In the construction industry, tendering for construction contracts is a submission submitted by a supplier in response of an invitation to tender. Thus, it makes an offer for the rendering of goods or services.
The process is generally centred around the selection of a contractor that will simple construct the works. Nevertheless, as procurement means have become gradually complex, tenders have been sought for a wider range of goods and services. Moreover, contractors may have to take on additional jobs such as design and product management.
In modern times, there is also a call for suppliers to be put onto single contracts whereby a group of professionals can work on particular jobs.
The Process of Open Tendering
The open method permits a company or individual to submit a tender for the application of good or services. Simplistically, an advert will be made available to let a prospective company know that goods or services have been tendered. The notice will also give other company a open field to submit an application to tender. Client awareness is paramount within this process.
On larger-scale projects, there may be a pre-qualification process that is put in place which highlights all possible suppliers and they will be invited to submit them accordingly.
Nevertheless, open methods has been critiqued for allowing a larger number of interested parties to submit an application. Some of the interested parties may not have adequately prepared and this may lengthen the decision-making process, which will hinder a project getting off the ground. Contrarily, it offers a wide-range of interested parties to stake a claim and offer healthy competition.
Surveying potential suppliers is imperative if a project is going to attract the right suppliers. Nevertheless, surveying potential clients takes time and can lead to the process being lengthened.
The selective method only permits a supplier to submit applications to potential clients directly; thus, a pre-selected list may have already been drawn up by the supplier who will then contact the companies. This process cuts is seen as both time effective and efficient because potential companies have already been vetted for their credentials and the suppliers are already aware of their capabilities/suitability for goods and services required.
Selective methods offer the company peace-of-mind because tenders offered are done so in an extremely professional and efficient manner. Furthermore, it saves time on more complex contracts where getting the correct company for the job is imperative to a project actually getting off the ground. The selective method is used for both small and larger scale projects.
Negotiated with a single supplier may be the only option if a contract I highly technical and specialised. It may reduce the cost of setting up a competition to seek out the best supplier and is often seen as a more direct process. In larger cities such as London negotiated methods are often undertaken by companies who want specialised suppliers who offer a particular service. London based companies have particular expertise in negotiated methods.
Cost estimating must also be taken into account in negotiations – the pre-planning of cost is imperative so a project does not go over budget. Estimating the cost of project is seen as forward-thinking and also a must if a project is going to succeed.