Commercial and Contractual Management of Projects

The Techniques That Are Used When Tendering for A Contract in Sri Lanka
and How a Project Manager Manages the Commercial and Contract Matters of
Large Complex Projects at Construction Industry
CETM10
Commercial and Contractual Management of Projects
Assignment 1 of 1
Name: Hiruni Nisansala Kalpani Colombage
Student Number: 219052643

Contents
Introduction..............................................................................................................................3
The Techniques That Are Used When Tendering for A Contract in Sri Lanka............3
Standard Procedures for Procurement in Sri Lanka........................................................4
Procurement Methods Practice in Sri Lankan Construction Industry...........................5
How a Project Manager Manages the Commercial and Contract Matters of Large
Complex Projects.....................................................................................................................6
Project Managing on Large Complex Construction Projects in Sri Lanka....................7
Commercial And Contract Matters of Large Complex Projects and How They Can
Mitigate as A Project Manager (Sri Lankan Context)......................................................7
Conclusion.................................................................................................................................9
References.................................................................................................................................9
Figures
Figure 1: Current Procurement methods in Sri Lanka

Introduction
construction industry, which is recognised as an economic regulator, plays a crucial function
in its economy, notably contributing to national output It has established a substantial
relationship with other economic sectors.Construction is the fourth most important industry in
the Sri Lankan economy, after services, manufacturing, and agriculture, accounting for 7.6%
of GDP (Central Bank, 2016). Furthermore, increased investment spending, particularly in
the building industry, has fuelled economic development in recent years and will continue to
do so in the future (Central Bank, 2016). Building construction, unlike other sectors, is
immensely diverse and complicated.
The Sri Lankan government owns most of the projects, which are sponsored by a private
enterprise. The most essential component of the bid assessment is to get the most value for
the money, and it's done to find the right contractor with the right financial and technical
skills. In the Sri Lankan context, government projects are evaluated using the GBEP
(Government Bid Evaluation Procedure) in accordance with national procurement
procedures. Tendering is the industry's most conventional and preferred procurement strategy
(Kang et al., 2018). Construction firms have been obliged to seek a competitive edge by
improving their organisational performance (Horta and Camanho, 2014).
This paper attempts to identify the techniques/methods used in Sri Lankan building projects
for bid evaluation (tendering and procurement). The Sri Lankan government is the
construction industry's greatest client, and the GBEP is the most extensively utilised
assessment method in the country. The private sector, on the other hand, is more accustomed
with specific bid evaluation processes that are specific to the firm and the project type.Also,
have a look at how project managers in Sri Lanka handle contractual issues in large,
complicated projects. Contractual Disputes are not uncommon in the construction business,
and because of them, construction projects often go over budget, take longer to complete, and
produce a low-quality product. Several causes of conflict have been examined throughout the
previous two decades. One of the main reasons of disagreements in the Sri Lankan
construction sector has been identified as inaccuracies in contract paperwork.
The Techniques That Are Used When Tendering for A Contract in Sri Lanka
Tendering is the method of submitting a bid, offer, proposal, or expression of interest in
response to a solicitation. Organizations will seek out other organisations to satisfy a certain
demand, such as the supply of goods and services, and will select the offer or tender that best
fits their needs and provides the most value for money.
Tender request documents, also known as invitations, to tender, spell out what's needed, or
what the seeking organization's requirements are. These documents also lay out the
requirements, criteria, and procedures to be followed. Future bids will often be extensively
posted to provide chances to a variety of providers, foster competition, and create a larger
pool of options from which to choose.
A tender is an offer made by a potential supplier in response to a request for proposals. It is
an offer to supply products or services. Tenders may be issued for a wide range of goods and
services as procurement routes have become more and contract workers may take on
additional functions such as design and management. Open tenders, selective tenders,
negotiated tenders, single-stage tenders, and two-stage tenders are the four primary types of
tenders in Sri Lankan context. (Perera et al., 2020)
Anyone can submit a bid to provide the required products or services through an open tender.
In most cases, a notice will be published to the public and that a contract is being tendered
and allowing any entity to submit a bid (offer). For large complex projects, a prequalification

procedure and create a short list of eligible suppliers who will then be invited to bid.
Selective bidding is not the same as this type of prequalification procedure. Bids can only be
submitted by invitation as part of a selective bidding process. A list of potential vendors is
compiled and recognized as suitable for a project of the required size, type and complexity
based on their track record. Specialists or experienced clients may maintain "approved" lists
of potential providers and then periodically review performance to determine if providers
should remain on the list. Selective bidding can give customers greater confidence that their
needs will be met, while reducing the time and effort spent on open bidding. For very
specialized contracts or to extend the scope of an existing contract, it may be acceptable to
negotiate with a specific supplier. When all the information necessary to establish a fair rate
is accessible at the beginning of the tender, single-stage bidding is used.
Bids are generated and submitted by potential suppliers, and the preferred bidder is picked
and can be hired following talks. Two-stage bidding identifies a supplier before all relevant
information is gathered, allowing them to quote a fixed price. In the first step, a small list of
appointments is agreed upon to allow work to begin, and in the second stage, a predetermined
sum for the contract is negotiated.
When the Government established rules on tender procedures in 1996, the Ministry of
Finance and Planning through the General Treasury formally implemented the GBEP of Sri
Lanka (General Treasury, 1996). When the General Treasury was renamed the National
Procurement Agency (NPA) in 1997, a new version of the tender procedure rules was
released (NPA, 2006). The Government has issued a system for tendering (bidding as used in
Sri Lanka) notably for public sector projects, according to the Ministry of Finance and
Planning (1997).
Standard Procedures for Procurement in Sri Lanka
A construction project's procurement method, which creates and manages partnerships, is
critical (also in large complex projects). Procurement operations span everything from
demand discovery to project completion, making it an excellent tool for harmonising strategic
corporate goals. The strategic importance of acquisitions has lately been recognised by
academics and business experts. Construction procurement is a complex process with several
options and pathways to take. ( Ruparathna and Hewage,2015)
In compared to other nations, Sri Lanka's construction sector employs more traditional
procurement methods than alternative procurement methods. The current analysis of
procurement strategies used in Sri Lanka, according to Shiyamani et al. (2005), finds that
Measure and Pay is the most common methodology, followed by Design and Build. As a
result, as compared to other impoverished countries, using alternative procurement processes
is shortcomings for the Sri Lankan projects.
According to the GBEP, the four steps of bidding include preliminary bid evaluation, full bid
evaluation and comparison of bids, post-qualification verification, and drafting of bid
evaluation report. To keep things simple, the breadth of its usage in the public and private
sectors was evaluated separately, and it was discovered that almost all organisations in both
sectors employ GBEP, with or without modifications to the standard method.
In addition, Mathonsi and Thawala (2012) stated that “procurement systems are essential to
ensure the efficient execution of a construction project, completed accurately for all phases of
a given project”. According to Dewage (2009), the major well-known contracting techniques
that have been employed in the construction industry in Sri Lanka today include traditional