A Tender is an invitation to bid for any project that must be submitted within a limited time.
The tendering process is a combination of the sequential procedures required in purchasing goods or services from external suppliers. Tendering is usually practised by government institutions.
The main objective of this process is to eliminate corruption in construction companies. with the help of tender client can compare different prices quoted by the various contractor for work. Low price and experienced contractor wins the tender.
Types of Tendering Method
In an open tendering, advertisement is published publicly on newspaper and other various mediums. The advertisement contains information about location site, closing date, document fee and tender deposit. Out of all tender document, one has to be selected. It is a consultant job to evaluate each tender. The advantage of open tendering is open to all qualified bidders and highly competitive. On the other hand, it has a disadvantage of the high cost of tendering.
Selective tendering is of two types, single-stage and two-stage selective tendering.
In single-stage tendering, client benefits from a competitive tendering process which can lead to more competitive pricing.
In two-stage tendering, the project doesn’t have to be fully designed and cost before they can start procurement for the project, thus reducing costs.
Selective tendering has simplified tender evaluation. It has high price than open tendering.
A Negotiated tender is a single-stage tender take place between the client and just one contractor. It has a high success rate, suitable for emergencies. In this process, the reputated contractors are involved. On the other hand, it has a disadvantage of the long negotiation period.
Serial tendering involves the preparation of tenders based on a schedule of works. Serial tendering is a hybrid method tendering which combines a normal competitive tender (single or two-stage) with negotiation.
Steps involved in the Tendering Process:
- The tender process is fixed. The organization will resolve the kind of tender to be used. Various type of tender is discussed above.
- Appeal for tender is prepared. It contains contractual requirements and how one should respond. A tender request is an invitation to the distributor to provide a competitive offer to win contract.
- Tenders are invited. For achieving success it is necessary to identify opportunities in the tender market. One can find out various tendering opportunities in future or present through different sources.
- Distributor respond. It is necessary to first obtain all relevant documentation then plan and prepare your response.
- Evaluation and selection of tender.The tender that offers experienced, best value for money will win.
- When a contractor has been granted, the person who has got tender will be guided in writing of consequences.
- Confirmation and management of the contract. A formal agreement will be needed between tenderer and company.
Advantage of Tendering Process
- Tenders are drifted by large private and public organizations for major projects that involve a lot of money.
- Tendering process create a competitive market. Selection depends upon price, the experience of the contractor.
- It provides the best possible value-for-money outcome from procurement activity.
- It helps companies in maintaining an understanding of what alternatives are available in the market.
- The tendering process is a way to encourage innovation in the way services are provided.