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The National Building Specification (NBS) defines tendering as<\/a>:<\/span><\/p>\n \u201c\u2026 the process by which bids are invited from interested contractors to carry out construction work. It should adopt and observe the key values of fairness, clarity, simplicity and reinforce the idea that the apportionment of risk to the party best placed to manage it is fundamental to the success of a project.\u201d<\/span><\/p>\n In my opinion, the latter point is the pivotal one: it is critical that risk is apportioned to the party best placed to manage it, and often, it is not.<\/span><\/p>\n Construction is a highly technical industry with multiple trades and areas of expertise, making it near impossible for anyone to understand all the different specialities. The tendering process in construction work is, therefore, incredibly difficult and it necessitates a firm grasp of both the technical aspects of the project and the most suitable <\/span>tendering method<\/span>.<\/span><\/p>\n W<\/span>hether the process used is one of\u00a0 <\/span>the more c<\/span>ommon methods employed in <\/span>construction tender<\/span>ing like single-stage tendering or <\/span>two-stage tendering<\/span>, each with its advantages depending on <\/span>project complexity<\/span>, <\/span>project duration<\/span>, and other factors.<\/span> There are also c<\/span>ost management procedures, <\/span>performance specification<\/span>s to consider<\/span>. <\/strong><\/b> Then there is the selection of an appropriate contract method. All of which are vital considerations to take during the <\/span>tendering proces<\/span>s. These procedures directly impact factors like <\/span>competitive pricing<\/span>.<\/span> <\/b><\/p>\n But before all that, there are many a different <\/a><\/span>tendering proces<\/span>s in construction that a buyer has to consider.\u00a0<\/span><\/p>\n When you tender for construction work, it is much more than just getting prices back for elements of work. Instead, I believe tendering is more of a risk management process. <\/span>Risk management strategy<\/span> involves:<\/span><\/p>\n Identifying the major risks of a project.<\/span> In construction, there are many different options for dividing the risk between stakeholders; that is why we have many <\/span>tender proces<\/span>ses. There’s a multitude of ways to approach <\/span>construction tender<\/span>ing, as explored below:<\/span> <\/b><\/p>\n Open Tendering allows anyone to submit a tender to complete the works. Typically, a project notice will be placed by the client, giving notice that a package of works is being tendered and requesting that organisations register interest to submit a tender. Open <\/span>Tendering in construction<\/span> is the procurement route that offers the most significant competition and allows SMEs to reach a broader client base. This encourages innovation and will enable buyers to view more proposals. The challenge with Open Tendering is that in this format, anyone can submit a tender for the works that are required and often, this leads to un<\/span>suitable contractor<\/span>s tendering for the works or multiple contractors tendering, and thus, the buyer is unable to suitably reply to each of them.<\/span><\/p>\n Selective Tendering<\/span> differs from Open Tendering in allowing contractors to submit tenders by invitation only. <\/span>Selective Tendering<\/span> is not \u2018open\u2019, and a pre-selected list of possible contractors is prepared based on the client\u2019s initial pre-qualification. Once the buyer has determined a list of contractors suitable to tender for the construction works required, the client will invite them to tender. The exact number will differ from contract to contract and package to package, and we advise that this is no more than 4 to 5. When tendering for construction work, most Quantity Surveyors and buyers opt for the <\/span>Selective Tendering<\/span> procurement method.<\/span><\/p>\n Why? <\/span>Selective Tendering<\/span> is perceived well as it involves pre-qualification. Prequalifying the supply chain ensures that the buyer quickly identifies contractors capable of delivering the scope of work. One challenge with this process is that it can lead to a \u2018stale\u2019 procurement list of prospective contractors as the <\/span>pre-qualification proces<\/span>s takes time and can exclude contractors unknown to the buyer from the process.<\/span><\/p>\n Negotiated tendering is when the client approaches a single supplier, and the contract terms are negotiated with this company and this company alone. It is often considered most appropriate when the tender is for highly technical or specialist construction work. On many <\/span>public project<\/span>s, negotiated tendering is not permitted as it can be perceived as being anti-competitive. For these reasons, you more commonly see it in the <\/span>private sector<\/span>. Negotiated tendering for construction works can result in both a reduced tender period and cost for the tender, with both parties able to confidently get to the detail of the package quickly. Despite this, it can be seen as anti-competitive and exclusive and often is not permitted due to a perceived lack of accountability.