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Analysis of challenges in project management

(tendering)

By

Name:

ID: ..

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Abstract
The tendering process is an important means by which a fair price and best value for undertaking
the works is obtained. The topic of interest that I discussed in this report is about the discussion
of the challenges in project management regarding the tendering. The main objective of the
report is to answer the research question, “what are the challenges that the project management
will face during the tendering”? It is an empirica1study based on desk based research
methodology. The findings of the research show that the project managers are facing different
challenges during the procedure of the tendering.

Some of the know challenges in tendering are time/delays, bribery or gift exchange, risk
mitigation, controlling costs and achieving savings and provider related issues. The evidence
from this research are useful for the students for study purpose and for the organizations in
government sector that are usually offering tendering for construction projects. Additionally, the
research can be used for academic purpose to increase the knowledge of the students about
tendering. The findings show the main challenges are: Contractors’ Problems such as incomplete
bids, Owners’ Problems such as identical bids and manipulation. Common challenges are
Withdrawal in tendering, Bid Cutting, Cover Pricing, Collusion.

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Contents
Abstract.......................................................................................................................................................2
Introduction.................................................................................................................................................4
Literature Review........................................................................................................................................4
Introduction.................................................................................................................................................4
Principles of Ethics in Tendering.................................................................................................................5
Withdrawal in tendering..............................................................................................................................6
Bid Cutting in tendering..............................................................................................................................7
Cover Pricing...............................................................................................................................................7
Compensation of the Costs of Tendering.....................................................................................................8
Collusion.....................................................................................................................................................8
Research Methodology................................................................................................................................9
Desk-Based Methodology Rationale for Selection......................................................................................9
Collection and Analysis of Information.......................................................................................................9
Analysis.....................................................................................................................................................10
Discussion.................................................................................................................................................12
Implication................................................................................................................................................13
Conclusion.................................................................................................................................................14
Recommendation.......................................................................................................................................15
Bibliography..............................................................................................................................................15

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Introduction
In the contemporary world the outsourcing of businesses became common. In the construction
projects the government usually decides to get its work done in effective and efficient way by
using public and private companies’ resources. Due to high number of construction companies
the government has to choose the best one and the selection of that company can be done
through tendering process. Tendering is defined as the process by which bids are requested from
concerned contractors to perform explicit packages of construction. Project tendering is the
process by which bids are invited from interested construction contractors to carry out specific
packages of construction work. It is a common procurement method to obtainConstruction 5

Services. The tendering process is an important means by which a fair price and best value for
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undertaking the works is obtained. The summary of the tasks involved in this report consist of
the starting with the literature review followed by methodology. Then discussion and conclusion
followed by the recommendations.

Literature Review

Introduction
In this part of the report we discuss about the literate, past papers, theories and concepts
regarding the tendering. Project tendering is the procedure by which bids are welcomed from
intrigued construction contractors to complete explicit bundles of construction work. It is a
typica1procurement method to get construction administrations [CITATION Jam171 \l 1033 ]. The
tendering procedure is a significant method by which a reasonable cost and best an incentive for
undertaking the works is acquired. Part feeders should plan to acquire an incentive for money at
whatever point they procure construction administrations. This requires clear project definition
and determination of the best conveyance method for the project before leaving on the tendering
procedure. According to (Smith, 2017) tendering challenges are mostly related to Contractors’
Complications, such as the unit or alternate prices are mixed or missing

The tendering procedure ought to embrace and watch the key estimations of reasonableness,
clearness, straightforwardness and responsibility, just as set up the idea of apportionment of risk
to the gathering best set to evaluate and oversee it [ CITATION Bog14 \l 1033 ]. The standard of
tendering is to guarantee that genuine challenge is accomplished, and tenders got are assessed by

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applying certain criteria. These criteria might be communicated as far as financia1issues,

involving a basic appraisal identifying with tender totals, or progressively complex financial
assessment, including thought of projected expenses over the life cycle of the finished project. It
can likewise address other non-financial factors, for example, time, proposed methods, levels of
capacity; or once in a while a blend of every one of these criteria.

According to [ CITATION Wan12 \l 1033 ] all tenderers ought to have the option to bid on an
equivalent premise, implying that they should get a similar data and, in particular, this data ought
to be adequate in substance and precision to permit them to appropriately survey the
ramifications of the project and bid likewise. The tendering procedure isn't in every case simple,
and each action in the tendering procedure has a period and cost suggestion. Along these lines, it
portends well not to overburden the givers with pointless data necessities, and to focus on those
which are important to the work which is to be attempted.

