Serial tendering

A serial tender differs from a continuity tender in that at tender stage, rival contractors are informed that the successful firm will be called upon to carry out a number of future separate contracts, each of which will be very similar, if not identical, to the original being priced – the prices contained in the bills of quantities being used to value similar work on the future projects.

The approximate extent of the ‘series’ of planned works will be known at the initial tender stage, even though the design work on some of them may as yet be incomplete. Serial tendering is, in effect, a standing offer to carry out a series of projects all based on the priced bills of quantities for the first project, which becomes the ‘master’ priced document. Serial tendering allows for a number of similar projects to be placed, with one contractor providing the incentive of a continuous flow of work for the contractor.

Rates contained in the original bill of quantities can be updated to account for inflation using either a ‘conventional’ or ‘formula’ method for assessing the amount of increased costs. The guaranteed workload to be enjoyed by the successful contractor should ensure that the client obtains value for money.

The rationale is that the contractor might accept a small loss on the first project, but by the time subsequent ones have been delivered, the contractor’s workforce and subcontractors would be fully conversant with the building system and a profit should ensue.

Again, the advantages to be gained from maintaining continuity of work with the same contractor are the same as outlined for continuity contracts, including keen tenders from competing contractors in the first instance.

Future contracts are based on the original pricing document, suitably adjusted in accordance with a stated price adjustment formula stated in the original tender agreement.

The client considers that negotiating with one contractor over a number of years is more cost effective than tendering separately for a number projects with different contractors.

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This article is from the free online course:

Procurement Strategies and Tendering

Coventry University