<\/span><\/p>\n Two-stage tendering<\/span> for construction work occurs in two separate and clearly defined stages. In the first stage, a limited appointment is issued by the client to allow the contractor to commence work, and in the second stage, a fixed price is negotiated for the agreed scope of work. The focus of <\/span>two-stage tendering<\/span> is early contractor engagement. The focus is on enhancing buildability and increasing cost certainty in an advisory capacity before the scheme is fully designed. <\/span>Two-stage tendering<\/span> is typically applied to <\/span>complex project<\/span>s where the client wants to appoint a Main Contractor, or more commonly by the Main Contractor in their employment of a subcontractor for a design-oriented package such as M & E, cladding or curtain walling.<\/span><\/p>\n A framework agreement is an agreement between one or more businesses or organisations. In entering into a framework agreement, a contractor is usually one of many contractors contractually bound to deliver the client\u2019s requirements. Clients with a continuous line of work to tender can reduce timescales and other risks using framework agreements. Such arrangements allow the client to invite tenders for construction work from contractors on a call-off basis as and when required. A call-off contract is a framework agreement allowing the client to place bulk orders over time. This type of agreement is often used in tendering for construction maintenance works, where projects can last for months or even years. For clients, framework tendering is a really efficient procurement route when they have repeat work. Where appropriate, the client will complete one tendering exercise over the life of the contract arrangement, which reduces administration and costs while also establishing a long-term working relationship with its supply chain, which promotes operational efficiency.<\/span><\/p>\n Serial tendering<\/span> involves preparing tenders based on a typical or notional bill of quantities or schedule of works. The rates submitted can then be used to value works over a series of similar projects, often for a fixed <\/span>period of time<\/span>. <\/span>Serial tendering<\/span> can reduce tender costs and may encourage suppliers to submit low rates to secure an ongoing programme of work. This type of tender is particularly useful for projects where the scope of work is repetitive or ongoing, allowing for a more streamlined and cost-effective approach.<\/span><\/p>\n Single-stage tendering means all the necessary information needed to calculate the service price is already provided in the Invitation to Tender. <\/span>Potential supplier<\/span>s submit their offers, and clients choose the best one directly from these submissions. There is no need for additional steps. In contrast, <\/span>two-stage tendering<\/span> involves at least two steps. The contractor can be appointed even before all information required to set the price is submitted. Initially, the contractor prepares a framework for the project with design input, which can later improve communication regarding the final price.<\/span><\/p>\n As a client tendering for construction works, ascertaining the correct <\/span>tender proces<\/span>s for a given project will be based on a balance of factors, including the level of specialism required, local market, and budget. If you consider construction work in three headline categories; standard projects, technical projects, and maintenance projects, our advice for the most appropriate tenders for construction is as follows.<\/span><\/p>\n On a relatively standard project, our advice is always to undertake a level of pre-qualification of the supply chain before issuing Invitations to Tender. In doing this, you ensure that you have appropriate, interested contractors with whom to tender, and as a result, you should receive at least 4 to 5 tenders back to ensure the process is competitive. An Open Tender can result in too many tenders being returned and returned by contractors whom you consider unsuitable: this is neither an effective use of your nor the contractors\u2019 time, and therefore, we advise against this.<\/span><\/p>\n Where the scheme or package involves more technical elements, <\/span>two-stage tendering<\/span> can deliver good results owing to the early specialist engagement and should always be considered. With maintenance work, specifically longer-term maintenance work, we recommend exploring Framework agreements which can often result in both time and cost efficiencies.<\/span><\/p>\nTable of Contents<\/h3>\n
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\nAssessing their likelihood of occurring.<\/span>
\nDeciding how best to manage them.<\/span><\/p>\nOpen Tendering<\/strong><\/b><\/h3>\n
Selective Tendering<\/strong><\/b><\/h3>\n
Negotiated Tendering<\/strong><\/b><\/h3>\n
Two-Stage Tendering<\/strong><\/b><\/h3>\n
Framework Tendering<\/strong><\/b><\/h3>\n
Serial Tendering<\/strong><\/b><\/h3>\n
Single-Stage Tendering<\/strong><\/b><\/h3>\n
How do you know which is best for your project?<\/strong><\/b><\/h3>\n
Key Step<\/span>s in the <\/span>Tendering Proces<\/span>s<\/span><\/h3>\n