COURSE WORK

M31 BE PRE
CONTARCT
MANAGEMENT
TASK -1 (TENDERING TYPES)
Alekhya Bondala
11/21/2014

Different Type Of Tender Bids Are Explained With The Key Objectives Giving Pros And cons In Each
Type. And Choosing A Specific Tender Type For Given Project.

Contents
1. INTRODUCTION: .............................................................................................................................. 2
2. TENDER PROCESS AND CLASSIFICATION: ................................................................................ 3
Principal Phases of Tendering: ........................................................................................................ 4
2.1. METHODS OF TENDERING: ...................................................................................................... 4
2.1.1 OPEN TENDERING: ............................................................................................................... 4
Key Requirements Of Open Tender Are: ................................................................................... 5
Drawbacks of open tendering: ..................................................................................................... 5
Conclusion: ............................................................................................................................................... 6
2.1.2 SELECTIVE TENDERING: .................................................................................................... 6
KEY REQUIREMENTS: .................................................................................................................... 6
2.1.3. NEGOTIATION OR SINGLE TENDERING: ....................................................................... 8
2.1.4 Partnering: ....................................................................................................................................... 9
3.RECOMMENDATIONS: ................................................................................................................... 10
BIBLIOGRAPHY: ................................................................................................................................. 12

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1. INTRODUCTION:
Construction is considered as a very vast sector with huge investments and various
activities. When an organisation considers to extend their infrastructure or to carry
out refurbishment a procurement form should be choosen.For every construction
project client will have a valid and approved design and working drawings provided
by architect from which quantity surveyor produces bill of quantities (BOQ).The next
step would be choosing a best form of procurement method and tendering method.
Tendering is the next immediate stage after choosing an appropriate procurement
method.

Tendering is the process of making a bid or proposal or an offer showing interest for
a given invitation of work. The main objective of choosing a tendering is for a
selection of a contractor for undertaking the construction project phase. Tenders the
n submitted will be evaluated accordingly depending on the requirements and offer
made.

Purpose of tendering involves two major things to be taken into consideration are
procurement and contract options. Tendering is the process in which various
interested contractors are invited for bids in order to carry out specific part of
construction activity. In any construction industry the tender process is to select
contractor who offers to do work for quoted amount or profit.

Tender submitted by any company generally comprises of bill of quantities and

specifications with a statement of work. Various factors are taken into consideration
to choose a tender bid, cost being the major factor, labour, material specifications
cost, and time and plant are considered as well. A tender should be feasible enough
to make additions or changes at any point of requirement.

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2. TENDER PROCESS AND CLASSIFICATION:

(source:http://www.firstadapt.com/clients/nweip0310/processes/c/f727c8c12915419c
be9bfc8c942c786b.htm)
In Every tender activity time and cost are their major considerations. Every project is
unique so depending upon the nature and complexity of project different types of
tendering methods are chosen according to the building type and specifications
required. These are the major activities for every tendering process from formal
invitation to the contractor to closure of the work.

Tender process involves the following list of activities such as:

Formal invitation to tender
Tenders Quoted And Submitted
Formal Tender
Tender De Briefing
Issuing Letter Of Intent
Contract Award
Goods And Services Delivered
Payment And Other Documents
Closure
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Principal Phases of Tendering:

Bill of Quantities

Specifications

Drawings

Budget

2.1. METHODS OF TENDERING:

Method of tender for selecting a contractor can be either by competition or
negotiation or sometimes by both. This is usually classified based on different
degrees of competition and project requirement. Different type of tendering methods
are as follows:
1. Open Tendering
2. Selective Tendering
Single stage tendering
Two stage tendering
3. Negotiated Tendering
Serial Tendering
Continuity tendering
4. Partnering
5. Web based tendering
2.1.1 OPEN TENDERING:

In this type of tendering eligible contractors are invited by advertising their proposed
project through media or any other source. There is high competition in this type of
tender. This is also known as open competitive bidding or public tender as the sealed
bids submitted are opened in public and are chosen based on the quality and price
basis. This is one of the common types of tender used.

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Key Requirements Of Open Tender Are:

Should be open to all interested and qualified bidders.

