#tendering process

The Importance of Quantity Surveying in Construction Projects

Introduction to Earnest Money Earnest money, often referred to as a bid bond or security deposit, is a crucial component in tender processes. It is a sum of money provided by a bidder to demonstrate their genuine interest and commitment to the tender. This financial deposit acts as a safeguard for the entity issuing the tender, ensuring that the bidder is serious about participating and has the…

What is a Tender Notice?

In the realm of business and procurement, a tender notice plays a crucial role in initiating the process of soliciting bids or proposals from qualified suppliers or service providers. It is essentially a formal announcement or advertisement issued by a company, government agency, or organization, inviting potential suppliers to submit their offers for a specific project, contract, or procurement opportunity. The tender notice serves as a crucial communication tool to inform the interested parties about the requirements, conditions, and guidelines they must follow while participating in the bidding process.

Tender Notice Format: Understanding the Structure of a Tender Notice

A well-structured tender notice is essential to ensure clarity and transparency throughout the bidding process. While the format may vary slightly depending on the issuing authority and the nature of the project, the following elements are typically included:

Title/Heading: At the top of the tender notice, there is a clear and concise title that outlines the nature of the opportunity or project for which bids are being sought.

Issuing Authority Details: This section provides information about the organization or entity issuing the tender notice. It includes the name of the organization, address, contact details, and any references such as a tender identification number.

Introduction and Background: The tender notice should provide a brief introduction to the project or opportunity, including the purpose and objectives. It may also include the background of the project and its significance in relation to the organization's goals.

Scope of Work: This section elaborates on the specific scope of work or services required. It should be detailed enough for potential bidders to understand the expectations and deliverables clearly.

Eligibility Criteria: Here, the tendering authority outlines the minimum requirements that bidders must meet to be considered eligible for participation. This could include financial capacity, past experience, technical expertise, and other relevant qualifications.

Tendering Process and Timeline: The tender notice should specify the exact process for submitting bids, including the required documents and any prescribed format. Additionally, it should outline the key dates such as the deadline for bid submission, pre-bid meetings (if any), and the date of bid opening.

Evaluation Criteria: This section provides insights into how the submitted bids will be evaluated and the factors that will be considered during the assessment process. It helps bidders to align their proposals accordingly.

Terms and Conditions: All relevant terms and conditions that govern the tendering process and the subsequent contract, if awarded, should be explicitly stated. This includes details about performance bonds, payment terms, indemnities, and other legal aspects.

Contact Information: The tender notice must include contact details of a designated person or department whom interested bidders can reach out to for clarification or inquiries.

Key Elements of a Tender Notice

Clear and Concise Language: The language used in the tender notice should be simple, unambiguous, and easy to understand, avoiding any jargon or technical terms that might confuse potential bidders.

Accurate and Detailed Information: Every aspect of the tender notice should be accurate and provide sufficient details to enable potential bidders to make informed decisions.

Transparency and Fairness: The tender notice should be transparent, providing a level playing field for all bidders and ensuring a fair evaluation process.

Compliance with Legal Requirements: It is essential to ensure that the tender notice complies with all relevant laws, regulations, and policies governing the procurement process.

Government agencies and large-scale industries frequently use business tenders. The procurement team publishes a tender to notify potential suppliers Government agencies and large-scale industries frequently use business tenders. The procurement team publishes a tender to notify potential suppliers that they are seeking bids whenever there is a demand for the supply or exchange of commodities.

This formal approach is essential for finding the right consumers or suppliers at the right time for a big project. To “float” a tender is to publicly publicize it through advertising in newspapers or other trade publications.

From submitting bids to selecting a winner, the tendering process entails numerous painstaking and carefully thought-out phases. In this article, we will talk about how to start a tendering business and build guidance for you step-by-step.

What is tendering?

When a business issues a tender and receives several bids from suppliers or contractors indicating interest in their open projects, this is known as the tendering process.

The entire process of finding the best supplier to meet their needs for raw materials, goods, or services is handled by the procurement committee on the buyer’s side.

When buyer businesses launch a tender with a clear description of what they need, the tendering process gets underway.

Each step of the tender procurement process frequently includes a deadline. So, prospective suppliers submit their technical and financial proposals before the deadline and wait for the review procedure.

The buyer would have discovered a perfect match among the received bids by the tendering’s conclusion.

How to do a tendering business?

It might be challenging to launch a tendering firm, but with these helpful hints, you’ll be well on your road to success. Obtain knowledge about issues that you could resolve.

Due to incomplete knowledge and information, many young entrepreneurs who are just starting face numerous difficulties in the tendering business. Many of them also decide to enter the tendering industry only to discover midway through that they lack the necessary training and expertise, or that they might not be able to fulfill the tender’s requirements.

So stay with us as we will provide you with all the tips for starting a tendering business.

