Various types of tendering methods in construction

Generally three types of tendering methods are found in constructions which are performed by open tendering, selective tendering or negotiation. Tendering methods are chosen on the basis of necessities of construction contracts.

Open Tendering Methods in Construction:

In open tendering, the employer presents his future project, and allows as many contractors who are involved to implement tender documents. Often the contractor requires a deposit from applicants, the deposit is to be returned ‘on receipt of a bona fide tender’.

However, this process is recognized as wasteful of contractors’ resources as lots of people are engaged for arranging tenders unnecessarily. Also, scopes are limited for acquiring the contract, contractors are unable to evaluate the contract briefly to calculate their lowest price, but just quote a price that will surely get them a profit if the contract is awarded to them.

So, the employer is provided only ‘a lottery of prices’ and not essentially the minimum price for which his project will be developed. If he opts for the minimum tender he bears the risk that the tenderer has not evaluated the contract in detail to assess the associated risks; or the tenderer does not contain the technical or financial resources to accomplish the work efficaciously.

Selective Tendering Methods in Construction:

In selective tendering the employer promotes his project and offers contractors to apply the tender that will be arranged on a nominated list of contractors who are asked to submit bid for the project. Contractors who send application are provided a list of information that should be delivered by them with the purpose of ‘pre-qualifying’.

The benefit for the employer is that he can choose only those contractors, who are well experienced and have strong financial background, and contain the resources and expertise to execute the work. As only half a dozen or so contractors are chosen, each contractor identifies that he gets a logical scope of winning the contract and so has an incentive to evaluate the tender documents in detail and suggest his strongest price.

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Cons of reinforced concrete:

As the contractors have all pre-qualified, it is not possible to discard the lowest bid, even if it seems to be uncertainly low – except that is caused by some evident error.

An issue occurs with both open and selective tendering is that a contractor’s conditions may change once he has delivered his tender. He will face losses on other contracts and his financial strength will be affected; or he becomes very successful at tendering that there are not sufficient skilled staffs or men to manage all the work he gains. Neither method of tendering nor any other ways of obtaining works can therefore be trouble free.

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