Discuss about the Operational Analysis of Company Costs.
Kijac Empire Limited is a construction company headquartered in Melbourne, Australia and incorporated under the Australian company law. The company has been the leading construction company in the country since the year 2001. We pride ourselves as a top company that provides engineering construction services to clients within and outside the country. Our clients include small to big private companies, private developers, and government agencies. One way that a company can cut its operational costs is by producing its raw materials whenever it is cheaper to produce than to purchase (Barrett, 2016).The company plans to engage minimize construction costs in future projects by construction material materials. We plan to engage in the extraction of hard rock and sand in order to minimize purchases of such materials as we assemble construction materials for our numerous construction projects.
The General Manager of Kijac Empire Limited is seeking tenders for the Quarrying of crushed rock and sand in Adzuna mines (Tender No. 903/2018). The project is projected to produce 1 million tons of sand and 2 million crushed rock per day that would be used in the company’s projects. Kijac Empire Limited has leased the mines from the government of Australia, and therefore seeks a contactor to begin the process of quarrying. The company seeks mining companies that possess the necessary capacity to express their interest for the tender.
Release of tender request
Thursday, 24th May 2018
Final date for tender intention registration
Friday, 15th June 2018
Deadline for tender queries
Friday,22nd June 2018
Deadline for tender submission
Friday , 29th June 2018
In case any errors are found by tenderers on this document, or any need for clarification arises on the part of the tenderer, it is required that the tenderer notifies Kijac Empire Limited in writing before the deadline for tender enquiries. The company through the procurement manager, shall address the concerns raised through an Addenda to all registered tenderers. The company has the right to make amendments to this request for tender document before the deadline for tender submission.
The costs in any business are the key determinants of the profitability in that the excess of revenue over expenses make up the profit. Costs however, exist in different forms such as opportunity costs, sunk costs, operational costs, and fixed costs which vary depending on the kind of business (Sopta & Komin, 2017).
Regarding expenses, tenderers are notified that they would be responsible for the expenses the incur while;
(i)Making submissions on questions raised by the principal and making available any information requested by Kijac Empire Limited.
(ii)Solving conflicts that might arise during the request for tender processes.
(iii) Facilitating and acquiring information useful in preparing and delivery of their tender documents.
All the tenders advertised by Kijac Empire Limited are the company’s property on submission. However, the right to intellectual property of any information provided by the tenderer shall remain theirs ( Heizer 2016, p.2). The applicant authorizes Kijac Empire Limited to amend, copy, or disclose materials and information that it finds necessary to disclose during the assessment.
The validity of this tender shall be until 60 days from the submission deadline. The principal however, has the right to extend the timelines. In such a case, the principal shall notify the tenderers by means of writing. Within the 60 days, the tender committee shall conduct meetings to select the winning tenderer.
The right to equal opportunities for peoples in a country are an essential feature of a democratic society. This whenever is reflected in the economic, political, and social spheres can promote development in the country (Richard, 2017). In accordance with the provisions of the government of Australia concerning the equal participation by workforce in development activities, Kijac Empire encourages women, youth, people with disability, and the minority people such as the Aboriginal group to apply for the tender. While executing the tender, the tenderer is also required to promote this work force participation by employing individuals from minority groups, and promoting skill development among the locals (PGPA Act, 2013).
Kijac Empire’s code of ethics believes in respect, integrity, and accountability as values of good business engagement with clients, suppliers, and our employees. In every activity we participate in, we do it in accordance to the industry standards and the company’s strict ethical standards. This are all aimed at maintaining and establishing trust and social license to continue serving our customers (Lee, 2014). On top of construction services, we lease mines and engage mining companies in quarrying processes in order to obtain high quality building materials in form of sand, gravel, and construction stones. We are committed to continuous improvement using innovative practices and cost minimization strategies.
You, as tenderers and suppliers of our company play a great duty in helping the company deliver its services to its customers. The trust between you and the company is vital in the transaction of business just like it is for local communities, clients, investors among other partners. Our success depends highly on the collaboration between you and the company in assisting the company achieve its objectives. Suppliers are requested to carry out activities in accordance to international standards and Kijac Empire’s code of ethics in order to smoothly transact business with us. We set the pace in the manner we work to you our contractors, suppliers, among other stakeholders we engage with.
The company shall duly carry out its mandate created by the contact of tender. In addition, Kijac Empire shall ensure that tender documentation, the tendering process, and contract management are effectively undertaken.
The tender documents are complete and conform to our sourcing strategy. They conform to the requirements of AS 4120-1994 section 6.1.2 pg. 6 Objectives of tender documents.
The Procurement manager of the company is mandated under GC21 contract to act on behalf of the company for the purpose of carrying out activities relevant to the execution of this tender.
The executive director of the company shall lead conflict resolution initiatives in case any conflicts arise between the contactor and the company. This power is conferred to him under the provisions of GC21 contract.