Should be clear technical specifications

Should have a clear and effective objective evaluation criteria

Should be advertised

Should be awarded to the low cost bidder without any negotiations in

contract.
This type of procurement is good for value for money and very effective
competition; however it is known to be designed for simple goods
procurement as it is strictly procedures based.so this type of method is not
usually suggested for complex type procurements as the focus is high on the
profit and outcome of the contract process than on standards of the project.
(Brook Martin.2012)There are few drawbacks for not choosing this type of
tender are stated below:

Drawbacks of open tendering:

Procurement process takes long time

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Gives priority to low cost bidding

It is very strict as it is adherence to the procedures

High estimating time and high cost for tender

Assumes existing requirements for completion of clear specifications

Restricts contractor participation in opting the technical specifications

As it is open to every contractor it gives chance to new contractors who are

not experienced, so no guarantee to quality and on time completion

Conclusion:
Open tendering cannot be suggested for HS2 project as it is a very huge
investment based project and which requires high quality project as it is public
transportation project where it involves high risk. It is always highly
recommended to choose companies with high experience in civil and building
works for better quality and project completion.
As usually low cost bidding is chosen in this type of tendering this may not
guarantee the quality of the project.

2.1.2 SELECTIVE TENDERING:

Selective tendering as the name indicates in this type of tendering few selected
contractors are invited to bidding process for tender. The major characteristic of this
type of tendering is limited to certain number of firms as only few companies are
qualified to attain the specifications and type of requirement in order to limit the cost
and time factors in the selection process. Selective tendering will reduce the efforts
that involved in open tendering; it gives high confidence level to clients.

Usually design team and client together will decide which contractors to be invited.
Many factors are taken into consideration while selecting contractor like financial
stability, business record and capacity to undertake project.

KEY REQUIREMENTS:

Only Qualified contractors are invited to bid

Number of contractors are limited to bid compare to other type of tenders

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It is mainly used for major projects

Quality and time frame of work is guaranteed due to the previous qualification

The major advantages of choosing selective tender are the guarantee about the firm
and limitation of bidders makes it easy and confident to get best project performance.

There are few drawbacks as well in this method of tendering they are favouritism
while selecting the tenderers, higher cost and collusion during tender. This type of
tendering is appropriate for complex projects.
Selective tendering can be classified into two types single stage and two stages.

Single stage tendering compromise of pre tender qualification checks with very
limited competition and low cost providing a better quality as only approved firms are
selected. Client pre qualifications are major consideration in this type of tendering
where various factors like market, time, capital, client, tender documentation are key
factors influence on tender decision.
Two-stage tendering:
In two- stage tendering financial and technical proposals are given separately. As
the name suggests it is done in two stages as follows:
Stage 1: contractor is selected depending upon the profits, rate, available resources,
material price etc.
Stage 2: as per the stage 1 information a contractor will be selected by negotiating
the list based on pricing.
Advantages and Disadvantages of Two Stages Selective Tendering:
Advantages:

Better quality as the experienced firms are Chosen

Low cost and buildability

Design risk is transferred from client to contractor

Reduction in project delay due to overlap of design and tendering

Qualification of bidder is known so more confident about quality

Risk is low as the bidders involve form initial stage in specifications of work.

Disadvantages:

Risk of price increase

less competition and high negotiation leads to high expensive and longer
than other methods
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It requires high commitment from both parties but which may lack and lead
to failures

Conclusion:
In selective tendering method there will be very few disputes or claims as the
contractor is part of project team from initial project stage with reputed experience
and background.
Early appointment is usually allowed in two-stage tendering of a supplier, which helps
to give a fixed price. In single stage a very limited appointment is allowed to start
work and then in second stage fixed price will be negotiated to the contract.

2.1.3. NEGOTIATION OR SINGLE TENDERING:

Negotiation, Single Tendering, or Nomination tender is a tender type in which a
series of negotiation will take place between client and contarctor.Mostly under
design and build form of procurement. This is usually used to extend an existing work
or when there is less time.
Negotiation tendering:
Success and satisfaction is high in this type of tender as it is given based on the
previous work. Mistakes in pricing are very less as the contactor submits the price
when invited to tender which can be discussed and changed as per requirements.
There is high confidence in this type of tender as both the employer and contractor
are very confident with fixed budget.
There are very few chances of using this type of tender for public as they are not
permitted by the rules. Documents are produced on contract basis which should be
available for open or selective tendering or should generally chose by single
contractor.
Cost of work is usually high in this method as the contractor is chosen according to
the need. Owner is advantaged in this process with high confidence of success.
Advantages:

Early Completion
Financially Secure
Better Quality
Best tender will be obtained
Tendering cost is reduced
Work carried within scope and experience
Smooth administration

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Disadvantages:

Public accountability and very rarely satisfied

High cost
Favouritism
Limited to one contractor
Comparative prices are not provided

2.1.4 Partnering:
Partnering is the most effective and efficient way to design and build of construction
project for different type of projects. It is the most cooperative form of procurement
between business partners in order to improve project performance. It will use open
book negotiation.

