Tendering Procedures and Methods in Construction

Tendering

Tendering is the process of inviting bids from interested contractors to carry out specific packages of construction work.

Types of Tendering

Competitive tendering

1. Open
2. Selective

1 – Open tender

The main tendering procedure used by both the government and the private sector is open tendering. The tender offer is publicised in local newspapers by the client. Giving specifics and key information about the proposed works, as well as inviting interested contractors to bid. In the legal sense, such tender notices are an invitation to treat, or a simple request by the employer for the appropriate contractor to submit bids or offers.

If the tender notice identifies the pre-requisite to the tendering in the form of possession of the necessary registration, then the advertisement is directed to only that specific class of public having the said qualifications. Earnest money is deposited to reduce the number of inquirers (for private project). It will be returned until the bona fide tender selected is received. Although cost is an important consideration in deciding which tender or bid to accept, it is not the only one. The client is not obligated to accept the lowest or any offer. The benefits and drawbacks of open tender are listed below.

1. It allows any interested contractor to submit a bid. As a result, an unknown contractor has the opportunity to compete for the work.
2. The tender list may be lengthy if there are too many contractors bidding on the same job.
3. Allowing for the creation of fair tender lists. The client will get the best deal possible. There will be no favouritism in the selection of contractors.
4. The source is being used in an inefficient manner.
5. Ensuring fair competition without being obligated to accept any offers.
6. If the lowest offer is not accepted, public accountability may be called into question.
7. Traditional tendering method, well-known throughout the Engineering & Construction industry.

A disadvantage of both open and selective tendering is that a contractor’s circumstances can change after he submits his tender. He may incur losses on other contracts, affecting his financial stability, or he may be so successful at tendering that he does not have enough skilled staff or men to handle all of the work he wins. As a result, neither the tendering method nor any other method of procuring works can guarantee the avoidance of the trouble.

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3 – Negotiation Tender

Tendering by negotiation is widely used in the engineering and construction industries, from tendering to dispute resolution, i.e. under the styles of pre-contract negotiations and post-contract negotiations. Typically, one contractor is used, but up to three contractors may be used.

The following are the steps in the negotiation process.

1. Employer identifies a suitable contractor with whom to negotiate.
2. The contractor can be chosen from the employer’s preference list or on the advice of the professional team.
3. The contractor is being informed of the scope of the work.

Where the contractor is involved in the project’s financing.

1. In situations where the employer believes it is advantageous to continue an initial or existing contract for the new works with the same contractors.
2. Where there is a pressing need to begin work on the site as soon as possible and to complete the work as soon as possible.
3. In exceptional circumstances, such as security reasons, emergencies, and so on, it is preferable to secure the services of a specific contractor only.
4. Where there is only one contractor available or with the special skill or resources to carry out the specific works.
5. Because the employer’s resources are limited or constrained, using other tendering methods is impractical.

Disadvantage.

1. In situations where the employer believes it is advantageous to continue an initial or existing contract for the new works with the same contractors.
2. Where there is a pressing need to begin work on the site as soon as possible and to complete the work as soon as possible.
3. In exceptional circumstances, such as security reasons, emergencies, and so on, it is preferable to secure the services of a specific contractor only.
4. Where there is only one contractor available or with the special skill or resources to carry out the specific works.
5. Because the employer’s resources are limited or constrained, using other tendering methods is impractical.

Selection of the Suitable Contractor

• This entails selecting a suitable contractor and establishing a pricing level for subsequent negotiations.
• The goal is to select a suitable contractor as soon as possible in order to collaborate with professional teams and establish a pricing level for subsequent negotiation.
• Short-listing criteria are typically limited to items such as technical and financial capability, experience in similar works, and the extent of resources (manpower, plant & equipment).
• The pricing document should be adaptable enough to account for price fluctuations between two stages and the pricing of the second stage.
• When selecting a suitable candidate, a pricing basis for the subsequent second stage should be established.