A Comprehensive Guide to Tendering in Construction

Tendering is a process in which an organisation submits a proposal that describes the details of a construction project and works related to it, and invites bids to provide the execution  services. Tenders are generally shared publicly to receive an attractive bid from eligible contractors and suppliers. Tender documents are very important to select the main contractor or suppliers for a construction project. 

In this article, let’s discuss all the aspects  of tendering in construction. 

What is  Tendering  in Construction?

In simple terms, tendering in construction means requesting and receiving prices or rates for a construction related work. In this process, clients invite bids from eligible and interested contractors to execute a reasonable construction project 

Tenders are usually publicised through domestic or local media and can be accessed by all the interested contractors to submit their bids with information regarding technical and financial details and the materials used for the project. Once the bids are submitted within the deadline from contractors, it is then evaluated by the client based on quality, price and other such factors. The most ideal contractor or builder is then selected for executing the project. 

The Tendering Process

The tendering process in construction includes five major steps, they are:, 

1. Pre-tender Stage: It is the initial and crucial stage in tendering. Before launching a tender, there are some preparatory tasks like defining the scope, budget and time taken by the buyer. Detailed construction drawings are also prepared in this phase.
2. Tender Advertisement/ Invitation stage: The tender notice is published in e-tender portals, trade publications, newspapers, or on social media platforms like Facebook, Twitter and LinkedIn,  Sometimes, the tender invitation is sent to only specific contractors chosen by the client. Through this advertisement or invitation, other details required for the execution of the project—such as design drawings, terms and conditions of the project and other expectations from the contractor—can also be accessed by interested parties. 
3. Closing of Tender: The tender notice will also notify about the validity period, within which the interested parties must submit a proposal or bid . If the contractor fails to submit the bid within the allotted time, it is considered that the contractors is not interested  to bid for the project. 
4. Tender Opening and evaluation process: Once multiple proposals are received, each of these is carefully evaluated based on various criteria, such as quality of materials, cost and timelines proposed. 
5. Tender Award: The tender is awarded to the most ideal contractor or organisation as judged by the client or tender publishers. Once a contractor has won the tender, he/she has  to provide the needed goods and services at the price offered and the buyer must pay the negotiated amount on/before the given period. 

Types of Tenders in Construction.

According to the nature of the contract, complexity of the construction and the needs of expertise, a client can choose different types of tenders which suit them technically and financially. Given below are brief descriptions of the types of tenders used in construction;

Open Tendering: In Open tendering, the clients advertise their invitation about the proposed project publicly which can be accessed by all interested contractors. It allows any new or emerging contractor to submit a bid and gives an opportunity to win. Since it is an open tender, there will be more competition among potential contractors and bargaining is possible. It is suitable in construction as there is no bias in the selection processHowever, there is a high chance of picking a contractor who offers the lowest price but fails to deliver good quality work. 

Selective Tendering: Here, the clients invite a few selected contractors to submit their bid. In selective tendering, a pre-qualification process is likely to be used when there is a large and complex project. Pre-qualification can be done by evaluating various aspects regarding the contractor or organisation, such as Supplier identity and background, financial information, business and professional standing, health & safety measures adopted, equal opportunity & diversity policies, environmental management, quality management, previously completed projects and anti-bribery and corruption policies. Here, the overall numbers of competitive bids received is reduced. It is easy to manage and is considered a time saving method This method is designed to improve the quality of bids with  limited contractors. It reduces the tendering cost and promotes economical use of the client’s resources. 

Negotiated Tendering: In negotiated tendering, only a single contractor is selected to submit a tender and also has an allowance for three contractors maximum. Negotiation begins when the client finds a suitable contractor of their choice to submit a bid for a project. This type of tendering minimises the risk of failure in construction and is useful in certain circumstances such as, emergencies. It reduces the time taken involved in appointing the contractor or supplier for the tender.

Benefits of the Tendering Process.

There are several benefits gained by the tendering process, such as: 

• Competitive Pricing: It encourages main contractors to provide competitive pricing for the project, which can lead to keeping the costs down and makinge sure that the project is completed within budget.   

• Quality Assurance: It ensures that the main contractor who was selected for the project will provide quality consistency, reliability and continuity of supply of the goods and services.  

• Financial Planning: Tendering ensures that both the property owner and the contractor are aware of the budget for the project in advance, any change in which will not be valid. Payments at every stage of construction are defined, which allows property owners and also the contractors to efficiently manage their funds.
• Transparency: Since every aspect of the project, such as quality and type of materials used, is specified in a tender document, property owners can be assured of delivery of a building that meets their standards and expectations.

Conclusion.

Tendering is a construction process that has various benefits over typical construction, for both the contractors and the property owners. It is thus a vital aspect of the construction industry. However, its types, benefits and legal aspects must be carefully evaluated before getting involved in the process, in order to ensure a smooth and hassle-free project.

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