According to (Lent, 2014) common tendering challenges are related to the Owners’ Problems for
example 2bids received that are indistinguishable or equal and the owner wants to use non
disclosed criteria to determine award.

Both the tenderer as well as the biding contractors must have to be careful about the ethical
principles (Lewis, 2003).Tendering can likewise be utilized for the procurement of plant and
hardware not related with a construction project [ CITATION Pet131 \l 1033 ]. Confronted with
contending financia1weights most construction contractors will complete their own appraisal of
the projects for which they wish to tender, and will be less disposed to bid for those where the
methodology included are seen as excessively entangled or burdensome. Likewise, since
readiness costs are remembered for their overheads, these will at last be passed on as more
significant expenses.

Principles of Ethics in Tendering

Keeping the ethical principles in view is the main point in tendering. The tenderer as well as the
biding contractors must have to keep the ethica1principles during decision making and procedure
of tenders [ CITATION Har031 \l 1033 ]. The tender explanations should be deliberately figured out
how to guarantee that confidentiality is kept up and tenderers are dealt with impartially and
morally. It is required that tenderers do not take part in any uncompetitive conduct.

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 The tenderers should have to take care about the understanding between tenderers with
respect to who will be the effective tenderer and the installment of ineffective tender
expenses
 It is important that the installment to any outsider of monies, motivating forces or
different concessions which don't identify with the arrangement of bonafide
administrations significant to the object of the tender, dependent upon the
accomplishment of the tender
 It is obligatory that tenderers do not engage in acknowledgment or arrangement of briber
or commissions or accommodation of spread tenders
 It is compulsory that tenderers do not engage in entering of any ill-advised business
courses of action with some other contractors, subcontractors, providers, operators or
some other gathering
 It is important that tenderers do not engage in looking to impact contract choices by
inappropriate methods
 It is compulsory that tenderers do not engage in acknowledgment of impetuses to give
agreements or administrations to different contractors, subcontractors or providers that
financially hindrance the parcel feeder.

Withdrawal in tendering
Withdrawal in tendering is a significant issue. If the bid is accepted by the contractor and
tenderers are acknowledged it then there is no permit to withdraw the tender. While a tender can
be withdrawing before or after the acceptance of the tender by the contractor due to any
operational problem. But it is important to send a notice to contractor and describe that the tender
offer is withdrawn. If there is any cost occurred in withdrawal process and mistake is the
tenderers, then he will have to pay the cost to the contractors. If there is any cost occurred in
withdrawal process and mistake is the contractors then he will have to pay the loss to the
tenderer The tenderer may alter or withdraw his tender after submission, gave that the change or
notice of withdrawal is gotten recorded as a hard copy by the management engineers before the
due date for submission of tenders [ CITATION Gra12 \l 1033 ]. The tenderer's change or notice of
withdrawa1will be readied, fixed, stamped and conveyed, with the inward envelopes furthermore
checked withdrawal" as suitable [ CITATION Gus13 \l 1033 ]. No tender might be adjusted resulting

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to the cutoff time for accommodation of tenders. Withdrawa1of a tender during the interim
between the cutoff time for accommodation of tenders and the termination of the time of tender
legitimacy for example 60days as indicated by the tenderer as tender may bring about the
relinquishment of the tender security. On the off chance that a tender isn't generously receptive to
the necessities of the tender records, it will be dismissed by the Engineer-in-control, and may not
in this manner be made responsive by the tenderer having amended or withdrawn the non-
affirming deviation or reservation [ CITATION Gre13 \l 1033 ]. Unti1the tenderer withdraws the
standing offer, the tenderer stands prepared and ready to convey the merchandise or
administrations at the concurred cost.

Bid Cutting in tendering

Bid cutting is also a challenge in tendering. If a bidder offers less than what the auctionner is
asking for then bid cutting happens. For example, the auctioneer is asking AED100 and bidder
indicate that he want to cut the bid. In this circumstance the bid may be cut to AED50 if there is
no higher bid, or a lower increment. Bid cutting is the divulging a contractor’s bid to other
prospective contractor before the award of a contract in order to secure a lower bid. Dropped
bids may lead to cost cutting in the construction process. The general contractor cannot change
subcontractors if its bidis accepted. For instance, a person who manages an auction is asking
AED 100and you demonstrate by hand movement moving from left to right that you need to cut
the bid. For this situation the bid might be sliced to AED50if there is no higher bid, or a lower
increase.

