What is rate bidding? What is the difference between this bidding method and other bidding methods?

It seems that in recent years many chemical engineering projects have been of the tripartite type; however, experts are requested to explain how the bidding process is carried out in such cases.

Rate bidding – In construction project bidding processes, the tenderer specifies in the bidding documents that bidders should compete by indicating the level of rates (i.e., the percentage of indirect costs such as construction management fees and profits relative to the direct costs of the project), rather than by submitting a total price for the project. The evaluation committee then conducts a comprehensive assessment based on the rates submitted by each bidder, taking into account factors such as deadlines, quality commitments, construction plans, and the relevant performance record of the construction companies, in order to determine the winning bidder. It can be seen that it is essentially similar to other bidding methods; the only difference lies in the quotation – it is not the total cost of the project, but rather a rate! It is suitable for projects whose design is not fully completed, and for those where design and construction take place simultaneously ； Projects whose scope has been determined but for which the drawings have not yet been received ； A project with a tight deadline. For reference only! This post was last edited by guozongduan on 2008-8-29 19:44.]

The answer on the 5th floor is quite detailed; this approach is not common. Firstly, once the rate is determined, the total cost depends on the volume of work, which makes it difficult to control the overall cost. Secondly, there is often an increase in the volume of work that needs to be carried out during actual construction, as well as unforeseen tasks. If the rate is low, contractors are less motivated, coordination becomes difficult, and this hinders project management. Lastly, since the total cost is uncertain, payments can only be made based on progress, which poses a great challenge for contractors with limited funds. This also affects the actual progress of the project, further delaying payments, and ultimately increases the difficulty for the owner to control the project timeline. Therefore, it is recommended to use this bidding method sparingly and with caution at present. This post was last edited by bird5796 on 2008-8-23 15:10]

Both of those upstairs mentioned good points. However, for the new chemical projects that have been launched in recent years, especially coal-based chemical projects, it is said that competitive bidding is often used due to schedule constraints. I wonder what problems may arise during their actual operation?

Rate bidding refers to a bidding method in which the tenderer specifies in the tender documents that bidders should submit bids based on rates rather than the total cost of the project. The evaluators consider the bidder’s rates as the primary factor, and also take into account other criteria such as deadlines and quality commitments, construction organization plans, and past performance, in order to determine the winning bidder. Scope of application: 1. The design is not fully completed; design is carried out simultaneously with construction ； 2. The project has been finalized but the drawings have not arrived yet ； 3. Meeting deadlines. Advantages: 1. It eliminates the most complicated process of calculating project costs (base prices or bid amounts), simplifying significantly the bidding process for contractors, and it also helps to prevent issues such as the leakage of base prices or fraudulent manipulation. 2. The bid evaluation process is simple and fair, reducing the possibility of covert manipulation. 3. Since, in practice, most projects require changes to the original design drawings, it is possible to calculate the base cost of the project by taking into account the variations in the drawings and any related visas just once; thereafter, multiplying this amount by the bidding rate yields the final cost of the project. 4. It enables effective control of project costs; the tenderer can determine a reasonable percentage reduction in the cost of the project, taking into account factors such as the average market price level, financial conditions, construction environment, market risks, project quality, and schedule. IV. Risks 1. Risks for the tenderer: The main drawback is the neglect of \"pre-project\" control over construction costs, which may lead to excessive investment. Controlling only the indirect costs, which account for a small proportion of the total project cost, is not sufficient to effectively manage project expenses. The owner needs to invest a significant amount of money in engineering costs or hire technical personnel to verify the volume of work. In short, rate bidding places high demands on the tenderer’s project management capabilities, and it can easily lead to loss of control over investment costs. 2. Bidder’s risk: The risk for the bidder is low. Method of bidding based on the general contract rate: In addition to the comprehensive evaluation of technical aspects, the assessment of commercial aspects takes into account the following: 1. Design indicator system: It lists the indicators considered along with their weights, such as the rate (a key indicator), the bidder’s qualification level, past performance, deadlines and quality commitments, as well as the construction organization plan. 2. Determine the standard rate: Based on the actual conditions of the project, and referring to the comprehensive fee rate for that type of project issued by the cost management authorities, an adjustment range (i.e., the acceptable bid rate) is determined; the standard rate is then established on the basis of all acceptable bid rates. If the bid rate is identical to the standard rate, the score for this item is full; the greater the difference, the lower the score. The practice of preferring lower rates at all costs is strictly prohibited. Method of final settlement for tendering based on the general contract rate: The actual amount completed by the contractor is determined using the measurement methods specified in the tender documents; this amount is then multiplied by the bid rate for that particular item, resulting in the payment amount for that project. The cumulative amount of all items plus the amounts reimbursed based on actual expenses constitutes the final settlement price for the general contract. This post was last edited by guozongduan on 2008-8-29 19:44.]

This is how bidding works for regular annual maintenance contracts for industrial facilities: the scope of work cannot be determined, the client cannot control the volume of work to be carried out, and therefore reasonable rate standards are necessary

Reply to 6# bird5796: The situation you mentioned is not uncommon here. It seems like they’re all mainstream. Should this be called a rate quote for variable tires or a genuine rate quote? Generally, the drawings are still in the design stage, or only a small number of them have been designed; the deadline is very tight. To save time, the owner first determines the winning bidder, and the rates and charging standards are predetermined in the tender documents. How did the construction company submit it? It depends on how many percentage points you can reduce the fee rate proposed by the other party. Those that submit the most bids generally manage to win the contract (of course, before submitting a bid, your qualifications and experience must be approved by the client; companies that are not up to standard will not be chosen by the client or won’t even receive an invitation at all). ). The engineering risk fee is also included in it. For just a few percentage points, we construction companies fight to the point of severe suffering – it’s truly heartbreaking! While the owner was laughing nearby.