But contractors will have to dig deep for tendering costs
Tendering costs are part and parcel of a contractor’s lot.
You’ve simply got to spend it as part of the head office overheads if you want to win jobs.
For contractors eyeing the most prestigious contract on the whole Shatin-Central Link project, their pockets will have to be deep.
Last week, the MTR Corporation (0066) kicked off the tendering process for the most critical part of the entire project, the cross harbour tunnels, with an invitation for expressions of interest.
According to the MTR’s invitation, the tunnel project will be tendered and awarded as a design and construction contract but with something extra.
“The tendering process for Contract 1121 shall adopt an early contractor involvement process (ECI) in 2 stages,” the MTR said.
In stage one, contractors will submit their usual company details regarding the project and will be required, as part of the ECI, to come up with technical proposals to identify all possible time and cost savings based on the employer’s requirements.
This would include any possible changes to the design and specification.
Contractors who successfully pass this stage get to go forward to stage two where they will be asked to prepare detailed design and planning based on the employer’s requirements, if it has been revised as a result of proposals submitted in stage one.
The works include immersed tube tunnels of length 1.4 kilometres between Hung Hom and Causeway Bay Typhoon Shelter; cut and cover tunnels at the typhoon shelter and at Hung Hom; temporary reclamation for the cut and cover tunnels; a new North Ventilation Building at Hung Hom Station podium and ground treatment works at existing structures and if necessary for tunnel construction.
According to Transport and Housing Bureau’s paper submitted to the Public Works Subcommittee of the Finance Committee of the Legislative Council in April 2012, the cost of the cross-harbour tunnels alone excluding inflation factor was estimated at HK$2.86 billion at September 2011 prices.
The tender process for stage one is scheduled for the first quarter of 2014 while the tender process for stage two will be carried in the following second and third quarters with a view to awarding the contract in fourth quarter.
For this project, the amount to be spent would appear to be above and considerably beyond that required on a normal public works contract.
“Design and build contracts are always very expensive. For this tender, definitely over 10 million and [could] probably go up to 15 million,” a local listed contractor said.
With costs so high, and with no guarantee of success, some contractors may have second thoughts.
“That’s why unless one has a good chance, otherwise it is just too costly,” the company boss said.
One construction industry consultant was even more bullish over the costs of tendering.
“The cost of completing stage one and stage two of this tender will be very big. I doubt that it will be under HK$20 million and could easily be as much as HK$40 million,” the consultant said.
“If I were preparing a prequalification for this with a view to then tendering, I would want to know how many contractors are intended to be prequalified and how many will be short-listed for the stage two part of the tender. This [MTRC] notice provides no guidance,” he added.
The two stage tender process was also clever ruse by the MTRC to get some free professional advice, too.
“By this method, they squeeze considerable value out of the tenderers by considering the identified cost and time savings from stage one and then picking and choosing which ones they want to incorporate in revised designs and specifications when they issue the stage two tenders,” the consultant said.
In the event, the tender process forced several expert teams to compete against each other in closely scrutinising the initial design and specifications.
However things might not be all one-sided to the MTRC.
“Where MTR may lose out is in the further design development that the contractor will try to do post-contract award to further value engineer the design thereby creating savings which will all accrue to the contractor,” he said.