This article describes in detail the tender process for construction projects.
A tender is a submission made by a prospective supplier in response to an invitation to tender (ITT). It makes an offer for the supply of goods or services.
An invitation to tender might be issued for a range of contracts, including; equipment supply, the main construction contract (perhaps including design by the contractor), demolition, enabling works, etc.
An invitation to tender may follow the completion of a pre-qualification questionnaire (PQQ) in response to an advert posted by the client. The purpose of a pre-qualification questionnaire and pre-tender interview is to enable the client to produce a shortlist of suppliers. This helps reduce inefficiency and wasted effort in the tender process.
As part of the tender Process for construction projects an invitation to tender may include:
A letter of invitation to tender.
The form of tender;
Preliminaries (including pre-construction information and site waste management plan);
The form of contract, contract conditions and amendments.
Employer’s information requirements if BIM is being used;
A tender pricing document (or contract sum analysis on design and build projects);
A drawing schedule;
Design drawings, and perhaps an existing building information model, and Specifications.
Ideally, tender documents should be broken down into a series of packages. Each with its own design drawings and specifications suitable to be issued by the main contractor to potential sub-contractors. This makes the tender easier to price for the contractor and easier to compare with other tenderers for the client.
Mid-tender interviews may be arranged to allow clarification of matters that might otherwise lead to an inaccurate tender being submitted. This can also give the client insights into potential problems or opportunities in the project.
Responses to queries raised during the tender process can lead to clarification or amendment of the tender documentation which may also result in an extension of the tender period. It is better to allow sufficient time during the tender process to investigate opportunities and clarify problems, as the resulting tenders will then be better prepared and will be likely to save time and money later.
It is important that any clarification, additional information or changes to the tender documents are circulated to all of the tenderers to ensure a level playing field.
In response to an invitation to tender, invited tenderers will submit their tender, which will include their price for supplying the goods or services.
The precise content of tenders will vary considerably depending on the procurement route, however they may include:
A tender return slip, with details of the contract, including information such as return address and tender checklist;
A completed tender pricing document (or contract sum analysis on design and build projects);
Schedules of rates;
An initial construction phase plan;
Any design proposals or method statements that have been requested;
Procedures to be adopted, such as procurement procedures and cost management procedures;
Demonstration of capability, for example design capability, systems used etc;
A BIM execution plan – if building information modelling is being used;
Key project personnel, which may require submission of CVs;
Plant and labour resources and availability;
Prior experience, and References.
Alternative or non-compliant proposals, sometimes referred to as ‘variant bids’ may be submitted if the tenderer believes that what they are proposing offers better value for money. However, non-compliant proposals should only be submitted if they have been requested and should be accompanied by a compliant proposal.
Qualified tenders are tenders which ‘…include reservations or statements made to limit liabilities. A qualification is a clear statement regarding an item in the tender.
Once the client has identified the preferred tenderer (this may involve further interviews) they may hold a tender settlement meeting to enter into negotiations. This may result in further adjustment of the tender documents and the submission of a revised tender.
Contract engrossment is the process of preparing the final agreed form of contract and its schedules and appendices so that it can be executed.
Contract execution is the process of signing an agreed contract, after which its terms become binding on the parties to the contract.
Two-stage tendering is used to allow early appointment of a supplier, prior to the completion of all the information required to enable them to offer a fixed price.
In the first stage, a limited appointment is agreed allowing the supplier to begin work and in the second stage a fixed price is negotiated for the contract. It can be used to appoint the main contractor early or more commonly as a mechanism for early appointment of a specialist supplier.
A two-stage tender process may also be adopted on a design and build project where the employer’s requirements are not sufficiently well developed.
In this case, the contractor will tender a fee for designing the building along with a schedule of rates that can be used to establish the construction price for the second stage tender.
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