TENDERING PROCESS

Dr.Tharwat Hassane
 Outline
Post Contents:-
What Is Tendering Process?
Tender Meaning In Construction
Characteristics of Tenders
Advantages of Tendering In Construction
1) No Nepotism
2) Value for Money
3) Encourages Competition
4) Easier Entry for New Firm
Types of Tender In Construction
1) Open Tender
2) Selective Tender
3) Negotiation Tender
Tendering Process In Construction
1) Pre-tender Stage
2) Tender Advertisement Stage
3) Closing of Tender
4) Tender Opening and Evaluation Process
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Tender Award Dr.Tharwat Hassane 2
What Is Tendering Process?
• Tendering is the process of inviting bids for large projects, it is usually
practiced by government institutions.
• The main objective of the Tendering Process in Construction is to eliminate
favouritism and corruption in awarding works to construction companies.

Tendering Process in Construction

• It is an invitation from the owner to the contractor to execute some work
at a specified cost at a specified time
• With the help of the tender, the client can compare different prices quoted
by various contractors for work. It is always the low price and experienced
contractor wins the tender. The tendering process in construction plays an
important role in the selection of the cheapest and quality bidder for work.

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 Tender Meaning In Construction
• A Tender is a written document in which work details are
mentioned. It is document is publicly released or sent to
eligible suppliers or contractor who are willing to fill it and
take the work.

• A tender document helps in a tendering process that helps a

buyer select qualified and interested suppliers based on
certain contract criteria.

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 CHARACTERISTICS OF
All potential contractors and
suppliers must submit their bids
within the deadline decided on by
the client.
The process of tendering starts
with an invitation of tender or a
request for tender (RTF).
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TENDERS
The bid (tender papers) must
After the deadline has passed, all
include all the required and
bids are evaluated by the client
relevant details about the
based on a set of predetermined
materials to be used, the expected
criteria such as price and quality.
cost of the project, etc.
Before they are floated by the
It ends with the public evaluation
client, tenders are generally
process and following by which
advertised in a different local of
one of the firms that submitted a
media and newspapers, to allow
tender wins the project or
all interested contractors an
contract.
opportunity to bid for the project.
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 Advantages of Tendering In Construction

1. No Nepotism

• Tenders or bids are evaluated based on certain predetermined criteria, such as price,
quality, and value for money
• The agency which offers the best quality product or service at the lowest price point
would win the contract or tender

2. Value for Money

• For the client, tenders give the greatest value for the amount of money
spent. This is because the client can choose potential contractors to select
the ones that can produce the highest quality product or service at the
lowest price point. This allows the government or company to save money
without having to compromise on quality.

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 3 . Encourages Competition

The process of tendering helps to promote a competitive market, because:-

• several potential contractors, firms, or suppliers get a chance to bid for every
project.
• selection depends on quality and price, every bidder tries to reduce
operational cost and labor costs as much as possible to lower expenses and
improve quality.

This entire process encourages healthy competition in the market and prevents
laziness and provides a boost to innovation and new ideas.

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 The system of tendering makes it
possible and simpler for new firms to
enter the market or even a particular
industry.

This is because contracts under these

systems are awarded based on
4. Easier Entry for New Firm predetermined, objective criteria.

This process helps new firms to quickly

get a foothold in the market or
industry, thus significantly lowering
the traditional barriers to entry.

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 TYPES OF TENDER IN CONSTRUCTION

Which type of tendering process in

construction that the employer wants to
choose depends on the nature of the
contract, the complexity of the
construction, the expertise needed, and
the other several reasons.

The following major Tender types used

in construction:-

➢Open Tender
➢Selective Tender
➢Negotiation Tender
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 1. Open Tender
• An open tender is the main tendering process in construction employed by both the
government and the private sector.
• The government or client advertises the tender offer in the local newspaper and media
giving detail and key information of the proposal works and inviting interested
contractors to tender.
• If the pre-requisite to tendering on the form of possession for tender of the necessary
registration has been identified in the tender paper, then the advertisement is directed
to only that particular class of the agency or firm having the said qualifications. To
reduce the number of inquiries, the earnest money is deposited (for a private & govt.
project).
• Until the receipt of a Bonafede tender is selected then it will be returned.
• Although the price is very important in the decision on which tender or bid to accept, it
is not the only factor taken into account. The client does not bind to accept the lowest
or any offer.

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 The advantages and disadvantages of the open tendering
process in construction are stated below

Advantages
• It allows any interested contractor to tender. Therefore it
allows an unknown contractor to compete for the work.
• Allowing the tender list to be made without bias. The client
will obtain the bargain possible.
• No favoritism in selecting contractors.
• Ensuring good competition bot obliged to accept any offers.
• It is a traditional method of tendering and familiar to all
sectors of the engineering and construction industry.
Disadvantages
• The tender list can be long as too many contractors tendering
for the job.
• Uneconomic use of the source.
• Public accountability may be questioned if the lowest offer is
not accepted.

