Types of Tenders and Details

What is Tendering?

Tendering is the process of making an offer, bid or proposal, or expressing interest in response to an invitation or request for tender. Organisations will seek other businesses to respond to a particular need, such as the supply of goods and services, and will select an offer or tender that meets their needs and provides the best value for money.

What is Estimation?

An estimate is calculation of quantities of various items of works and expenses likely to be incurred thereon.

Why Tendering is important?

Construction usually involves big amount of money and often give rise to situation of fraud and corruption thus the purpose of the tendering is to make sure that the appointment process of contractor is done in transparent way and unbiased all the responsibility lies within the quantity surveyor.There are several ways in which a tender can be made and its details as below:

Tendering Methods

Open Tender: Open tender is an arrangement where an advertisement in local newspapers or trade journals invites contractors to apply for tender documents.

A deposit is usually required to ensure that only serious offers are made;

Presumably it is needed to cover the cost of copying the documents. Local authorities have been advised against open tendering because it often leads to excessive tender lists where the cost of abortive tendering is considerable. There are instances of selection criteria being applied after the tender has been submitted, so a bid could be rejected if a contractor does not belong to an approved trade association, for example, after he has submitted his tender. They argue that this method allows new contractors to join the market and increases the chance of gaining a low price. Regional and national contractors avoid this method because they can see no reason to compete against anyone who asks to be included on the tender

Advantages of Open Tender

The main advantage of such tendering is as follow:

• Give high level of competition and contractors tend to give best prices as compare to other tendering method.
• There is no list of restrictive tenderers, which does not allow favoritism.
• It is very transparent process, which ensures that only the contractor with the best price and meeting all the technical requirements will win the tender.
• This process is usually managed by procurement board where its staff are trained for such exercises and board ensure that all the procedures involved in tender are followed.

Disadvantages of Open Tender

• The low price usually detriment of quality and often result in the client obtaining poor quality job and late completion of work.
• Given that its open tender and thus there are no restrictions on the number of contractor who can bid and become bulky and lengthy job for tender analyses which often result in delays and high cost.

Selective tender: Selective tendering consists of drawing up a list of chosen firms and asking them to tender. It is by far the most common arrangement because it allows price to be the deciding criterion; all other selection factors will have been dealt with at the pre-qualification stage. There are three ways in which selective tendering lists are drawn up:

• An advertisement may produce several interested contractors and suitable

Firms are selected to tender.

• The consultants may contact those they would wish to put on an ad-hoc list.
• Many local authorities and national bodies keep approved lists of contractors in certain categories, such as work type and cost range. Contractors who ask to be included on select lists of tenderers are usually asked to provide information about their financial and technical performance, particularly about the type of work under consideration. The National Joint Consultative Committee for Building (NJCC) has written the ‘Standard form of tendering questionnaire – private edition’ so contractors can prepare answers to relevant questions in advance. The questions mainly deal with projects carried out during the previous three years. Once the form has been completed, it can be used for specific projects or for those compiling lists of selected contractors.

Advantages of Selective Tender

• Give that only few numbers of contractors are invited to submit the bid which make the tendering process less bulky and faster compare to open tender.
• The risk of obtaining a lower price with poor quality job is remote because contractors are usually short listed on the bases of past track record and reputation in the industry.

Disadvantages of Selective Tender

• The client may not be getting the most competitive price given that the contractors will be submitting the bid price according to the short listed competition; this may give rise to collision by pushing the price much higher and outsource the project to other contractors, however this is not legal.

Negotiated Tender :under this method normally one contractor is approached and such tender mainly used for specialist work such as lift system or airport project at big level, in such case there are limited number of contractor who do such work in the market .it is based on one-to-one discussion with contractors to negotiated the terms of contract.

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