Tender process: Bidding for construction projects

The tender process in construction invites bids or proposals from contractors to undertake a project, including steps like issuing an invitation, bid submission, evaluation, and contract award. The goal is selecting a qualified contractor based on criteria such as cost, experience, and compliance with project specifications, ensuring a transparent and competitive selection process.

The tendering process can take many forms depending on the scope and complexity of the project and the client’s risk tolerance.

Open tendering: An open tender is accessible to the public and any interested contractor can submit a bid. It is suitable for projects in which a wide pool of contractors can meet the project requirements and the client aims for maximum competition.

Selective tendering: In selective tendering, only pre-qualified or shortlisted contractors are invited to submit bids. The selection is based on contractors’ qualifications, experience, and capabilities.

Negotiated tendering: Negotiated tendering involves direct negotiations between the client and one or more selected contractors. The client negotiates terms and conditions, including price, with the chosen contractor(s).

Serial tendering: Serial tendering divides a larger project into smaller packages or phases. Contractors bid on individual packages or phases and separate contracts are awarded for each.

Framework tendering: Framework tendering establishes a framework agreement with selected contractors. Instead of bidding for individual projects, contractors compete for a position on the framework and contracts are then awarded as projects arise. Project owners often opt for framework tendering when they’re looking to build long-term relationships with a group of contractors for ongoing and future projects.

Single-stage tendering: In single-stage tendering, the design and construction phases are combined into a single tender. Contractors submit a complete bid, including detailed design and pricing. This approach is usually adopted for straightforward projects with well-defined requirements where a single contractor can manage design and construction.

Two-stage tendering: Two-stage tendering separates the design and construction phases. In the first stage, contractors submit initial bids based on outline designs. The client then selects a preferred bidder and detailed design and pricing are finalized in the second stage.

From the moment a project owner notifies potential contractors that they’re open to bids through beginning the construction phase, there’s a method to the bidding process both sides need to pay attention to, namely:

Invitation: The process begins with the client (project owner) issuing an invitation to tender. This formal document outlines project details, specifications, requirements, and instructions for submitting bids. The invitation may include a request for pre-qualification, asking potential bidders to provide information about their qualifications, experience, and financial stability.

Clarification: After the invitation is issued, there is typically a clarification period during which potential bidders can seek clarification on any aspects of the tender documents. The client responds to queries to ensure that all bidders have a clear understanding of the project requirements, specifications, and other relevant details.

Submission: Bidders prepare and submit their sealed bids or proposals before the specified deadline. Bids typically include details such as cost estimates, project timelines, technical specifications, and any other information required by the client.

Evaluation: The client opens the submitted bids in a transparent manner, often in the presence of representatives from the participating companies. The submitted bids are evaluated based on predefined criteria, which may include cost, technical capabilities, experience, and compliance with specifications. Note: Some projects may involve a negotiation phase where the client and shortlisted bidders discuss terms before finalizing the contract.

Settlement: After the evaluation, the client selects the winning bidder and formally awards the contract.

Contract execution: Once the settlement is reached, the client and the winning bidder(s) sign a formal contract that states all agreed-upon terms and conditions and outlines the responsibilities of both parties. A kick-off meeting may be conducted to initiate the project, clarify expectations, and establish communication channels.