The tendering process
In construction, tendering is a process for getting a contractor and agreeing on a price.
Tendering is the process by which the client or employer invites contractors to place a bid for work on a construction project. Contractors’ bids are based on the tender documents issued by the client. The successful tenderer becomes the ‘contractor’ and a ‘party’ to a contract with the ‘client’. The tender documents are legally binding and are signed by all parties involved. The completed tender documents become part of the contract documents.
The two main outcomes the client expects from the tendering process are:
- The right contractor
- The right price
The tendering process is important to both the client and the contractor: it is the way in which the client allocates work and the way in which contractors stay in business.
The tendering process is associated with a number of terms that have a specific legal definition:
Invitation to treat: legally, an invitation to tender is an ‘invitation to treat’, which is an invitation for the other party to make the offer. So, a tender is one of the means of making an offer.
Offer: the contractor’s returned tender is known as an ‘offer’. The client can accept or reject the contractor’s offer.
Tenders can be obtained through two options:
- The single-stage tender process, comprising open tendering (where the project is advertised and anyone who meets the criteria can put in a bid for the work), selective tendering (where clients can choose from a list of pre-approved contractors) and negotiated tendering (where there is only one option for contractor and so the price is negotiated), etc.
- Two-stage tender process, which is made up of Stage 1 and Stage 2 bids. This allows for non-cost based submissions to be assessed at the first stage and then cost-based submissions to be negotiated at the second stage.
The method for submitting and receiving tenders should be clearly set out in the instruction to tenderer’s documentation. This should include a time, date, name of person and address to which the tender returns should be sent. It’s common for clients to request hard copies of tender returns, even when using online tendering, for opening purposes.
Reflect on your own practice: what does it mean to get the right contractor and the right price?
Take around 30 minutes to do some further research on the tender process and find some examples of construction projects that have been procured using a tender process. Perhaps you have worked on a project for which contractor bids were invited?
Discuss the process of tendering using one of the construction projects you researched as an example. Which tender process would you advise for this project and why?
If you’d like to learn more about the tendering process, you may want to read the following journal article:
Holt, G., and Olomolaiye, P., and Harris, F., ‘A Review of Contractor Selection Practice in the UK Construction Industry, Building & Environment’ Vol. 30 Issue 4 October 1995, 553-561
Or this research paper:
Larya, S. ‘The Tendering Process and Performance Analysis of a Public Building Project in Ghana’, School of Construction Management and Engineering, University of Reading, UK. Presented in the Construction and Building research conference of the Royal Institution of Charted Surveyor (COBRA) September 2008.
© Coventry University. CC BY-NC 4.0