Cover Pricing
Cover pricing happens when a bidder needs to be believed to take an interest however wouldn't
like to win the activity so approaches a contender for a practica1"cover cost" and submits it as a
veritable bid [ CITATION Eli10 \l 1033 ]. It is the act of tendering an artificially extraordinary worth
for a contract. It will be based on the notion that the tender will not be accepted. An organization
may have a valid justification to request a cover cost so it can exhibit a reasonable bid: it may get
dropped from a tender rundown on the off chance that it doesn't take an interest; or it may need
ability or limit with respect to the activity yet need to pull in future work from a similar head.

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Cover pricing is another challenge in tendering. Globally it has been seen many cases of cover
pricing case against a construction companies.

Office of Fair Trading (OFT) found that different construction companies engaged in cover
pricing by illegal anti-competitive bid-rigging activities from2000 to2006. [ CITATION Dav09 \l
1033 ]. Much of the time it adequately sets a story on the bid cost. Cover pricing therefore
introduces a high risk of rupturing the Commerce Act. A second kind of risk emerges if the
tender conditions require a bidder to warrant it has not plotted with different bidders or broke any
challenge laws. So presenting a cover cost subsequent to giving such a guarantee is probably
going to be deluding or misleading behavior and break the Fair Trading Act.

Compensation of the Costs of Tendering

Another challenge in tendering is the competition of winning a bid. Contractors who are losing
bids may attempt to claim payment if tender procedures are not conducted legitimately. But the
process of claiming back the compensation is complex and most of the contractors are not claim
it as its time taking in court (Bittner & Gregore, 2010). The compensation that can be claimed
may be for the cost of time as well as solid money paid/invested during the bidding process

If the tendering was dropped on account of a change of the target or extent of the venture, the
approved individual will settle on a choice on compensation for costs which will be paid from
the project spending plan [ CITATION Eli10 \l 1033 ]. In the event that any expert overseeing
execution of building is unreliable or intrigues with the construction contractor to guarantee a
wrong amount or nature of works, at that point both the consultancy contractor and the
construction contractor must compensation for trouble and harm and will be managed as per
article 75 of this Law and other applicable laws [ CITATION mof20 \l 1033 ]. To pay compensation
for misfortune and harm to applicable gatherings compliant with this Law if such misfortune and
harm was brought about by the shortcoming of the master tendering gathering [ CITATION
Wan12 \l 1033 ]..

Collusion
Another challenge based on the literature is collusion. When 2 or more than 2competitors
became united to weaken the competitive tendering process to get an unfair benefit is called

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collusion. In this process two or more bidding companies agreed to select a wining bidder by
taking bribe from the winning bidder. In collusion the competitors exchange the information
among each other in the absence of tenderer (Wang, 2012). It refers to when at least two
contenders collaborate to undermine the serious tendering procedure so as to increase an out of
line advantage. it is a procedure wherein firms tendering for contracts put out to tender by open
specialists’ consent to share out agreements among them as well as to fix the cost at which bids
are to be made. Guarantee procurement and agreement staff, inspectors and specialists
comprehend the various types of collusion.

Research Methodology
The selected methodology for the study is the Desk based research method. Since this is an
exploratory research in nature, qualitative approach is adopted in identifying from the literature a
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list of the most common challenges that influence the tenderers' acceptance/adoption of
Tendering worldwide. It encompasses searching for information using existing resources, such as
journals, books, press, lega1regulation publications and analytica1reports.

Desk-Based Methodology Rationale for Selection

The research methodology I chose to do my research is based on the Desk-Based Methodology. I
chose this method because it helps in finding the challenges in project management in tendering.
It refers to secondary data or that which can be collected without fieldwork. Using the academic
writing and journals I can find the desired data about the challenges in project management of
tendering and evaluate it based on the principles and laws related to tendering.

Collection and Analysis of Information

To know about the challenges in project management in tendering I collected data from the UAE
procurement and tendering sites [ CITATION mof20 \l 1033 ] and found that in most of the states of
UAE the government is using the “Advanced Procurement Systems” [ CITATION gov18 \l 1033 ].