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 2. SELECTIVE
TENDER • The selective tendering process in construction
is the one alternatives developed to address
the limitations of the open tendering
procedure. In this method, a shortlist of
contractors is drawn up and they are invited to
submit tenders.
• The purpose of the selective tendering process
in construction is to”
• 1- improve the quality of the bids received, to
ensure that contractors with the necessary
experience and competence are allowed to
submit the necessary bids, due to the urgency
work involved.
• 2-To make the tendering process in
construction more manageable and less a
burden on the parties involved.

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 The advantages and disadvantages of the SELECTIVE tendering
process in construction are stated below

Advantages
• It reduced the cost of tendering Economic use of resources.
• Reduce tender documentation.
• Shorter tender periods.
• Better management of the tender process.
• Only the competent contractors were invited to tender,
then the lowest can be accepted.

Disadvantages
• Reduces the availability of work for other contractors
especially new contractors.
• Tender Price may invariably higher than would have been in
open tendering.
• Greater chance of collusion.
• Favouritisms may occur in the shortlisting.
• The tendering period longer because it involved two
distinct stages.
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 3 . N E G O T I AT I O N T E N D E R

The negotiation tendering process in construction is mostly

used in the engineering and construction industry
commencing from tendering till dispute resolutions. Usually
with a single contractor but may be up to three contractors.
The negotiation process involves are as follows:

Identification by The contractor can The contractor This type of Where the Where there is a
the employer of a be selected either being apprised of tendering process contractor is pressing need to
suitable contractor from the the work scope. in construction the involved in the have a very early
to negotiate with. employer’s list of Negotiations can employer has a financing of the start of work on
preferences or on be applied to the long term business project. the site and to
the advice of the following type of relationship with complete the
professional team. contract. the contractor. works on a fast
track basis.

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 The advantages and disadvantages of the Negotiation
tendering process in construction are stated below

Advantages
• this type of tendering process in construction reduces
the risk of failure.
• the best alternatives for the employer to adopt are
special circumstances such as emergencies, security
reasons, etc.
• Early Commencement of work on site. It decreases the
period involved in appointing the contractor for any
tendering work.
• The Contractor can contribute his expertise during the
design stage.

Disadvantages
• The cost work is likely higher than competitive tender.
• Reduces the availability of work for other contractors.

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TENDERING PROCESS IN CONSTRUCTION

The tendering process in construction includes the

following stages:

Tender Tender Tender

Pre-tender Closing of
Advertisement Opening Evaluation Tender Award
Stage Tender
Stage Process Process

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 1. Pre-tender Stage

At the pre-tender stage, when the clients have an idea,

the client will appoint a consultant to discuss further
the project. The consultant will do their job, advising,
managing the tender and contract, and also transfer
the idea into the drawing.

At this stage, the client and consultants will be

brainstorming about the scope, time to complete, and
budget.

The pre-tender stage is the most crucial matter because it

will initiate the next step of a project. If the pre-tender
stage is failed, the project will not complete. it is the first
stage or step for the tendering process in construction.

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2 . T E N D E R A D V E R T I S E M E N T S TA G E

The tender advertisement is also called tender notice. The

conventional tender notice will advertise in the local newspaper. In
the tender notice, the basic requirement that should be appearing
are:

Class of contractor, Location, date, and

Title of the project. head, and subhead time to obtain the
needed. tender document.

Location, date, and time for

Fees for tender submission of tender doc.
documents.

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 3. CLOSING OF TENDER
Tender notice will mention If the contractors fail to submit
the time and date of the their bids within a specific time
and date, it considers the
tender closing process. contractors refuse to bid for the
tender. At that time also the
tender validity period is started.
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At this stage, contractors can
withdraw back their tender
papers if they are no more
interested to fight for the tender.
Consultants use this period to
make assessments and
evaluations of each of the offers.
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 Quantity surveyors usually will handle the tender opening
process. To ensure the integrity of the competitive process,
the evaluation of proposals must be undertaken objectively,
consistently & without bias towards particular suppliers.

4. TENDER
OPENING AND Tenders are generally evaluated against a pre-determined
E VA L U AT I O N set of criteria. The evaluation of the tenders shall be
prepared the soonest as possible after the tender opening.
PROCESS

A report prepared by the Quantity Surveyor will describe

the findings of the said evaluation and it will be supported
by tables and graphs. In the end, the Quantity Surveyor will
recommend which tenderer, who in his opinion, is the most
suitable to undertake to execute the project.

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 An evaluation team will examine each tender received and make
recommendations as to which tender represents the best value
for money. Once the contract has been finalized and work has
been awarded, both the successful and unsuccessful tenderers
will be notified.

5. Tender Once the final decision has been made on the tender award to
the particular contractor, the tender administrator creates the

Award tender results notification which is in letter form and then sent to
all participating contractors.

Once the client or government accepts a tender, it is binding on

both parties. This means that the agency or company that won
the tender has to provide the goods or services in the manner
agreed to and at the price offered, and the client/government
must pay the agreed price at the agreed time. The tendering
process in construction complete with tender awarding.

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