ba84e95e4318054134b89.jpg, ③ Analysis of the rationality of the comprehensive unit prices for various sub-projects and itemized quantities ； Experience: Analyze the composition of labor, materials, and equipment for each item to determine whether there are prices that are significantly lower than costs or higher than market prices (prices that are 10% below or above the base unit price specified in the bill of quantities are considered to be abnormally high or low), and also assess whether the proportions of labor, materials, and equipment meet the required standards. ④Analysis of the completeness and rationality of the list of measure items, as well as analysis of the accuracy of the non-competitive costs included therein ； Experience: Are there any cases where the rate for total cost measures is lower than the prescribed rate, where measure items are not reported, or where the prices differ significantly from market rates? ⑤Analysis of the completeness and rationality of items in the other project list ； Experience: Verify whether the provisional estimates and provisional sums are quoted in accordance with the prices set in the tender control price. ⑥ Unbalanced bid analysis ； In fact, what is mentioned above emphasizes the issue of uneven pricing, that is, the existence of prices that are significantly higher or lower than market prices (prices that are 10% below or above the base unit price for bid evaluation are generally considered to be abnormally high or low in the project schedule; the specific criteria depend on the agreements set by each organization). ⑦ Arithmetic review of the total and combined amounts and suggestions for corrections ； Experience: That is, the total of each sub-item equals the total price, with no situation where the sum of unit prices does not equal the total price. ⑧ Other issues that should be analyzed and clarified. Experience: Hinders the analysis and avoidance of terms unfavorable to the tendering party. 2. Based on the \"Procedures for Full-Process Cost Consulting in Construction Projects\" (CECA/GC4-2017) and relevant personal experience, the bid rejection process is summarized as follows. ①The total prices of all bidding units are sorted from lowest to highest, and then a comparative analysis is conducted, starting with the total bid price and moving on to the quotes for individual construction tasks and sub-projects. As shown in the table below: http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/11b096e2b0543d4a2b671db0dd2df6dc.png ② Determine the benchmark price, and analyze the difference between this benchmark price and the total cost as well as the cost of each individual project, indicating the percentages involved. Reference price: The tender control price or the average price among all bids can be used. If multiple entities submit bids, it is recommended to use the average price, that is, calculate the average by excluding one highest price and one lowest price. http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/3a2db365541e9c07dc1e23c21b00899d.png③Analyze the proportions of each individual project. For example, for the analysis of the unit project in Building 1: http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/9efe3b123aa67fb07452b36dc9662daf.png. ④ Analyze the rationality of the unit prices for labor hours, major materials and equipment, machine shifts, consumption levels, management fees or comprehensive rates, as well as profits. For example: http://img.civilcn.com/d/file/zhishi/gczj/2020-04-29/f4183196c7b36b9f1c0e97e2dfec9d0f.png. ⑤ Analyze the rationality of the composition of the comprehensive unit prices for various construction items; identify and list any unreasonable or severely unbalanced quotes ； ⑥The rationality and completeness of the quoted prices for individual items in the analysis of measures can be evaluated based on their total price or the main individual costs ； ⑦Analyze the rationality of pricing elements such as the general contracting service fee quotes and daily rates ； ⑧Analyze and check the completeness of the list of fees and taxes ； ⑨Analyze discounts or alternative quotes ； Following the above process, all steps of the bid cancellation can be completed. 03 Precautions and Tips for Bid Disqualification 1. Form a bid disqualification team: This process is effective in preventing issues such as uneven bidding prices by bidders and collusive bidding practices. To ensure an effective bid evaluation process, the tenderer may invite experienced consulting firms to form a highly skilled bid evaluation team to carry out the evaluation tasks ； 2. Make proper preparations: Organize the bid documents submitted by various entities in a unified format to facilitate comparative analysis ； 3. Establish a unified approach: conduct inspections from the general to the specific, in a step-by-step manner, so as to create a uniform format for easy summarization ； 4. Verify the response received after the first bid rejection, to check whether the bidding party has made adjustments in accordance with the bid rejection report. 04 How to write the title of a bid evaluation report: Analysis Report on Bids for XXXX Project

I. Overview: Briefly describe the project details and the bid documents received from various bidders.

II. Bid Analysis:
1. Analysis of total bid amounts
1.1 Arithmetic analysis: (That is, summing up all individual unit prices to obtain the total amount, with no arithmetic errors.)
1.2 Comparative analysis of individual project components
2. Individual analysis (Analyzing each component separately)
2.1 Regarding comprehensive unit prices for various items:
Bidder 1: The overall comprehensive unit price is low; items with low prices are...; items with high prices are...
Bidder 2: The overall comprehensive unit price is high; items with low prices are...; items with high prices are...
2.2 Analysis of supplementary items
Bidder 1: Failure to include costs related to safe and civilized construction at the required rates.
Bidder 2: Omission of costs related to vertical transportation.
Bidder 3: Failure to include regulatory fees and taxes in the total bid amount.
2.3 Others – Analysis of general contractor service fees
2.4 Conduct analysis based on the actual conditions of the project. A comparative analysis table can be attached.

Signed: XXX Consulting Company