4 Types of Tender and Tendering Processes

Highly effective bid management and tender process provide a positive evaluation approach that leads not merely to the appointment of appropriate suppliers but to make sure that the ongoing relationship is mutually beneficial. A wholly balanced and highly efficient bid and tender management process improve the quality of the supply chain while reducing costs and managing risks.

A tender is a submission created by a potential supplier in response to an invitation to tender. It creates an offer for the way to obtain goods or services. As procurement routes have grown to be more complex, tenders could be sought for an array of goods and services (for example, on a construction management contract the works are constructed by a variety of trade contractors each contracted to the client) and contractors may take on additional functions such as for example design and management.

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The 4 main types of tenders are:

Open tender
Selective tender
Negotiated tender
Single-stage and two-stage tender
 

Open tender

Open tendering is the primary tendering procedure employed by both the government and the private sector. Open tendering allows one to submit a tender to provide the products or services required and offers an equal chance to any organization to submit a tender. This sort of tender is most common for the engineering and construction industry.

Open tendering provides the greatest competition among suppliers and gets the advantage of creating opportunities for new or emerging suppliers to try to secure work. However, not absolutely all those who bid could be ideal for the contract and additional time is required to evaluate the tenders.

 

Selective tender

Selective tendering only allows suppliers to submit tenders by invitation. These suppliers are those who are known by their background to be suited to a contract of this size, nature, and complexity required. Selective tendering gives clients greater confidence that their requirements will be satisfied. It could be particularly appropriate for a consultant or complex contracts, or contracts where there are only a few suitable firms. However, it can exclude smaller suppliers or those trying to determine themselves in a new market.

 

Negotiated tender

Negotiated tenders are extensively used in the engineering and construction industry commencing from tendering till dispute resolutions. Negotiating with an individual supplier may be appropriate for highly expert contracts, or for extending the scope of a preexisting contract. Costs are reduced and allows for early contractor involvement. Since the contractor is part of the project team at an extreme stage of the project, this results in better communication and information flow.

 

Single-stage and two-stage tender

Single-stage tendering is utilized when all the information essential to calculate a realistic price is available when tendering commences. An invitation to tender is issued to prospective suppliers, tenders are ready and returned, a recommended tenderer is selected and following negotiations they might be appointed.

Two-stage tendering is used to permit the early appointment of a supplier, just before the completion of all the details required to permit them to give a fixed price. In the first stage, a restricted appointment is decided to allow work to get started and in the second stage, a set price is negotiated for the contract.

 

Other styles of tender include serial tendering, framework tendering and public procurement. Serial tendering involves the preparation of tenders based on an average or notional bill of quantities or schedule of works. Framework tendering allows the client to invite tenders from suppliers of goods and services to be carried out over a period on a call-off basis as so when required. Lastly, public procurement is for public projects held by the federal government.

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