Tendering Process in Construction – Types, Benefits and Software

In construction, the tender process is a very technical procedure. Well, there are many misconceptions about tendering process. And, many contractors make this process an impossible task for small companies. Thus, if you are one of them, this article is for you!

Now, you don’t have to worry about this step during the construction of the project. This article explains the whole tender procedure for a building contract. It will discuss construction tender types as well. So, have a look at the below read.

What Is Tendering Process?

The construction projects include the process of requesting bids. This process is known as tendering.

Most organizations of government use this process. The major goal of tendering is to reduce favoritism and corruption in the business.

Additionally, The tendering process is the process of soliciting bids from potential contractors, suppliers, and other service providers for the purpose of selecting one to complete a project or provide goods or services. 

The tendering process typically involves publicly posting a tender notice, sending out invitations to bid, reviewing prospective bids, selecting a winner, and negotiating a contract. It’s important to note that the exact process may vary depending on the requirements of the organization issuing the bid and the local jurisdictional laws.

Tendering Process in Construction

It is an invitation to the contractor from the owner to complete some job. It has a cost commitment and a specified timeframe. According to the cost of the work, it is publicized as a tender notice. So, it displays in newspapers, notice boards, etc.

The customer can examine the rates offered by several contractors for the work. The contractor with the lowest bid and high experience always gets opportunities. So, the selection of such contractors becomes easy for the construction project.

How Tendering Process Is Important In Construction

The importance of a tendering process has the following main points:

1. Promotion of Competition: You can choose a qualified contractor for your construction. Also, it can help you lower of cost high-quality end products. 
2. Eliminates Fraud: A well-run tendering process can identify fake bids. It reduces corruption while your construction is underway. Sometimes, you can be deceived by dishonest bidders. But, this process helps you to identify such fraud.
3. Taxpayer Protection: You can hire qualified contractors. These contractors ensure the smooth process of tendering in construction. So, they can help you to protect yourself from taxes. It results in better products with fewer total costs.
4. Transparency: An effective construction tendering process is the main purpose. So you should allow all stakeholders to see the status of the project without any fear.

In other words, the tendering process is an important aspect of the construction industry because it ensures that projects are completed on time, on budget, and to the highest quality standards.

This process helps to promote competition among contractors and keeps construction costs manageable. It also ensures that contractors are properly vetted and qualified to take on a specific project and that all bids are evaluated fairly.

The tendering process also helps to ensure that projects are completed in a timely manner, that all deadlines are met, and that all other requirements of the project are fulfilled. Additionally, it provides an effective system for resolving disputes and ensuring accountability.

Tender: The Actual Meaning

A tender is a written document that mentions the completed task on it. This document contains the whole data of qualified contractors. The contractors just fill out the paper and then make it public.

Properties of Tenders

The main properties of the tender are listed below:

• Contractors must submit their projects by the client-determined deadline.
• The quantity of material and cost of the project should be included in the document.
• The client can estimate each pre-defined standard from the document.
• It provides an invitation to a tender the for initiation of the tender process. 
• It usually ends with a public review procedure.
• First, tenders are posted on social media. That’s why; it provides a chance for every contractor to their proposal submission.

Main Benefits of Tendering

The benefits of the process of tendering are mentioned below:

1. There are no chances of scams in the process.
2. The potential to create a network of contacts.
3. Smoothness in the whole process control.
4. Ensuring a time-saving process.
5. Best ratio value for capital is the tender’s assured outcome.

Different Contracts Tendering Types  In Construction

 Several types of tender processes are used in construction. The types are:

1. Open tendering
2. Selective tendering
3. Negotiated tendering

#1. Open Tendering

This tendering allows the submission of a tender during the open bidding process. It allows all interested contractors to avail of it. Anyone may submit a tender to the owner’s invitation. 

Open tendering is the most competitive type of tendering. It provides a chance to submit a proposal. It promotes competition among applicants. So, it gives up-and-coming contractors a chance to land jobs.

Pros of Open Tendering

The main advantages of Open Tendering are as follows:

1. Open chance for every contractor.
2. Common in both the engineering and construction industry
3. The client can bargain for any change in the tender list
4. Merit-based selection
5. Promotes tough competition

Cons of Open Tendering

The main disadvantages of Open Tendering are as follows:

1. The too-lengthy tender list may cause time wastage
2. Inefficient usage of resources
3. Public accountability follows the lowest offer’s rejection.

#2. Selective Tendering

Selective tendering is a good option for a small list of contractors. It does not apply to all contractors. The owner selects a small list of contractors to invite to the tender process. Only invited ones may issue a tender in this situation. It allows the fit judgment for a project. In this way, it works well for specialized or difficult projects. 

An unidentified contractor won’t take part in this opportunity. Selective tendering ensures that only qualified contractors take part in your project. It saves you time to not review too many contractors’ proposals. You can exclude new and unqualified contractors with the help of selective tendering.

Pros of Selective Tendering

The main advantages of Selective Tendering are as follows:

1. Good management of the tender process
2. Time-saving process
3. Ensures low-cost tendering
4. Efficient use of resources
5. Easy selection of competent contractors.

