How to tender your project? (6 popular Methods of tendering)

There are various methods of tendering, to analyze, negotiate and award a project to a contractor. We can identify two types of contractual bindings in the industry. The first is a standing offer under a maintenance work for a specified period and this tender type is rare compared to others. The acceptance of such a contract does not create a binding agreement itself. A simple offer which was done by the contractor to carry out the relevant work which is mentioned in the invitation to tender is the second type of tender. It is more usual than the first one, and it creates a binding contract legally. Based on the project requirement, The quantity surveyor is the most suitable person to advise the client regarding the most suitable tendering method to follow.

Extent competition is the main feature here. Most of the time the lowest price will be selected, and it has caused to dissatisfy the competition. However, these are some tendering procedures which can be considered as the common procedures in the construction industry.

Key Methods of tendering are as follows,

  1. Open tendering method
  2. Single-stage selective tendering method
  3. Two-stage selective tendering method
  4. Selective tendering for design and builds
  5. Negotiation
  6. Joint ventures
How to tender
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1. Open tendering method

They use an advertisement with the details of the type, scope and other relevant details in brief. Then, contractors those who are willing to accept it, apply for the advertisement. This procedure has many issues. It does not provide reliability about the quality of the work. The preparation may create many expenses and losses. People have declined the use of this method because of such disadvantages.

Advantages

  • High transparency and competition
  • Create opportunities (to more number of contractors)
  • The owner will get a better price
Read :   Procurement methods/ Contract types in Construction

Disadvantages

  • Can select a contractor who has no experience
  • Time consumption is more for the tendering process.
  • Unreliable competition

2. Single-stage selective tendering method

Initially, a limited number of contractors will be selected by the owner. If the employer builds regularly, he will have a short and approved list of contractors. Unless, he can use ad hoc lists where the names of contractors those who proved their skills and competency, are mentioned.

Advantages

  • Time consumption for the tendering process is low.
  • Can select a reliable, experienced contractor.

Disadvantages

  • Less competition
  • Can be biased

3. Two-stage selective tendering method

This is called as, ‘negotiated tendering’. In this procedure, the employer takes the contractor’s service as advice instead of giving him the responsibility for the design. Two-stage selective tendering consists of two stages.

The first stage: This step includes the process of selecting a suitable contractor and establishing the price levels using the collected information. Those details should be strong enough to make such decisions.

The second stage: The selected contractors start the production drawings. As a result of this stage, they complete the documentation of the contract after making bills to include in it.

Advantages

  • Time consumption for the tendering process is low.
  • Can select a reliable, experienced contractor for a reasonable price

Disadvantages

  • can be risky (at the negotiation stage)

4. Selective tendering for design and builds method

In this method, the contractor has two responsibilities. They are, designing and building the project. He must give the services in a very professional way. There is an agent for the employer, who is responsible for his constructive interests and requirements. They present a price as a total amount that must pay to carry out the project till the end according to the conditions and policies in the contract.

Advantages

  • Can save the design time and cost
  • Less risk to the client.
Read :   Remeasurement(Re measurable) contracts / Unit price contracts

Disadvantages

  • Price may be high
  • Final quality may be affected.

5. Negotiation

Tendering
Image by Reimund Bertrams from Pixabay

It is more radical compared to other methods. Negotiation goes beyond from the traditional procedures and it best suits with procurement strategies. Mostly used for the specialized works which have minimal experienced contractors (such as Elevators, special access control systems). Serial contracting is a special term that goes with negotiation. In such a contract, employers ask contractors to bid for the contract. And negotiate the final price before work awarded to them. If the contractor is succeeded and the client is satisfied with the job done, more works will be awarded based on the agreed prices. This method is developing good relationship between both the parties, which will be good for the project.


6. Joint ventures

With respect to other methods of tendering this method is mainly used for complex projects which determined as hard to handle. This is the best solution for the problem of distributing liability among consultants and contractors. It does not require to establish a special company for this purpose, but it will be possible to do so. The parties those who are participating must pay attention to the agreement before entering it.

For further reading about methods of tendering check FIDIC Tendering Procedure 2nd Ed (1994

Check our article about How to form a valid contract with 4 Key elements.

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