It is best considered as collaborative process to improve the common goals and how
to achieve it can be applied in two ways either in a project situation known as project
partnering. In long-term relationship known as strategic partnering. Partnering is
about cooperation, less disputes and improvement with high performance.

Partnering can be further divided into the following ways:

Traditional contract in construction with an individual partnering character or
Two party contract in which chosen contract will be reflected in the principles
of collaborative relationship between parties.in this method it works on two
party approaches and which will rely according to the contract conditions
achieving the partnering aspects.
Multi party partnering contract is considered as a complex legal issues with
respective to the responsibilities and liabilities in multi-party.

Negotiation is the key factor in partnering approach than competitive

tendering. Risk is low as it is made clear before project beginning and the
partners share risk on the basis of bearing it.So the main factor of partnering
lies in good faith, mutual co-operation and understanding.

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ADVANTAGES:
Less disputes
Early supply
Open book based and always a win/win situation
Integration of design and construction process
Benefit from multiple projects.

DISADVANTAGES:
Can be abused by any one of the parties
Requires more client resource and project may fail when one party becomes
failure
Early involvement of staff leads to high cost

3.RECOMMENDATIONS:
After successful procurement in choosing a tender type is the major and key factor of
a project. For the given HS2 project which is transportation public project which
involves large budget and risk. It involves both civil and building works. Civil works
being the excavation, track laying, levelling etc., building works involve construction
of station and other support infrastructure. So according to the given scenario it is
high budget with time constraint and high risk as the size of the project and budget
involved is high. There should be high experience to deal such projects as even a
single mistake will be risk.
As high risk is involved the best suitable tender method for this project would be
partnering method. Building works and civil works can be divided and given to
companies using partnering as partnering is based upon open book. Quality,
integration with the construction process and design process means innovative and
practical alternatives can be implemented easily.
Depending on the time available and required integration of design process and
tender cost planning can be done simultaneously although care should be taken on
site.

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BIBLIOGRAPHY:
Brook, Martin. 2012., Estimating and Tendering for Construction Work.
[online]. Routledge. Available from :<http://www.myilibrary.com?ID=100909> 14
November

business. (2012). open tender. Available:

http://www.businessdictionary.com/definition/open-tender.html. Last accessed 13th
nov 2014.

ciob. (2014). designing buildings wiki. Available:

http://www.designingbuildings.co.uk/wiki/Tender_processes_for_construction_contra
cts. Last accessed 13th nov 2014

Constructor. (2014). TYPES OF TENDERING METHODS IN

CONSTRUCTION. Available: http://theconstructor.org/constrution/types-of-tenderingmethods-in-construction/6372/. Last accessed 13th nov 2014.

dan ross. (2009). tendering in construction. Available:

http://www.slideshare.net/dants575/tendering-in-construction-introduction. Last
accessed 13th nov 2014.

designing buildings wiki . (2014). two stage tendering. Available:

http://www.designingbuildings.co.uk/wiki/Two-stage_tender. Last accessed 10th nov
2014.

ehow. (2014). TYPES OF tendering in construction. Available:

http://www.ehow.co.uk/info_8521369_types-tendering-construction.html. Last
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hs2. (2014). hs2 engine for growth. Available: http://www.hs2.org.uk/. Last accessed
10th nov 2014.

jorge lynch. (2012). open tender. Available:

http://www.procurementclassroom.com/open-tendering/. Last accessed 13th nov
2014.
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Jorge Lynch. (). Restricted Tendering. Available:

http://www.procurementclassroom.com/restricted-tendering/. Last accessed 10th nov
2014.

Lewis, H 2012, Bids, Tenders and Proposals : Winning Business Through Best
Practice (4th Edition), Kogan Page, London, GBR. Available from: ProQuest ebrary.
[20 November 2014].

nss. (2011). contracts and law. Available:

http://www.thenbs.com/topics/contractsLaw/articles/tenderingForConstructionProject
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https://consultations.rics.org/consult.ti/comparative.construction/view?objectId=
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Simon Rawlinson. (2006). Procurement: Two-stage tendering.Available:

http://www.building.co.uk/procurement-two-stage-tendering/3067103.article.
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Tenders. (2012). Procurement Process: Understanding Types of Tenders! - See

more at: http://www.tendersinfo.com/blogs/procurement-process-understandingtypes-of-tenders/#sthash.8Ea69ipz.dpuf. Available:
http://www.tendersinfo.com/blogs/procurement-process-understanding-types-oftenders/. Last accessed 10th nov 2014.

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