Cons of Selective Tendering

The main disadvantages of Selective Tendering are as follows:

1. Not an open opportunity for all contractors
2. Does not encourage competition, so leading to many unjust acts in the process
3. Can cause favoritism during shortlisting
4. No tender is available for newbies.

#3. Negotiated Tendering

Negotiated tendering makes a selection of only one contractor. The owner negotiates a deal with that dealer or contractor. The cost of this procedure is much reduced because there is one proposal to consider. 

This type of tendering hinders contractor competition. It results in higher costs and a more complex negotiation process.

Pros of Negotiated Tendering

The main advantages of Negotiated Tendering are as follows:

1. High rate of success
2. Time-saving process
3. Contract works based on the fast track
4. Long-term relationship of an owner with a contractor.

Cons of Negotiated Tendering

The main disadvantages of Negotiated Tendering are as follows:

1. Expensive tendering process
2. Decreases contract availability for other contractors.

Tendering Process in Construction

The stages of the tendering process in construction include the following:

1. Pre-tender Stage
2. Tender Advertisement Stage
3. Closing of Tender
4. Tender Opening Process
5. Tender Evaluation Process
6. Tender Award

1. Pre-tender Stage

It is the most important phase to understand the whole process. Your project won’t be finished if the pre-tender phase is unsuccessful. It is the initial phase or step of the construction tendering process.

The consultant of a project may help you to explore the project. The consultant gives advice, overseeing the tender and contract. You can also put the concept into a sketch. Now, you strategized about the project’s scope, timeline, and money.

2. Tender Advertisement Stage

The tender notification is another name for the tender advertisement. The tender notice will run in the neighborhood paper.

The following basic requirements should be included in the tender notice:

• Project title.
• Need qualified contractor, head, and subhead
• Document mentioning location, date, and time
• Charges for tender documents
•  Submission of time, date, and location

3. Closing of Tender

The whole closing schedule of the process is included in the tender notification. You can take action if a project is not submitted on mentioned time. 

The tender validity starts at the time of submission. In case, contractors don’t want to continue the project then they can withdraw their bids. During this process, consultants estimate and assess each offer.

Also check: Bid Abstract Template for Construction Management

4. Tender Opening and Evaluation Process

In general, some examiners are in charge of the tender opening procedure. The bids must be carried out without bias towards certain suppliers. 

The estimation process gives you the complete integrity of the competitive process. In the end, the evaluator will make a recommendation to assign the project’s execution.

5. Tender Award

Each tender will be examined by an evaluation panel. This evaluating panel suggests the best-performing tender. They help you to find a better version for your project. After assigning or completing the contract, tenderers are informed. The whole information is shared about the owner who owns the contract.

The tender administrator announces the result to inform all participants in the contract. The document awards the contract to a specific contractor. First, a tender is accepted by the government. Then, you can work on that project after its approval.

This implies that both parties must agree to the written terms of the project. The owner that won the tender must deliver the offered services as well.  The tendering process is finished after awarding the winning bid.

How Does the Tendering Process Work?

The process of tendering works on the following steps:

1. Request for Tenders

The client can send the invitation to a tender. The invitation may be sent to particular contractors or the public. The marketing rate of a tender depends on the type of tender.

2. Clarification

At first, things are not clear to clients. Some suppliers provide enough knowledge to clients. So, they can take confidence that submitted tenders will satisfy all standards.

3. Submission

Contractors who are interested in working submit their bids. The tender document contains all requirements of resources. This file allows the customer to select one that offers the most value for money.

4. Tender discussions

The two parties may discuss every detail of the contract. It could be a conference where the cost, quality, and deadline are explained.

5. Execution of a Contract

After the modification of the tender, the parties sign the agreement. Then, the contractor can begin the execution phase. Also,  the client should save the contractor’s information for the next project.

Also Read: Different Types of Estimates Calculated during the process of Construction

Support for a Tender Process by Construction Management Software

Nowadays, you can use software to support the process of tendering. The detailed procedure is listed below:

1. You can make the tendering process by following the automated tendering platform
2. Contact information at quick access is given to all providers.  This information falls within the designated categories
3. Automatic evaluation criteria support the best supplier for you.
4. Important information i.e cost and progress status put in one place by simple access.

List of Top 10 Tender Management Software in Construction

Here is the list of the top 10 best Tender Management Software for the construction industry:

1. Bidease
2. Corrigo
3. PlanRadar
4. Bamboo Prefab
5. e-Builder
6. Tender247
7. Blueteam
8. 4PS Construct
9. Archdesk
10. ProTenders

Frequently Asked Questions

What are the steps in tendering process?

The main steps are:

• Understand the needs of the project
• Develop a plan according to the demand of clients
• Evaluates the proposal and choose one.
• Discuss the whole contract with the approved provider

What are the main types of Tender In Civil Engineering

The following major Tender types are used:

1. Open Tender
2. Selective Tender
3. Negotiation Tender

Conclusion

In short, tendering is essential to select the best contractor for your project. The contractor must approve by the government before starting the contract. 

You must discuss your project with a contractor after documentation. Hoping you get your queries after reading this informative read!

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