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Analysis
In most of the states of UAE the government is using the “Advanced Procurement Systems”
(government.ae, 2018)

In UAE the challenges of tendering such as the collusion, Withdrawal in tendering, Bid Cutting,
Cover Pricing, Collusion etc are very rare

During the last decade few cases are reported

The new e-procurement framework is run by Department of Finance (DOF) for tendering that
has special focus on procurement

The e-procurement framework is a web based system that provides a fair and potential procedure
of tendering in UAEThe new e-procurement framework was propelled by the Department of
Finance (DOF) in 2006 as an activity planned for decentralizing procurement methodology over

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all administration substances in Abu Dhabi Emirate The e-procurement framework is a web
based propelled instrument intended to empower different government elements to discuss
electronically with the merchants of merchandise, materials, supplies and administrations
according to the principles and guidelines pertinent to open tendering frameworks and practices.
The e-procurement framework incorporates an electronic enlistment system that permits
organizations and foundations to enlist online to meet all requirements for partaking in the
tenders offered by various government elements. In e-procurement methodology, the best
expectations of protection, confidentiality, security and straightforwardness of data are
maintained.

The e-procurement framework has been created by the (MoF) with the aim of declaring buys
identified with MoF or different services and bureaucratic elements, to submit tenders and report
the granting of agreements, and empowering providers to get some answers concerning all
tenders and sell-offs gave by the nationa1government [ CITATION gov18 \l 1033 ]. They can
likewise take part in these tenders and sales by submitting bids, following-up on buy arranges
and submitting solicitations online in a structure that guarantees straightforwardness and builds
work effectiveness in the government.

Tenders and Auctions System guarantees the accomplishment of buys completed by government
elements to accomplish targets and give administrations, just as to help decreasing financial and
managerial costs by qualifying providers to partake in tenders, sell-offs, and bids as per to the
Cabinet goals NO. 34of 2014concerning government procurements and guidelines of the
Consolidated Financial Procedures Manua1with respect to these. It shows data of tenders, sell-
offs, bids, and supply requests of different services and elements that might bear some
significance with private segment organizations, particularly providers who are a piece of the
government enrollment at the Ministry of Finance (MoF).

Different services and government constituents post tenders and sell-offs consistently in the
"Providers Registration" of MoF, which incorporates every single administrative service of the
United Arab Emirates. To furnish this administration as per laws, guidelines and manuals, the
Procurement System must be followed just as holding fast to techniques of procurement
administration, buy methods, contract types, providers' data the executives, and notwithstanding

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granting through advisory groups of procurements or non-tenders acquiring to guarantee

productivity and viability of buys

Discussion
The challenges in the tendering are difficult and complex to detect but there are different
resources that help both the bidder and the tenderers to avoid the illegal means in tendering
procedures

The common problems such as Withdrawal in tendering leads to the challenges of owners the
contracting companies

The Bid Cutting also lead o the losses for the tenderers

Cover Pricing is a challenge for the bidders as they don’t have much time for evaluation and sue
the tenderer against their illegal activities

In the contemporary world these challenges are increasing as the market growth increased

Due to financial problems and the contractors are compelled to do such unethical acts to gain bid
or get other benefits by selecting someone for a specified bids through collusion Based on the
study in UAE the author found the following five main challenges in the project management of
tendering.

 Time/Delays
 Bribery or gift exchange among the tenderer and biding people
 Risk Mitigation
 Precise Data
 Decreasing Costs And Achieving Savings
 Provider Related Issues

As a rule, projects are being executed with a desire to move quickly the yields are earnestly
required. It infrequently happens that a project's yields are verified well ahead of time of when
they may really be required. It along these lines implies that in most of circumstances, there is
the additiona1strain to convey the yields predictable with the courses of events concurred.
Subsequently, when, for instance, genuine lead times, or the time required to source certain

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materials, wind up being significantly more than that envisioned or planned, it can impede the
whole project.

As laid out in our article, 5 hints for overseeing risk in projects, projects are laden with a wide
range of risks, which should be overseen for fruitfu1consummation of a project.On large
construction projects, or for a group that is dealing with various projects, it is vital to approach
precise information to guarantee convenient and well-educated choices. Information turns out to
be significantly progressively significant when it must be imparted to other people, especially
senior administration, or other people who don't have persona1information about a specific
project, yet may regardless have gigantic impact as for its execution.

