CONSTRUCTION TENDERING PROCESS IN NUTSHELL:

In construction, tendering is a process for getting a contractor and agreeing on a price.

Tendering is the process by which the client or employer invites contractors to place a bid for work on a construction project. Contractors’ bids are based on the tender documents issued by the client. The successful tenderer becomes the ‘contractor’ and a ‘party’ to a contract with the ‘client’. The tender documents are legally binding and are signed by all parties involved. The completed tender documents become part of the contract documents.

The two main outcomes the client expects from the tendering process are:

1. The right contractor

2. The right price

The tendering process is important to both the client and the contractor: it is the way in which the client allocates work and the way in which contractors stay in business.

Contractor selection:

Once the due date and time for submitting the tender elapses, all bids are reviewed in order to select and appoint the best contractor for the project.

Details of each bid are recorded on a tender opening form. The information recorded typically includes:

• The tender price (perhaps split into preliminaries, overheads and profit, and prime cost)
• The proposed programme
• Any key comments or exclusions
• Any alternative tender offers
• A confirmation that all documents have been submitted or not

The tendering process is associated with a number of terms that have a specific legal definition:

Invitation to treat: legally, an invitation to tender is an ‘invitation to treat’, which is an invitation for the other party to make the offer. So, a tender is one of the means of making an offer.

Offer: the contractor’s returned tender is known as an ‘offer’. The client can accept or reject the contractor’s offer.

Tenders can be obtained through two options:

• The single-stage tender process, comprising open tendering (where the project is advertised and anyone who meets the criteria can put in a bid for the work), selective tendering (where clients can choose from a list of pre-approved contractors), and negotiated tendering (where there is only one option for the contractor and so the price is negotiated), etc.
• The two-stage tender process, which is made up of Stage 1 and Stage 2 bids. This allows for non-cost based submissions to be assessed at the first stage and then cost-based submissions to be negotiated at the second stage.

The method for submitting and receiving tenders should be clearly set out in the instruction to tenderer’s documentation. This should include a time, date, name of person, and address to which the tender returns should be sent. It’s common for clients to request hard copies of tender returns, even when using online tendering, for opening purposes.