Kijac Empire limited shall not accept any risks of poor site conditions caused by the tenderer. It is on that note that we request tenderers to manage risks adequately to avoid incurring losses.
The selection process is the main role of tendering especially in construction and mining works. The open tendering procedures shall be applied for the purpose of this project in order to give all prospective tenderers an equal opportunity. In open tendering, prospective tenderers submit their application after a request for tender is made (Statsenko, Gorod & Ireland, 2018). It is the most transparent tendering method that provides applicants an equal opportunity.
Our prequalification process offers tenderers an equal chance at the same time helping the company identify tenderers that have the necessary financial and technical capacity to undertake the tender. It also gives us an opportunity to assess applications fast and identify our preferred tenderer (Ancarani, Guccio & Rizzo, 2017). The prequalification criteria is based on a measurable criteria where companies are given scores based on their financial, human, and technical ability.
The tender applicants must prove their capacity to finance the quarrying project. This shall be based on their financial statements that confirm that the company has enough financial strength to undertake the quarrying process. The company should also be able to design the mining design that would enable optimization of the resource and conform to the required safety standards. The level of experience possessed by the company is also a matter of concern to us. A proof that the tenderer has in the past undertaken similar projects successfully would boost the chance of being offered the tender (Lewis, 2016). The experience is also proven by the years of experience that the company has operated in the mining industry in full conformation to the mining laws of Australia. Social and environmental management are areas of concern to Kijac Empire Limited. We require that tenderers have the capability to ensure that environmental as well as social concerns are addressed holistically in accordance with industry standards and the countries environmental protection laws.
The company shall open all tenders presented by tenderers within the timelines on a date communicated to applicants through a notice at our company offices. Representatives of different tenderers are can attend the opening, they shall be required to sign a register to indicate their presence. Kijac Empire shall prepare meeting minutes and supply them to the attendants during the actual tender opening date.
In the execution of the tender, the tenderers are liable to obligations set out by agreeing to the contract document. According to Code of tendering (1994), tenderers are only required to submit their applications provided they are sure that they possess the necessary capacity to work on the project offered by this tender request.
Tenderers who happen to be unsuccessful in securing the tender shall be required to dully return the documents to Kijac Empire Limited manually or through post office within one week after the selection of the successful tenderer. This is a condition that every tenderer shall submit to before making the application.
Tenderers are advised to ensure that they visit or obtain information concerning the project site before receiving the tender documents and obtain clarification from our offices to confirm that their application is complete and that they have fully understood the requirements of the tender.
Canvassing is highly prohibited. We aim to ensure that all the tenderers are offered an equal chance to secure the business since in compliance to our ethical guidelines. Canvassing in this case refers to the use of unethical practices that include trying to bribe our staff in order to influence decision making of the tender committee members.
The tenderers should adhere to the regulatory provisions of the Australian tendering standards AS2014-1994 while formulating their tenders. This would include not engaging in inflation of tenders through collusion with other tenderers and use of unethical business arrangements with sub-contractors among other statutory requirements as provided on S4120-1994 section 7.4 pg. 10.In their application, tenderers are required to make their quotations with respect to labor costs, project plants, materials, and their plans for subcontractor relationships. Kijac Empire limited estimates that the company carrying out the quarrying shall require 50 unskilled casual workers working 8 hours a day for $ 20 daily, 10 management and technical staff earning $ 5000 monthly, and plant and machinery costing $5000000. The costs might vary depending on contractual agreements, and origin and type of machinery purchased.
Some information that come to the light of our company and tenderers are sensitive and thus should be kept confidential by all possible means. The tenders are required as per tender standards to keep information in confidence. The breach of this duty shall constitute a criminal offence and the tenderer shall be prosecuted.
Kijac Empire Limited shall finance the quarrying project through the sale of bonds to the public. The company being listed at the Australian stock exchange gives it a advantage of seeking funding through stock offerings. The company has floated a corporate bond worth $1000, 000 to finance the project for the first two years. The bond has been over-subscribed owing to the good public image that the company possesses. The company finds it prudent to begin the mining processes as soon as possible so as to attain its goal of minimizing operational costs. The company selected this project from many options that was under consideration after a great deliberations between the management. The project is projected to offer huge return on investment.
Kijac Empire Limited shall have the power to serve notices to tenderers in case on any change of plan. The notice shall be sent to all applicants through their postal addresses. Subcontracting is an arrangement where a contractor offers part or whole of the contracted work to another company (Hinton& Hamilton, 2015 .The subcontracting of the project shall be allowed on when the subcontractor has the capacity to undertake the project and should be ready to work as per our quality assurance standards. In case of subcontracting after allocation, the tenderer shall be required to submit all the relevant identification information of the subcontractor together with the terms of agreement between the two parties. It shall be the mandate of the contractor to ensure that the work is completed in accordance with the initial agreement.