It is a habitually wanted objective to have a project finished on schedule and under spending
plan. For the last mentioned, it implies attempting to decrease costs as well as discovering
approaches to understand a few reserve funds. In any case, there are a large group of reasons
why most projects never accomplish this, incorporating being under planned in any case, and the
expanded costs for merchandise and enterprises, when the project at long last get executed. Be
that as it may, such conditions may bring about the pieces of the project being limited or even
discarded, to attempt to keep the genera1project inside the financial backing assigned.
Consequently, cautiousness regarding project spending plan and spend can be an upsetting piece
of dealing with a project.

At last, the best test procurement experts showed were matters identified with providers – from
distinguishing the best providers, and guaranteeing that a steady stock of value materials can be
kept up, to observing provider execution. Along that range, providers likewise should be
constantly checked to guarantee that they convey what they state they will convey, inside the
courses of events and to the quality concurred.

Implication
Consequence of the challenges that are discussed early lead to unethical behavior

Companies who involved in the act of collusion are sued and paid fine for the losses

Globally the governments are taking action against the contractors who are involved in price
cutting, collusion or bribery etc.In a world with the same number of complexities as our own, it

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would be close to outlandish for a solitary business to perform at the top leve1in every single
diverse viewpoint due in huge part to the tremendous number and broad assortment of
components of an organization. There will quite often be another substance that can do a
particular part of work of a business superior to that business itself [ CITATION Gus13 \l 1033 ].
Tender is a procedure through which a gathering, known as the advertiser, will initially indicate
what administration they are hoping to acquire. They would then be able to start a bid, which is
what is known as a tender. Invested individuals will at that point have the option to think of
proposition on how precisely they would approach meeting the particulars of the necessity.

Conclusion
Withdrawal in tendering is a significant issue. Tender fees will not be reimbursed inthe case of
withdrawals. If the bid is accepted by the contractor and tenderers are acknowledged it then there
is no permit to withdraw the tender. Bid cutting is also a challenge in tendering. If a bidder offers
less than what the auctionner is asking for then bid cutting happens. Dropped bids may lead to
cost cutting in the construction process. Cover pricing is another challenge in tendering. It is the
act of tendering an artificially extraordinary worth for a contract. It will be based on the notion
that the tender will not be accepted. Globally it has been seen many cases of cover pricing case
against a construction companies. Another challenge in tendering is the competition of winning a
bid. Contractors who are losing bids may attempt to claim payment if tender procedures are not
conducted legitimately. But the process of claiming back the compensation is complex and most
of the contractors are not claim it as its time taking in court. The compensation that can be
claimed may be for the cost of time as well as solid money paid/invested during the bidding
process. Another challenge based on the literature is collusion. When 2 or more than
2competitors became united to weaken the competitive tendering process to get an unfair benefit
is called collusion. In this process two or more bidding companies agreed to select a winning
bidder by taking bribe from the winning bidder. In collusion the competitors exchange the
information among each other in the absence of tenderer.

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Recommendation
Based on the study I recommend the following points in order to overcome the challenges in the
tendering process by the project managements.

 The tender should have to provided sufficient time for the bidder to complete the project
and the bidder should have to arrange all the events as per agreement with the tenderer
and avoid delays
 The government of UAE has to establish strict rules and regulations against the bribery
offering individuals
 Reduce the risk of delay in completion of the project by giving the agreed amount to the
bidder on time. The tenderer has the responsibility to support the bidder financially as per
agreed contract to avoid any risk in the project
 Use the big data analytics to create a precise data that should be helpful in forecasting and
estimating about the project operations
 The bidder has to work hard effectively and efficiently in order to reduce the costs and
achieving savings by getting the lowest labors cost but should not use any low quality of
material in the project

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services/business/government-tendering-and-awarding

Lent, B. (2014). Cybernetic Approach to Project Management . Springer Science & Business Media.

Lewis, H. (2003). Bids, Tenders & Proposals: Winning Business Through Best Practice . Kogan Page
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mof.gov.ae. (2020). Retrieved from

https://www.mof.gov.ae/en/mservices/corporate/isupplier/pages/advancedprocurement.aspx

Morris, P. W. (2013). Reconstructing Project Management . John Wiley & Sons.

Mosey, D. (2009). Early Contractor Involvement in Building Procurement: Contracts, Partnering and
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Piga, G., & Treumer, S. (2013). The Applied Law and Economics of Public Procurement . Routledge.

Smith, J. N. (2017). Managing Bids, Tenders and Proposals: Introducing the Bid. ... Universal-Publishers.

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Analysis of challenges in project management