Pre-tender stage

When a need for particular items or an unfinished project is discovered, it develops into a concept that is then turned into a request for tender notice or quote document. This method is structured differently depending on the industry.

A consultant is hired by the procurement team to assess the needs and create the plan, budget, and delivery schedule. The pre-tender stage must be completed; even a single error here could result in an unsuitable client. Before creating the final request, many aspects must be considered.

Pre-qualification stage

This is the time to weed out the unqualified vendors from the list of those who are interested in submitting offers. This is not the actual tendering process; it is merely a phase.

Without going through this process, you can publish your call for proposals right away. However, by doing this, you both save time and that of the bidder.

The early contractor involvement that can be done during the prequalification stage allows the bidder to come up with cost-effective, environmentally and resource-friendly options to complete the project.

Tender contract documentation

The preparation of tender documents includes the technical details and design specifications, as well as instructions on how the tender process should go and conditions connected to the project’s implementation in detail.

The more details in the tender documents, the easier it will be for the tenderer to submit a top-notch bid.

When the document is complete, it is published in the neighborhood newspaper as an official invitation to bidders to submit business tenders.

The project title, tender specifications, the kind of contractors needed, the bid fee, the location, and the deadline for submission of bids are all included in this advertisement.

Receiving tenders and evaluation

You start getting bids from different vendors as soon as the request for tender is published. Any bid that was submitted after the deadline should not be considered.

The project owner’s policies and criteria for tender evaluation must be written and shared with the bidders.

This covers the criteria used to evaluate and take into account a tender, such as the importance given to environmental and other risk concerns.

You determine if their ideas meet the requirements of the tender. If they are qualified to undertake the project and adhere to the rules.

Those that don’t match won’t be taken into account for further tender bidding. Every bid should be carefully examined by project owners to identify and comprehend any hidden risks or bottlenecks.

Consider the unexpected costs and money invested to reduce potential dangers in the future that may come your way. It can seem like a cost-effective choice right now.

Don’t choose the vendor who offers the lowest price or give them the benefit of the doubt. Finding the best contractor or supplier who would provide true value for the money should be the objective.

Awarding the tender contract

Choose a bidder who has accepted all of the requirements you gave out as well as risk considerations from among the eligible submissions from the previous round.

Additionally, the bidder has developed a fair price strategy that excludes any unexpected charges. Of all the bidders, this one will offer the most value and ultimately work in your favor.

Share your findings with the winning bidder, and if they accept, give them the contract. Every participant must get an official notification that the results have been announced.

Read More: What Is the Bidding Process?

Final Words

It is always preferable to maintain this data readily available in a paper format so you may continuously keep updating pertinent data. Additionally, it is advised to include pertinent pictures and imagery to help the reader understand the procedures and oftentimes to avoid having to read a lot of text.

Starting a new business can be both thrilling and difficult. Before engaging in tenders, educate yourself about the tendering processes and conduct your research to increase your confidence. In conclusion, company tenders aren’t difficult if you comprehend their function and fundamental manners.

In critical situations in procurement, it is easy to understand why construction contractors often quote lower prices to win a tender. However, recent research figures within the civil works sector have been questioning the sustainability of such low rates, and whether the method of procurement is responsible for the same.

So let’s take a deep dive into the 2 main procurement routes; single-stage and two-stage tendering.

Single-stage tendering

Single-stage tendering, also known as traditional tendering, is when a client issues a tender for the entire project, with all the relevant information provided at the point of issue. The process aims to ensure that the client/buyer is able to secure various competitive price bids - due to which the contractor/bidder may decide to price aggressively/low in order to bag the project/contract.

It can be an efficient route to obtaining a contractor. However, if elements from the project specification are missing or are unclear, it can lead to adjustments being made later in the contract, and the final account may be very different as unforeseen costs mount up.

Advantages:

A single-stage tender is advantageous to a bidder, no matter what resources they currently have.

It’s a quick conventional tendering process. 

The client can look forward to price-competitive bids, making it a value-for-money project. 

Disadvantages:

The contractor at times may not understand the project design while he is preparing his bid document. 

Competitive price pressure may make the contractor bid lower than the actual. 

The risk factor is not accounted for as the price is quoted on the basis of the tender document information shared by the client. 

The contractor will not be able to adjust to changes in the project once the tender is awarded.

Two-stage tendering

Two-stage tendering involves an initial information stage, facilitating early collaboration between client and contractor. For most projects, and especially for those that are more complex, it is useful to obtain input before there is sufficient information available for the main contract. This enables early input between the main contractor and client, helping to ensure design and cost certainty. This method of procurement accelerates timelines as it's a pre-known factor discussed between the buyer and the service giver. 

This initial phase allows the contractor to submit details under a pre-construction agreement and includes aspects regarding project preliminaries, method statements, design, overheads, and profit.

