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What is EMD in a tender document?

by  on Invalid Date

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EMD or Earnest Money Deposit in a tender document is a type of security deposit to safeguard tender inviting authorities against unwanted proposals and financial liabilities that may come up in case the shortlisted vendor or contractor is not willing to fulfill his commitments as per the tender guidelines. So the authority earns ownership of the EMD amount if the contractor refuses to do the project after the tender process.

An EMD in a tender is like a gesture of good faith by the contractor, implying that he/she is willing to execute the project if they win the bid. It has to be submitted in the form of either a Bank Guarantee or Demand Draft or Banker’s Cheque, as demanded by the authorities.

The EMD amount is decided by the tender authorities and is kept at a minimum which should mean something to the contractor and he/she is not ready to lose that amount of money. The amount is usually predecided for slabs in government works. The amount is set based on the value and the type of work.

After the bids have been evaluated and the bidding results have been disclosed, the authorities return the EMD amount of the unsuccessful bidders and the successful bidder has to submit a performance security deposit to get his/her EMD amount back.