Tender Evaluation, Risk & Budget: Project Finance & Procurement

This report provides a comprehensive evaluation of tender responses for a project finance and procurement scenario. It includes a detailed analysis of four companies (Jim and Jane Green, Special Cleaning Response, Speckless Cleaning Services, and Master Office Clean), assessing their proposals based on factors like financial performance, risk factors, and service quality. The report identifies risks associated with each tender, such as non-adherence to quality standards, security clearance issues, and potential cost variations. Furthermore, it develops a maximum whole-of-contract budget, considering inflation rates over a ten-year period, to determine the financial viability of each tender. The analysis uses hourly rates and projected costs to estimate the total expenditure, offering a comparative overview to aid in the decision-making process.

Project and Finance
Procurement

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1. Detailed evaluation report of all tender responses:..................................................................3
2. Identification of the risk associated with each tender..............................................................4
3. Maximum whole-of-contract budget:......................................................................................6
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Coordination between activities related to finance and procurement divisions is vital in order
to attain long-term objectives of a business organisation and to achieve targeted return on
investment. Finance and Procurement are significant aspects for an organisation for identification
of opportunities. In large organisation, tenders are part of process of finance and procurement
departments (Akintoye and et.al., 2013). This report exhibits a critical evaluation of various
tender responses and various risks linked with each tender response. This report also describes a
maximum whole-of-contract budget to evaluate viability.
TASK
1. Detailed evaluation report of all tender responses:
In order to analyse the report of various tender responses, it is crucial for the company to
make evaluation of all the risk and financial performances. A project finance structure is involve
a number of equity stakeholder as well as other investors. It will be more suitable for companies
to analyse the internal department of the company. Thus, all responses must be evaluated before
taking any kind of decision for tender. All four companies’ responses are evaluated below:
Jim and Jane green: According to the response report of this cleaning services company
in which the proposal of tender has been apprise perfectly. The company think that getting work
with commonwealth is one of the dream since so many year. After visiting to the Jones
production research and development, areas as well as the refreshment provided (Dada and Hu,
2018). It was clearly seen from the report that they are bit confused about their working
requirements and forms. The company think because the overall performance it not so effective
thus chances of working together is very low.
Special cleaning response: As per the report, it has been evaluated that on request for tender in
respect to the provision of cleaning services to jones manufacturing agency they are must more
satisfy with the response come from the agency. They are highly obelize after getting the tender
request proposal during site visit on 24 January. This allow special cleaning to gauge the scope
of work they wanted from the company. They are fully confident of meeting their entire
requirement that is the demand by organisation on existing capacity (Anvuur, Kumaraswamy,
and Male, 2016). The overall reaction of internal department is more reliable as per the provision

asked by the agency. Apart from this, they also requested to asked any other assistance which are
required by the organisation.
Speckless Cleaning Services response: From the response report, it has been analysed
that Speckless wrote a letter to Mr Justin in which it has proposed a tender. According to the
organisation, it has the ability to provide best value for money solution for the agency. It has the
high service standard that will be the real advantage for the enterprise. It has the high level of
security clearance that is require by Jones for the tender. This was obtained by Speckless because
of its work for ANSA, DSO etc. (Shu Hui and et.al., 2011). It has said that it may have a large
number of Top Secret Positive Vetted cleaners available for Jones as it serves services to DSO
that is disbanded under the government's new homeland security.
Master office clean: Contracts manager of the company wrote a letter to Mr Justin who
is the contract handler of Jones. In this letter, the manager said thank you to Justin for visit its
site on 24 January. The organisation is more than familiar with Jones as they have good relations.
The contract manager of Master office is sure that they will get the opportunity of working with
Jones on the delivery of high quality cleaning services.
2. Identification of the risk associated with each tender
It has been seen that in every business organisation some kind of risk is involve. This will
help the owner of the company to make their decision by taking overall analysis of all unethical
aspects those are related with the tender. According to the report of “Jim and Jane green”, they
are happy to make response to the dreams of getting recent tender. As they are providing
cleaning services for more than 10 clients. The weekly fee ranges varies from $50 for a small,
straightforward household clean to over $ 100 for wide jobs. Jim and Jane is a little bit issues
regard quality of their product because they are not followed appropriate standards. They do not
have to pay a lot of money for the given certificate that will cover in logos. According to the
cost, structure which is quite simple. It was charge because of hours for the work required by the
client at the rate of $40. After getting, register with GST the cost goes high with $44 per hour
(Ahadzi and Bowles, 2011). The overall total cost generated during the year is around $200640
that is low as compare to other companies. After analysing the annual reports because of
inflation rate, they are less risky. Thus, the company must chose to invest in their particular
tender.