Advantages:

Greater cost certainty is achieved as the scope of work is well defined and communicated.

Contractor involvement helps them identify potential risks making them ready for the same. 

Project implementation has achievable deadlines avoiding damages towards delay of project completion. 

Disadvantages:

The bid price is higher as it involves pre-tender discussions.

The two-stage tendering process may be more time-consuming and this may not be appealing to employers with a tight development programme.

Increased contractor involvement in the initial project planning stage can play a negative role in the design plan if the contractor has hidden agendas.

Let’s have a look at a distinguishing table for the 2 stages for more concept clarity:

A tender process is not only about writing the tender document and making it available for prospectus bidders but also about crafting a well-deserving tender response. From a vast pool of bidders/tender applications, what is so unique in the tender response which got awarded. 

The following are the nuts and bolts of writing a tender response to win it:

1. Use the Templates or Formats Provided:

Most of the time, a tender document shared by a client will have a tender response template or a specific detail-providing format. TenderTiger, recommends not to wave away from it. This is shared with respect to details required on a mandatory basis by the client which mostly are the tender evaluation parameters for the respective tender. This makes your tender response easy to review by the jury to consider your offer. Stick to it.

2. Structure your Tender Response Document:

If the buyer has not specified any particular format or structure in the tender document shared, keep your tender response document clear, rational and in an orderly manner. Incorporate a short yet effective introduction that states the motivation, rationale and central proposition of your bid.

3. Provide all Relevant Details:

You have to realise that while your tender response is been evaluated, the reviewers will be turned off if they see irrelevant information or see some missing information. We advise you to stick to these standard information pockets to make your tender response document wholesome. 

Your Business Number.

A company profile and proficiency statement.

Whether you propose to subcontract.

The price for each product or service you will offer, and attestation of whether these are fixed or fluctuating (e.g. based on exchange rates or consumer price index variations).

Any circumstances affecting the price.

Delivery details and charges.

A suggested schedule showing milestones or delivery dates.

Whether goods or services are rare or regular.

GST and other taxes.

Suitable insurances.

Intellectual property rights where relevant.

An interpretation of any alternatives you propose in meeting the conditions of the contract.

 4. Address the Selection Criteria:

If you miss this part in the tender response document, you have lost your chance to win it. Being a critical point, you need to address the selection criteria well and with relevant past projects. Closely follow the norm in the tender request. Make sure your proposed offer accurately meets the buyer's needs. Describe the advantages the buyer will gain from the products or services that you intend to offer. Provide specific examples of how you meet the selection criteria perfectly rather than simply stating what you have done previously. Though it is vital to put forth your authentication and provide the valid experience you possess in the industry, make sure you don't brag too much about it. Additionally, you should also describe how your point of view is towards delivering the tender. Pick out the requirements that are most important to the buyer and emphasis them in your tender response.

 5. Choose the Right Referees

Another primary element of delivering a successful tender response is choosing the right arbitrator. Use arbitrators that know your products or services in and out. Make sure you get consent to use arbitrators before including them in your response. Give them knowledge of the critical elements of the request so they can mark their comments to the job specifications to the point.

6. Proofread your Tender

Before you hit the submit tender response button, you need to ensure your document is error-free. Use spell checks and if possible, request someone not linked with the tender development process to go through your tender response and give their unique opinion. Preferably, get a professional copy editor or proofreader to carry out this task for you. If several authors have contributed to the tender response, ensure that one professional person reads the entire tender response document for uniformity.

7. Submit your Tender in Time

Late or incomplete tender responses are usually removed from the consideration list, barring exceptional, pre-decided circumstances. If you are giving it online, do not procrastinate your tender submission until the last minute in case you have computer hardware, internet or network challenges. We suggest, you plan in advance and also consider time for delays. Consider using ‘same day delivery' for courier services or hand-delivering your tender response if you have to physically send your tender response across.

From our previous blogs, what a tender is, is well understood. Briefly, a tender is an invitation to bid for a project or accept a formal offer such as a takeover bid. Tendering usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. These tenders are usually conducted in four stages: Prequalification; the issue of tender documents; tender evaluation; tender award. Let's look at each of them in detail. 

STAGE 1: PREQUALIFICATION

The prequalification stage simply means identifying contractors who believe that they are qualified and would be interested in tendering for a potential project. This step is often mistaken for tendering. Additionally, this step if not considered will not create much difference in the tendering process. These contracts reach the prospectus contractors through various mediums like Newspapers Articles, Business Magazines, online E-tendering portals, etc. Most contracts are publicly advertised for tender without the need for prequalification. Prequalification is primarily utilized for large, complex projects that require specialised technical expertise. Prequalification also allows for “Early Contractor Involvement“(ECI) provides an efficient means of designing and planning infrastructure projects in a cost-effective, more efficient and less adversarial structure in which qualified contractors can offer their expertise prior to the start of a project.

