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3. Question Question 1 Kaleen (Pty) Ltd, a Gauteng-based company…
3. Question
Question 1
Kaleen (Pty) Ltd, a Gauteng-based company that sells bottled water, wants to build a storage warehouse in Cape Town to store its products and launch distribution in Cape Town. The storage warehouse will be a 600m² single-storey structure with sheet roofing and will be situated on a sloping site in Somerset West. It will have a lattice roof structure and walls that are plastered and painted. There is a small area for parking. After a robust tendering process, Palm Springs Construction is selected as the main contractor for this project.
Before any other work can start, the site needs to be levelled and prepared. Based on the bills of quantities for the project, 400m³ of soil needs to be removed from the site as part of the levelling and excavation process. The condition of the soil is described as “pickable material”, meaning that it will be easy to excavate. At the time of tendering, the professional team’s price estimation for the levelling of the site was R100,000. The project’s preliminary programme requires that the work be completed within three weeks of the start date. In addition, the foundation excavations need to begin within two weeks of the start date.
Palm Springs Construction decides that the levelling and preparation, which includes removal (cartage and disposal) should be subcontracted out, since the work needs to be completed in a short period of time. Palm Springs Construction invites four contractors to tender for the work as a domestic subcontractor and receives the following prices from them:
Dirt Movers: This is a demolition and bulk earthworks contractor with whom Palm Springs Construction already has a working relationship. The company’s price for levelling the site, including disposing of the material at a dumpsite, is R106,000. There are no conditions attached to the work, and Palm Springs Construction knows from experience that this contractor is reliable. Dirt Movers has even offered to send the manager of Palm Springs Construction tickets to a big sports event as a courtesy for their ongoing working relationship.
Spade Works: Palm Springs Construction has also worked with this contractor in the past. They are willing to do the work but state that the main contractor (Palm Springs Construction) will be responsible for the removal of material that results from levelling the site. To reflect the reduced scope of work they will be responsible for, Spade Works is willing to do the levelling work for R16,000. The going rate for removal is about R210 per m3.
Jack Sparrow and Sons Inc.: This is a comparatively new contractor who prides themselves on their B-BBEE compliance. They were recommended to you by a work colleague, because their prices are more affordable. The price included in their bid is R95,000. There are no conditions attached to their contract; however, the person who recommended them does say that Jack Sparrow and Sons Inc. has had some financial upsets in the past.
The Quarry (Pty) Ltd: This contractor offers to do the work at a very good price of R75,000. However, due to other commitments requiring the use of some of their transportation vehicles, they won’t be able to remove the material immediately. So, they have asked to stockpile the excavated material on site for 10 days before removing it.
You have been asked to consider this information in relation to the needs of the project and to recommend a subcontractor for this work.
Complete the following evaluation report using the information you have. More specifically:
Evaluate each tender price relative to other tender submissions.
Use the bullet points in the “Comments” cells of the table to capture all relevant points about the contractor that could inform Palm Springs Construction’s decision of whether they should be selected. Your comments should also consider any observations you can make around project scope, project duration, ethical tendering practices, etc.
Ensure that you recommend one of these contractors to Palm Springs Construction and justify why you have selected that particular contractor.