Master office clean Pty ltd is another company that is coming with a new tender. Some
risk is also associated with the company that are related to the chemical cleaning whose
probability of occurrence is around 2%. In case of cost variation that has been signed is having
impact of 3% because of which the possibility of event occur is only 1%.Scurity clearance is not
available because of which the impact is about 3% as well as probability of event is also 3%. The
overall risk level is 3.7. Overall annual amount as per the inflation rate is also much higher side
such as 764100 to 933971.9. On average basis, they are able to generate a total profit of 75000
per year. It means that the overall budget of the tender is more high or risky as compare to high
percentage of risk involve in their tender. The company is using only the latest models of
specialised office cleaning equipment. Master office clean Pty ltd is wants to build a positive
relationship with their staffs and customer. As it did not specifically mention third party QA in
the tender and would appreciate their earliest advice because of not appropriate service or
product quality (Knight and et.al., 2012).
Specklees cleaning services Pty Ltd is a small family operated business that is working
over 18 years ago. They are associated with providing office-cleaning services for medium to
wide scale business industries. In accordance with the government sector that have needed
security clearance for their cleaners and contract management employees. According to the
financial performance of the company they are more profitable organisation because they are
easily able to manage their resources (Bahl and Linn, 2012). Non-adherence to the overall
quality of material used as stated in RFT is showing huge impact with 3%, whereas the overall
probability of event occurrence is around 2%. All the other risk such as damage to property,
injury to JMRDA personnel and non-availability of previous client reference. The overall risk
level is around 6% and mean risk level recorded is about 2.5. It would take some commitment to
workplace health and safety that is very effective for this particular company. According to the
annual amount, that is $554400 with the profit margin of 10%. Instead of all these positive
aspects, they are not having proper appropriate position in term of profit or cost value. Thus, it
will not be so suitable for clearing all the norms and regulation for accepting the tender.
Special clean is another company that is looking for the tender after evaluating the risk
those are associated with the product and services that are deliver by them to the customer. In
order to assist the evaluation of the offer the statement which would be related to the statement
after distinguishing among services feeds and cost (Arrowsmith and Hartley, 2012). There are

certain risk that is making difficult for getting tender. Some of them are non-adherence to the
quality of materials are used in RFT is 3% affects, whereas only 2% of probability of occurring
event has been analyse at the time of evaluating the risk. Security clearance is not available
because of which 3% of total risk factor involve as huge implication. In respect to probability of
event is only 2% but also not potentially effective for the company. The overall risk level is
recorded 6% and minimum risk level is three that are taken as one assumption basis.
After analysing all the risk factor involve in all the four major companies those are
applying for the tender, only Jim and jane is more suitable in term of budget or risk factor. The
overall risk is very low as compare to other three companies (Nubi, 2012).
3. Maximum whole-of-contract budget:
In order to make analysis of the contract price for years of the contract, it is essential to
determine maximum potential budget for remaining year is being calculated below:
JIM AND JANE GREEN
Hourly rate (Including
GST) $44 Amount
General cleaning
Hours
(Per Day) Weekly Monthly Yearly
Weekdays 14 3080 12320 147840
Weekends 5 440 1760 21120
Noisy Cleaning
Weekdays 3 660 2640 31680
4180 3 200640
Master office clean Pty Ltd
Hourly rate
(Including GST) $164.48 Amount
General cleaning
Hours (Per
Day) Weekly Monthly Yearly

Weekdays 14 11513.6 46054.4 552652.8
Weekends 5 1644.8 6579.2 78950.4
Noisy Cleaning
Weekdays 3 2467.2 9868.8 118425.6
15625.6 3
750028.8
or Approx
750000
Special Clean Pty Ltd
Hourly rate
(Including GST) $109.422 Amount
General cleaning
Hours (Per
Day) Weekly Monthly Yearly
Weekdays 14 7659.54 30638.16 367657.92
Weekends 5 1094.22 4376.88 52522.56
Noisy Cleaning
Weekdays 3 1641.33 6565.32 78783.84
10395.09 3 498964.32
Speckles Cleaning Service Pty Ltd
Hourly rate
(Including GST) $122.579 Amount
General cleaning
Hours (Per
Day) Weekly Monthly Yearly
Weekdays 14 8510.53 34042.12 408505.44
Weekends 5 1215.79 4863.16 58357.92
Noisy Cleaning

Weekdays 3 1823.685 7294.74 87536.88
11550.005 3 554400
JIM AND JANE
GREEN
Master office clean
Pty Ltd
Special Clean Pty
Ltd
Speckless Cleaning
Service Pty Ltd
AUD 200640 AUD 750000 AUD 498960 AUD 554400
Yea
r
Inflatio
n Rate
Inflatio
n
Increase
Total
Amount
Inflation
Increase
Total
Amount
Inflation
Increase
Total
Amount
Inflation
Increase
Total
Amount
3 1.88% 3762 204402 14062.5 764062.5 9355.5 508315.5 10395 564795
4 2.35% 4797.31
209199.3
1
17932.5
5
781995.0
5
11930.1
6
520245.6
6
13255.7
4
578050.7
4
5 1.64% 3426.68
212626.0
0
12809.0
8
794804.1
3 8521.62
528767.2
9 9468.47
587519.2
1
6 2.34% 4966.94
217592.9
4
18566.6
2
813370.7
5
12352.0
0
541119.2
9
13724.4
5
601243.6
6
7 2.65% 5772.74
223365.6
8
21578.7
3
834949.4
8
14355.8
9
555475.1
9
15950.9
9
617194.6
5
8 1.94% 4322.13
227687.8
1
16156.2
7
851105.7
5
10748.4
4
566223.6
3
11942.7
2
629137.3
7
9 1.47% 3344.73
231032.5
4
12502.7
4
863608.4
9 8317.83
574541.4
6 9242.03
638379.4
0
10 2.93% 6778.49
237811.0
4
25338.2
7
888946.7
7
16857.0
5
591398.5
0
18730.0
5
657109.4
5
11 2.76% 6568.34
244379.3
8
24552.7
1
913499.4
7
16334.4
3
607732.9
3
18149.3
6
675258.8
1
12 2.23% 5456.99
249836.3
7
20398.4
4
933897.9
2
13570.6
8
621303.6
1
15078.5
3
690337.3
4

However, after evaluation of further associated risk assessment company should
be select.
Interpretation
The above budget is prepared while considering inflation effect on tenders cost. Inflation
act as a risk factor in preparation of budget, however budget describes quantitative aspects.
While inviting tender for cleaning company it should consider all other risk factors like, risks
associated with the use of chemicals for cleaning. Risk related to cost variations, Non-adherence
towards quality of materials used, Managerial or contractual in competencies, physical damage
to property if any, Injury to workers, availability of security clearance, Risks concerned with lack
of or incomplete details in response or Non-availability of previous client references etc. Such
type of budget is used to analyse tenders and for selecting best tender among various alternatives.
It also provide a framework for better decision making. From analysis of all above tenders, it is
clear that JIM AND JANE GREEN has presented most viable tender because after inflation
effects in various years cost of such tender is optimum as compare to other tenders. In tender
hourly rate is $44, $164.48, $109.422 and $122.579 as filled by JIM AND JANE GREEN,
Master office clean Pvt Ltd, Special Clean Pvt Ltd and Speckles Cleaning Service Pvt Ltd
receptively. Therefore, according to tendered hourly rate Jim and Jane Green is most
considerable. However, after evaluation of further associated risk assessment company should be
select.
CONCLUSION
From above report, it has been concluded that management of activities concerned with
financing and procurement is major to take important decisions in business to achieve
sustainable growth. Selecting a most appropriate tender response is part of effective management
of finance and procurement. Management should first evaluate and analyse response proposal for
optimise their respective process cost.

REFRENCES
Books and Journal:
Ahadzi, M. and Bowles, G., 2011, September. The private finance initiative: the procurement
process in perspective. In 17th annual ARCOM Conference (pp. 5-7).
Akintoye, A., Hardcastle, C., Beck, M., Chinyio, E. and Asenova, D., 2013. Achieving best
value in private finance initiative project procurement. Construction Management and
Economics. 21(5) pp.461-470.
Anvuur, A., Kumaraswamy, M. and Male, S., 2016. Taking forward public procurement reforms
in Ghana. In Proceedings of the 2006 CIB W107: Construction in Developing Countries
International Symposium: Construction in Developing Economies: New Issues and Challenges.
CIB.
Arrowsmith, S. and Hartley, K., 2012. Public procurement. Edward Elgar Publishing.
Bahl, R.W. and Linn, J. F., 2012. Urban public finance in developing countries. The World
Bank.
Dada, M. and Hu, Q., 2018. Financing newsvendor inventory. Operations Research
Letters. 36(5) pp.569-573.
Forshaw, A., 1999. The UK revolution in public procurement and the value of project finance.
Journal of Structured Finance. 5(1), p.49.
Knight, L., Harland, C., Telgen, J., Thai, K.V., Callender, G. and McKen, K. eds., 2012. Public
procurement: International cases and commentary. Routledge.
Nubi, T.O., 2012. Housing finance in nigeria: Need for re-engineering. Ideal Habitat
Cooperative.
Shu Hui, W., Othman, R., Hj Omar, N., Abdul Rahman, R. and Husna Haron, N., 2011.
Procurement issues in Malaysia. International journal of public sector Management. 24(6)
pp.567-593.