If you wonder what are the types of tendering methods in construction or if you want to know about tendering in construction projects, this article may help you to gain a basic understanding.
In contract management lifecycle, the award stage is most important because this is the time that an employer chooses a competent contractor to complete the construction work. Therefore, tendering stage is an important stage that includes a few steps from the preparation of tender documents, an invitation for tender, and evaluation of bids before choosing a contractor. For calling tenders, there are 3 main types of tendering methods where consultant team can choose depending on different factors such as risks associated.
What are the types of Tendering Methods in Construction
The 3 main types of tendering methods in construction are open tendering, selective tendering, and negotiation (Limited tendering) .
Employer invites the public to participate in the tender process by submitting their bids. There are certain qualifications that a contractor or supplier should satisfy before submitting their tenders. This method is mostly used in public sector projects to choose contractors. In this open tendering method, it is essential for the contractor to read and understand the drawings and documents clearly before estimating their bid. This open tendering method is competitive and the employer will evaluate bids depending on quality, cost, and other factors before choosing a competent contractor.
In this method, the employer invites pre-qualified parties to submit their tender proposals. Mostly, this method is used by developers and private sector employers for their projects. In this method, the Employer can select contractors who have experience on similar projects, financial capacity, and good track record. This is an advantage of the selective tendering method.
Limited Tenders (negotiation)
In this tender type, the employer invites to a limited number of pre-identified parties to submit their tenders. Employer identifies these parties as reliable sources to complete the task. This tendering method is also used when no party has responded with their bids for an open tender. This is also a tendering method where Open Tendering or Selective tendering is not feasible. Negotiation with a supplier or a contractor for highly specialized tasks includes in this method. In this method, the receiving cost proposals can be higher compared to open tenders which is a disadvantage.
Concluding, open tendering, selective tendering, and negotiation (Limited tendering) are the three main types of tendering methods in the construction industry. During the pre-award stage, it is vital for the consultant team together with the employer to choose the most suitable tendering method. The factors affecting their decision include possible risks as well.