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A well-defined bid management and tender process provides a positive evaluation approach that is mutually beneficial to both suppliers and vendors. A wholly balanced and highly efficient bid and tender management process improves the quality of the supply chain while reducing costs and managing risks.
What is Tendering?
A tender is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services. As procurement routes have become more complex, tenders may be sought for a wide range of goods and services (for example, on a construction management contract the works are constructed by a number of different trade contractors each contracted to the client) and contractors may take on additional functions such as design and management.
Tender request documents (also known as invitations to tender or Request for Tender (RFT)) are submitted by organisations and often include the specific project requirements, criteria and instructions that needs to be fulfilled by the supplier. Future tenders are generally commonly advertised to offer opportunities to a larger pool of suppliers while encouraging fair competition.
What are the most common types of tender and tendering process?
The 4 main types of tenders are:
- Open tender
- Selective tender
- Negotiated tender
- Single-stage and two-stage tender
Open tendering is the main tendering procedures employed by both the government and private sector. Open tendering allows anyone to submit a tender to supply the goods or services required and offers an equal opportunity to any organisation to submit a tender. This type of tender is most common for the engineering and construction industry.
Open tendering provides the greatest competition among suppliers and has the advantage of creating opportunities for new or emerging suppliers to try to secure work. However, not all those who bid may be suitable for the contract and more time is required to evaluate the tenders.
Selective tendering only allows suppliers to submit tenders by invitation. These suppliers are those who are known by their track record to be suitable for a contract of that size, nature and complexity required. Selective tendering gives clients greater confidence that their requirements will be satisfied. It may be particularly appropriate for specialist or complex contracts, or contracts where there are only a few suitable firms. However, it can exclude smaller suppliers or those trying to establish themselves in a new market.
Negotiated tenders are extensively used in the engineering and construction industry commencing from tendering till dispute resolutions. Negotiating with a single supplier may be appropriate for highly specialist contracts, or for extending the scope of an existing contract. Costs are reduced and allows early contractor involvement. Since the contractor is part of the project team at a very stage of the project, this results in better communication and information flow.
Single-stage and two-stage tender
Single-stage tendering is used when all the information necessary to calculate a realistic price is available when tendering commences. An invitation to tender is issued to prospective suppliers, tenders are prepared and returned, a preferred tenderer is selected and following negotiations they may be appointed.
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 to allow work to begin and in the second stage a fixed price is negotiated for the contract.
With proper preparation and understanding, any business can master its bid management and tender evaluation approach. Once the project has been evaluated to be a good opportunity for the business, there are various factors one should consider before entering the tender process.
Bid Management & Tender Evaluation is a 3-day training course 24-26 August 2020 (Kuala Lumpur) designed to fully equip delegates with the necessary understanding, skills, tools and templates to swiftly and effectively implement world- class tendered procurement strategies and processes. Gain an understanding and leverage the relationships between commercial requirements and contractual frameworks in supplier negotiation. Ensure your organisation is able to capitalise on the many opportunities available when utilising a class leading approach to a well-structured and thought out, tender process.
Unable to make it for the course? Contact us for other available dates.