Advantages of Prequalification Stage in Tendering Process:

Prequalification saves the owner of the project time and money by eliminating unqualified contractors from the start. 

It acts as a narrowing funnel wherein contractors who possess the required competencies matching with the contract terms, i.e. the financial and technical ability to undertake the work.

In the case where prequalification is used, only contractors which have been pre-qualified are eligible to bid on the contract. 

STAGE 2: ISSUANCE OF TENDER DOCUMENTS

Regardless of the type of tender process utilized, owners of the projects should understand that the lowest tender or price may not necessarily be the most advantageous. The contractors should be wetted on various parameters like; the working methods, environmental factors, and risk assessment before finalising them.

Tender Documents

The tender documents usually set out in detail the various conditions applicable to the tender procedure itself. Moreover, the contract conditions that will govern the relationship between the employer and the successful tenderer is defined. Sufficient information must be provided by the buyer in order to attract relevant yet worthy contractors for bidding.

Evaluating RiskBefore commencing a tender procedure, employers and consulting engineers should be aware that the fewer details given or the more vague the specifications and information contained in the invitation to the prospective tenderers, the greater the risk that irresponsible bidders will participate. It is believed that more the detailed engineering information available in the tender document, the lesser the risk the contractor has to bear towards the accomplishment of the work. 

STAGE 3: TENDER EVALUATION

The procedure to receive and review tenders will fall within strict deadlines and policy guidelines established by the buyer of goods and services. These methods should be well-structured, well-defined, documented and understood by all parties involved in the bidding process. The employer will review tenders and decide on which contractor has the capability and resources to meet the stipulated requirements for the project.

Reviewing contractor documents will encompass risks and risk allocation including environmental risks. Additionally, buyers should keep in mind that if risks are difficult to evaluate, some marginally qualified contractors can offer lower prices, as they have not anticipated the damages borne towards some uncalculated risks. Collecting the most extensive and complete information about soil conditions may be costly, but it will pay off and often leads to the most economical contract price with the least amount of unpleasant surprises.

STAGE 4: TENDER AWARD

The award of the tender to a specific contractor has to take risk evaluation and allocation into consideration. The award will hopefully also strive for the Best Value contract (i.e. in terms of price). When considering a “Best Value” contract, factors such as quality, options and incentives, ongoing maintenance and/or a longer project lifespan are considered and not just the lowest price.

TenderTiger Insider Tip:

A high-priced contact may seem unfair for the short term but will have a heavy risk-taking appetite, that will keep the buyer satisfied in the long run.

Nowadays, sourcing suppliers is not only a critical but also a tedious task. To begin with, it is vital to identify and evaluate potential suppliers for the best value, both in terms of cost and product. In order to do justice to your sourcing attempt, you need to be well versed with some terms widely-used widely in the sourcing process. The most used are Request for information(RFI), Request for proposal(RFP), Request for tender(RFT) and Request for quotation(RFQ).

Let’s understand in brief each of the above-mentioned terms, after which we will discuss how they differ.

Request For Information (RFI): This is the very first step in the supplier sourcing process. An RFI (request for information) is a formal process for gathering information from potential suppliers for the procurement of particular goods or services. RFIs are intended to be written by customers and sent to potential suppliers. When you reach out to a supplier with an RFI, you are meanly soliciting them to provide you with the production capabilities and other information you think is essential for a project. This is more early on the process, often done before one of the other three requests.

Request For Proposal (RFP): A request for proposal (RFP) is a business document that announces a project, describes it, and seeks bids from qualified contractors for completion. This is a legal method for receiving elaborate proposals from various suppliers. This helps in taking purchase-related decisions. RFP is primarily used to seek solutions for project tasks.

Request For Tender (RFT): An RFT, or request for tender, is an open invitation to suppliers, asking them to send offers — usually as sealed bids — in a well-structured format. In simple words, It’s a formal petition to offer proper and clean products, both in terms of quality and price. Additionally, A tender is an invitation to bid for a project or to accept a formal offer. Tendering is a process commonly used by governments and financial institutions, as well as the public sector more broadly. “Tendering” is the term used to describe the process where vendors or suppliers submit bids for large projects by a specified deadline. The RFT document helps to clear out all the queries regarding the products and their pricing.

Request For Quotation (RFQ): A request for quotation (RFQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RFQ can also be called: Call for bids (CFB) and Invitation for bid (IFB). It is used when a supplier submits a detailed proposal on a specific product/service/project. The buyer, after getting several quotations will decide which dealer to finalize for the product based on the quality and price quoted.

Below is the difference presented visually for FRI, RFP, RFT and RFQ:

Food For Thought: