A tender refers to a written document that describes the details of the project and the work that it will involve. It is shared with the public to attract bids from qualified contractors and suppliers. Clients may also directly send invitations to tender to contractors and suppliers who are eligible and willing to participate in the project.
A tender document is crucial in the tendering process because it provides the buyer’s criteria to select suitable contractors and suppliers. A client must consider pricing and quality when choosing contractors and suppliers for a project. Let's explore more about the tender process in our blog.
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A tender process is when the client invites bids from qualified and interested contractors to carry out specific construction work packages. A tender process begins with an invitation to tender.
Tenders are typically advertised through local media to give all interested contractors equal opportunity to submit their bids, clearly indicating the materials to be used and the project’s estimated cost.
The contractors must submit the bids within the client’s deadline. The client then evaluates all the proposals based on criteria such as quality and price. After a public evaluation process, the tender process is concluded once the winning contractors and suppliers are determined.
The tender process is critical in construction because of the following:
A client can choose different types of tendering based on the expertise needed, the nature of the contract, and the complexity of the construction. There are three main types of tendering: open tendering, selective tendering, and negotiated tendering.
In the open tendering, the client advertises the proposed project publicly and is available to all interested contractors. The client may require a refundable deposit from all applicants. Open tendering is common in both government and public sectors, and is widely used in the construction industry.
Below are the pros and cons of open tendering.
In selective tendering, the client only invites a shortlist of contractors to submit their bids for the tender. Selective tendering is designed to mitigate the limitations of the open tendering method. Since a shortlist of qualified contractors is drawn in advance, participation is restricted to only competent and skilled contractors.
Below are the pros and cons of selective tendering.
Negotiated tendering is commonly used in the construction industry, as negotiation starts from the tendering process to the dispute resolution stage. Negotiated tendering involves two phases: the pre-contract negotiations and the post-contract negotiations.
This tendering process typically involves a single contractor but has an allowance for a maximum of three contractors.
The negotiated tendering process begins when the employer identifies a suitable contractor to deal with. The employer can select the contractor from their list of preferences or through the guidance of the professional team.
Once the client identifies a contractor, they give them the project details. Negotiation tendering is suitable for types of contracts where:
Below are the pros and cons of negotiated tendering.
At its core, proper tendering helps all parties arrive at the best contractual terms that benefit all parties. Tendering is essential in construction because it helps select contractors and suppliers for a project.
Clients or employers can choose open tendering, selective tendering, and negotiated tendering methods based on the nature of the project and the expertise required. Proper tendering helps foster good client relationships and improve the quality of a project.
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