The contactor also, shall be observed during the first six months of work to determine whether the work would satisfy the required quality standards. Whenever the principal shall realize through examination and testing that the quality of work is below the agreed standards, the contact shall be terminated.
The company shall keep in check with the progress of the project overtime and assess the level of conformity to the set schedule. Whenever there shall exist disruptions, the contractor shall take the burden of the costs and losses associated with it. Kijac Empire Limited shall not be liable to any costs. Disputes do arise in the normal operations of business despite the sector of operation. (Ansah & sorooshian,2018). Disputes between the principal and the contractor shall be handle through arbitration before legal redress is undertaken. The company shall form a negotiating team to solve conflicts that might arise during the conduct of work. Variations from the estimates shall be monitored and the necessary measures undertaken in order to offer the contractor adequate assistance during his
Kijac Empire believes that the pursuit of customer oriented business, provision of quality leadership, and the involvement of the local communities are key success factors in any business. Best project management standards also propose a systems approach to project management in every sector including mining. Systems approach enables managers and other stakeholders to the view the sub components of the job as part of a whole. This ensures that every section or phase of the project conforms to the ultimate project goals. The pursuit of continuous improvement is a virtue that we believe are core to the overall functioning of the firm (Matthew, 2017). The quality of products and services should continuously improve to suit the changing tastes and preferences of consumers. Contractors as our partners in business should uphold the same virtues while transacting business with Kijac Empire Limited. This would ensure that we establish mutual benefits in the pursuit of the project milestones.
Kijac Empire limited values the safety of employees, partners, and the local communities while undertaking its projects. We appreciate that we co-exist in a society where people should conserve their habitat and protect themselves against perils. As a company, we shall never compromise the safety of our environment and health of our employees, and partners while in the pursuit of profits (McShane, French & Klein, 2015).We also request our tenderers to ensure the safety standards are met while partnering with us. The EHS policy of Environmental, Health and safety shall in at all-time be adhered to. The company offers trainings to its partners through the company website whenever there is need of such an arrangement.
The occupational standards and safety guidelines provide for the management of safety in all company processes and projects. Our company reviews adherence to these policies within the company periodically. The measurement and evaluation of occupational safety processes are necessary to the success of the company (Reese, 2015). Through them, we are able to plan, implement, and control safety processes in our operations. In the same spirit, the company expects partners, contractors included to implement similar processes while engaging with us.
AS 4120—1994, Code of tendering. (Austl.)
Ansah, R. H., & sorooshian, S. (2018). 4P delays in project management. Engineering, Construction and Architectural Management, (just-accepted), 00-00.
Barrett, P. (2016). New development: Procurement and policy outcomes—a bridge too far?. Public Money & Management, 36(2), 145-148.
Heizer, J. (2016). Operations Management, 11/e. Pearson Education India.
Hinton, M. A., & Hamilton, R. T. (2015). Competitive tendering and individual behaviour in the construction industry: convenient immorality at work. Construction management and economics, 33(11-12), 880-889.
Liu, T., Wang, Y., & Wilkinson, S. (2016). Identifying critical factors affecting the effectiveness and efficiency of tendering processes in Public–Private Partnerships (PPPs): a comparative analysis of Australia and China. International Journal of Project Management, 34(4), 701-716
Matthew, G. (2017). Procurement can be led by the Australian Government. Appita Journal: Journal of the Technical Association of the Australian and New Zealand Pulp and Paper Industry, 70(3), 212.
(2014). Ethical Behaviors in E-Tendering Based Construction Procurement Process in Malaysia (Doctoral dissertation, Universiti Teknologi Malaysia).
Lewis, C. (2016). Assessment of tender evaluation criteria in the construction industry (Doctoral dissertation).
McSwane, D., French, J., & Klein, R. (2015). Environmental health and safety. In Regulatory foundations for the food protection professional (pp. 125-141). Springer, New York, NY.
Richard, J. A. (2017). Equality and equal opportunity for welfare. In Theories of Justice (pp. 75-91). Routledge.
Sopta, M., & Komin, A. (2017). OPERATIONAL ANALYSIS OF COMPANY COSTS. Economic and Social Development: Book of Proceedings, 74.
Public Governance, Performance and Accountability Act 2013 (PGPA Act).
Ancarani, A., Guccio, C., & Rizzo, I. (2017). The role of firms' qualification in public contracts execution: An empirical assessment. Journal of Public Procurement, 16(4), 554-582.
Reese, C. D. (2015). Occupational health and safety management: a practical approach. CRC pres
Statsenko, L., Gorod, A., & Ireland, V. (2018). A supply network governance framework: a case study of the South Australian mining industry. Journal of Global Operations and Strategic Sourcing, 11(1), 55-78.
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