Types of Tendering in Construction

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Couple listening to contractor in a residential construction site.
Couple listening to contractor in a residential construction site. (Image: Digital Vision./Photodisc/Getty Images)

If you want to place an order for construction work, you have to decide which method of tendering is best suited for your purposes. The type of tendering you choose depends on your goals and what features of the project are most important to you. Different tendering types yield the lowest price, use the most qualified contractor, allow a quick award of a contract, or are suited for complex custom work. Choosing the right method helps give you the best possible results.

Use Open Tendering to Get the Best Price

Open tendering is quick and gives you the choice of a wide variety of contractors. To get a good selection, you may have to advertise your request for proposals or call contractors to inform them of your project. Once you have received all the bids, you can evaluate them and choose the one that meets your requirements for the lowest price. This type of tendering is suited for standard work that any contractor can carry out because you may get one that doesn't have experience with more complex projects. Asking for references in the bid helps you evaluate contractor competence.

Selective Tendering Lets You Choose the Best Contractors

When you have a complex project, you have to make sure that every contractor that quotes can do the job. Allowing only selected contractors to bid allows you to avoid having to evaluate unrealistically low bids from unqualified bidders who don't know what they are doing. Select bidders on the basis of their experience with similar projects and contact their customers to find out if the bidders completed such projects successfully. Only ask for tenders from bidders you could accept for the contract.

Multi-Stage Tendering Refines the Selection Process

If you want to tender on a selective basis but don't have enough information to make an effective selection of bidders, a multi-stage process can help you qualify contractors. Multi-stage tendering includes at least one open round for which contractors submit a concept and estimated price. The submitted documentation allows you to evaluate which contractors are suitable for your project. A second round includes only the bidders you select on the basis of their initial documentation and asks for firm bids with detailed proposals.

Negotiated Tendering Helps You Get the Features You Need

A negotiated contract lets you select the supplier you think will do the best job, but you may have to pay more because you are not asking for competitive bids. Negotiated tendering is appropriate if you know what you want and have a good idea what it should cost. You can select your preferred supplier and negotiate the contract, knowing that if the negotiated approach is not successful, you can try to negotiate with another supplier or use a different type of tendering.

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