Mistakes in tendering are a nightmare to contractors as the probability of being stuck in a financial quandary is very high. However, the mistakes made during the tendering process are unforgivable as it is mentioned in the contract that the contractor should burden the risk that is transferred to them, and they should acknowledge the disclaimer provided in the contract. Underestimating the errors in tendering can result in cost and time overrun while the project is being executed, as the contractor will only realize the mistakes after encountering financial difficulties causing delays during the execution of the work.
Most often than not, the lowest bidder gets awarded the contract and is the one who is likely to commit mistakes especially in cost estimation which may result in a delay to the project. The tenderer would only realize that they have miscalculated upon being awarded the tender as they have submitted an unreasonably low bid that is insufficient to carry out the works till project completion. This happens because of the lack of knowledge possessed by tenderers.
Wrong interpretation and lack of understanding of the items being priced, the agreement, and the contract will result in tenderers ignorantly committing to implied terms within the contract. Generally, mistakes can be associated with negligence, misinterpretation, and fraud as the mistakes may be taken in a good faith or bad faith depending on any confusion amongst the parties involved. The three frequent mistakes recognized by the English law contract are, common mistake where both parties commit the same mistake, unilateral mistake where only one party commit the mistake, and finally, mutual mistake where the parties have intentionally crossed the mistake.
The tendering process has been allocated with cost and time consequences, whereby it is used not to burden the tenderer with the requirement of excessive information but rather to ensure that the tenderer can focus on the necessary works to be required. The process of tendering is to guarantee that real competition is achieved in terms of financial strengths and technical experience related to assessment in the final submission of tendering. The tendering process is a process that involves two parties; the employer and the contractor, as a manner to achieve an offer and acceptance to the agreement of works.
The tendering method used is to provide competition and to reduce the costs of the project, therefore many inexperienced contractors or “low bidders” who participate in the tendering may bump into financial difficulties. This becomes a real issue as projects become delayed causing the potential of this to be a phenomenon that continuously increases over the years. Contractors who normally fall into this mistake will most often charge a higher price than previously established to cover for their mistakes. In addition, when they are at fault, they would normally want to represent themselves as the innocent party who unintentionally made the mistake and claim those blunders as misrepresentation.
Most contractors nowadays are too confident and greedy in pursuing projects, although as contractors they should verify and make sure that all the information or document that they receive are correct and understandable. The City of Tshwane Metropolitan Municipality in its Standard Specifications for Municipal Civil Engineering Works under SECTION 001: 04 CONTRACT RATES 04.03 Pay Items states that:
“The descriptions under the pay items in each section of the Specifications, which indicate the work for which allowance should be made in the tendered rates for such pay items, are for the guidance of the Contractor and do not necessarily repeat all the details of work and materials required by and described in the Specifications. The pay items for each section shall be deemed to cover payment collectively for all the work specified in that section.
The description in the pay items shall be read in conjunction with the relevant documents of the Contract and the Contractor shall, when tendering, make allowance for his rates to be all-inclusive as specified in subclause 04.02 above. Value Added Tax (VAT) shall however be shown separately.”
This is a clause that gives much information on how tenderers can best approach the tendering process. It is the responsibility of the tenderer to meticulously check for any discrepancies and to confirm any misunderstanding before the submission of the tender. If the tenderer does not clarify any discrepancy before submitting the tender, any mistake in the contract will be at his own risk.
Generally, contractors can be categorized in various backgrounds. They may be professional contractors who may have come from an academic background and specific skills to construction, politician contractors that become contractors after being awarded a project by political activities, a businessman contractor who enters the construction for the sake of business diversification, or the nouveau riche contractor.
Furthermore, many contractors who are facing problems due to their mistakes do not know how to address those faults when they are finally being disclosed. The most common cause of disputes in construction is a cost overrun, therefore the easiest solutions they can come up with to conceal their blunder, are to withdraw the bids, terminate the contract, flee from the project or try to manipulate claims and variation orders. In this situation, communication plays the biggest role as both client and contractor need to contribute the best outcome.
Although post-contract award there may be different mistakes that can be carried out in many stages during execution, tenderers must be aware of the dangers of proposing a low bid to give a higher chance of winning the bid. It is not often easy for contractors to manage to recover from the mistake of omitting the important cost as there are chance that other errors will be faced during the execution face. Every tenderer has a sole responsibility to ensure that their rates are all inclusive the pay items specified as elaborated in the project specifications, standards and contract.
A I M Kamil et al 2018 IOP Conf. Ser.: Earth Environ. Sci. 117 012019