It goes without saying that construction projects require careful planning and execution to ensure success. Just one of the many steps that can be involved is the tendering process, which involves selecting the right main contractor for the job.
In this article, we will explore how the tendering process in construction works.
What is the Tendering Process?
Tendering is a competitive procurement process that is used to select a main contractor or supplier for a construction project. In some countries, tendering is also known as bidding —across BCI Central’s geographic project coverage, the term “tender” is more common than “bid”.
Not all main contracts go to tender. Main contractors can be appointed by negotiation or undertaken by the developer themselves. If a construction contract does go to tender, the process involves inviting multiple companies to submit tenders, evaluating the tenders and selecting the main contractor who has the necessary expertise, experience, and resources to complete the job – and a good price.
Steps in the Tendering Process
There are different ways tenders go out. Sometimes it is an open tender for anyone to submit, or a tender of pre-qualified companies, or tenders only invited from a select list of companies. In some cases, there are licenses and specific expertise needed to participate.
Often the tender process is delegated rather than run directly by the project owner. Tender process facilitation can be conducted by the architect, project manager, or even the quantity surveyor.
The tendering process for construction projects typically involves the following steps:
- Pre-qualification: The first step is pre-qualification. This usually involves defining the business need, assessing market capability, preparing a scope of work, and preparing an evaluation framework to assess tenders.
- Registration of Interest: Main contractors are often invited to submit an expression of interest or registration of interest as a precursor to a formalised tender being sent out.
- Invitation to Tender: A formal invitation to tender allows the main contractor to outline their ability to meet the project’s requirements, which typically includes how they’ll meet the timeline, the budget and the scope of the work.
- Pre-Tender/Site Meetings: A pre-tender meeting is usually set shortly after the invitation to tender. The meeting is typically a briefing session and/or a site visit; this is an opportunity for potential tenderers to ask questions and clarify any concerns or details before they submit their tender.
- Review of Tenders: An evaluation of the tender responses allows the project owner to assess the main contractors’ capabilities and offerings – how well their solutions meet the project brief, the financial stability of the tenderers’ businesses, and the contract prices. Once the preferred tenderer is chosen, some negotiation may occur, especially in the case of private tenders.
- Awarding the Contract: After the tenders have been reviewed, and any negotiation completed, one of the tendering companies is awarded the project contract.
Benefits of the Tendering Process
The tendering process in construction offers several benefits, including:
- Competitive Pricing: It encourages main contractors to provide competitive pricing for the project. This can help to keep costs down and ensure that the project is completed within budget. The chosen tender is often the lowest priced.
- Quality Assurance: Ensures that the main contractor selected for the project will produce consistent quality, reliability and continuity of supply of the product or service.
There is a lot of work that goes on behind the scenes before construction commences. The tendering process is just one of the many steps that can be involved in making the final project is a success. From the project owner’s perspective, tendering ensures that the most suitable main contractor is selected for the job.