What is the importance of a tender in civil construction?

In civil construction the term “build, build, build” is considered to be essential, providing a period of beautifying the community. Procurement for civil construction covers a wide range of products and services including anything from supplying building equipment to major works contracts, mostly procured through a tendering process.

A tender is when an entity is in need of goods and/or services and it invites other parties to submit a proposal or bid to provide these goods and/or services, this invitation is formally referred to as a “request for or invitation to tender” and the process is known as tendering for business.

Any time a buyer publishes a request for goods and/or services and invites suppliers to respond, this might be referred to as a tender. However, each type of request can differ in terms of the documents required and the outcome of the request.

Tendering is also more common in certain industries, such as construction, information technology (IT), business consulting, and engineering.

What is a tender in civil construction?

In civil construction, in order to secure the work, businesses have to demonstrate through their tender why they are the most appropriate contract/supplier for the construction contract. It is normally a formal process, aimed at procuring the most economically advantageous option(s) for the buyer.

The contractor/supplier addresses the buyer’s specification and evidences how they will meet the criteria of the contract. The range of tenders available for goods, works and/or services related to the civil construction industry can include, but not limited to:

• development
• design and build
• flooring
• supply of construction materials
• groundworks
• project management
• repairs and maintenance

Construction worker submitting a tender

When would tendering be used in civil construction?

When it comes to tendering in civil construction, the methods used to procure goods, works and services typically fall into four categories:

1. Traditional contracts/procurement: uses methods in construction management procurement, and involves an arrangement between the client, consultants and contractor. Following a tendering process, the client appoints the building contractor to construct the works within an agreed timeframe and cost.
2. Design and build contracts: involves the contractor taking responsibility for the design as well as construction. This gives the client a single point of contact throughout the project, and would be helpful for projects where the client is willing to spend a little more to have one-to-one communication throughout.
3. Management contracts: appoints designers and a contractor separately, paying the contractor a fee in exchange for managing the construction works. There is less price certainty with this method, as the construction can often begin ahead of the design stages, with adjustments made during the project.
4. Contractor-led contracts: provides a design team to create a concept design as proposals for the tendering process. This normally leads to two teams proceeding to the next stage of the project, before one construction team is appointed the preferred bidder. This route can be more complex than others, but can also reduce costs in the long run.

Types of construction tenders

There are three main types of tendering methods used in construction, and tendering methods are selected based on the requirements of the construction contracts.

1. Open tendering: allows anyone to submit a tender to supply the goods, works or services that are required. It is a very simple, two-stage process, and is used in construction in order for a buyer to procure mainly simple goods, works or services.
2. Pre-qualification/selective tendering: for more complex and larger projects, a pre-qualification process will likely be used. Pre-qualifications can come in a variety of forms such as pre-qualification questionnaires (PQQ) or selection questionnaires. These contain a set of standardised questions, categorised into modules.
3. Negotiated tendering: obtained by the buyer inviting a contractor/supplier of their choice to submit prices for a project. Usually this is for specialised work or when particular equipment is needed as an extension of existing works, or for further work following a previous contract.

What is the tendering process?

The tendering process in construction includes the following stages:

1. Pre-tender stage: buyers undertake various preparatory activities such as defining the scope, time to complete, and budget. The pre-tender stage is the most crucial stage because it will initiate the next step of a tender and lays the foundations of whether the tender process will be successful.
2. Tender advertisement stage or tender notice: opportunity to tender may be advertised in a range of ways, but will usually include some of the following: e-tendering portals, other websites such as buyer’s own, tender search websites, trade publications and/or other social media forums. The contents of the advertisement will vary depending upon the requirements of the tender and the specific buyer.
3. Prescriptive or performance specifications: tender documentation may include instructions to bidders explaining the tender process, timescale for the tender process, an explanation of how the tender will be dealt with, evaluation process and criteria, process of submission, policy in relation to alternative or non-compliant bids, as well as policy for feedback to unsuccessful tenderers.
4. Tender opening and evaluation process: ensure the integrity of the competitive tendering process, the evaluation of proposals must be undertaken objectively, consistently and without bias towards any particular contractors/suppliers. Tenders are generally evaluated against a predetermined set of criteria. Once evaluated, the panel will recommend which contractor/supplier is the most suitable to be awarded the tender.
5. Closing of tender: notice will mention the time and date of the tender closing process. If the contractors/suppliers fail to submit their bids within a specific time and date, it is considered the contractors/suppliers have refused to bid for the tender. At that time the tender validity period also started.
6. Tender award: decision letters give details of the successful contractor/supplier and the score achieved in the evaluation of tender submissions. The contractor/supplier that won the tender has to provide the goods, works or services in the manner agreed to and at the price offered, and the buyer must pay the agreed price at the agreed time.

Construction workers advertising tender

What happens when tendering fails?

Competitive tendering is often considered to promote competition, provide transparency and give all contractors/suppliers the opportunity to win business. However, submitting a tender can be an incredibly time-consuming and expensive activity for both parties. There are also a number of other reasons why a tender may fail.

These include, but are not limited to:

1. choosing the right tender
2. misinterpreting the specification
3. rushing submissions

It takes time to:

• understand the specification and exactly what the buyer requires
• write compelling full answers to the qualifying questions
• work out pricing
• fill in the pricing schedule
• make sure all the supporting evidence and documentation is correct and present
• ensure that all policies and procedures are up to date
• stay on top of all the clarification questions and corresponding responses
• become familiar with the relevant portals
• understand how to submit the bid
• submit the tender bid

Answering some of the questions may appear difficult to understand at first but by reading the scope, and reviewing the specification, it should become clearer.

It is important to always answer with correct and complete information; make sure to add your previous experience. Contractors/suppliers need to demonstrate added value, going over and above the specified requirement by including extra information or proposing extra services to really demonstrate to the buyer their expertise, cost-effectiveness and added value of the tender submission.

A full understanding of the pricing requirements of a tender is critical, so always ask if anything is unclear. The price submitted with the tender is usually non-negotiable should the tender be successful, so it is very important to get it right.

There needs to be a balance between a desire to submit a low price in order to win the tender with the need to make a profit on the work. Winning a tender by submitting a price that means there will be no profit isn’t good for business and is likely to be seen by the buyer as unsustainable for contract delivery.

Trying to win a tender with a heavy weighting towards price might be a waste of time, whereas choosing a tender with a larger weighting on quality and submitting appropriate pricing may be more appropriate to winning the tender.

Unique selling points show the unique difference(s) between one contractor/supplier and the other. These might include such things as value for money, competitive pricing, value added, experience and capabilities, and social value initiatives.

A bid must be submitted before the deadline, or it will not be considered.

Construction tenders are often highly competitive so it is imperative to submit high-quality, compliant tender bids that demonstrate the ability to successfully deliver goods, works or services to a high standard.

For construction tenders, choosing the correct tender to submit is important and submitting a complete tender would increase the chances of winning it.

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