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Last edited 13 Dec 2015
Construction management: tender trade contracts
The tender stage is the process of selecting and appointing trade contractors. Tendering involves a number of trade contracts, contracted by the client but managed by the construction manager. Trade contracts may not all be tendered at the same stage, and so this process might be repeated a number of times during the project.
The construction manager and client prepare selection criteria for trade contractors and if appropriate pre-qualification questionnaires. If it is necessary and has not already been done, OJEU or other adverts are prepared.
The construction manager and client consider lists of approved trade contractors, the preferred form of contract, contract conditions and the allocation of risk. They then co-ordinate a stage start-up meeting with the consultant team, and the client to agree the programme and procedures that will be adopted for tendering. The construction manager gives any instructions necessary relating to lists of approved trade contractors, any required advertising, the form of contract, contract conditions and other requirements.
 Preparing the tender documentation.
The construction manager obtains from the consultant team information required for the preparation of the tender documentation, pre-tender estimate and cash flow projection for the trade contracts and co-ordinates the preparation of pre-construction Information.
The construction manager co-ordinates a review of the tender documents and issues instructions to make amendments if necessary. They should produce a risk allocation report which sets out whether risks in the contract documents are retained by the client, transferred to contractors, are shared or are insured.
The client considers the tender documents (including assessment of the pre-tender estimate in relation to the budget) and risk allocation report and issues instructions to make amendments if necessary.
 Identifying potential tenderers.
The construction manager and client prepare a long list of suitable trade contractors and issue pre-qualification questionnaires. The construction manager receives completed pre-qualification questionnaires and carries out financial checks on potential tenderers (ideally the contract should not be more than 20% of the annual turnover of the potential tenderers).
The construction manager co-ordinates advice on prospective tenderers and prepares a short list of tenderers to present for client comment or approval. The client accepts or alters the initial short list of tenderers and where appropriate the construction manager arranges pre-tender interviews with the initial short list of tenderers.
The construction manager co-ordinates any amendments to the initial short list of tenderers and agrees the final short list of tenderers with the client. If necessary, following comments received during the pre-tender interviews, the construction manager instructs amendments to the tender documentation.
 Identifying the preferred tenderer(s).
The construction manager compiles queries from tenderers and co-ordinates responses which should be issued to all tenderers. If necessary, the construction manager arranges mid-tender interviews and/or site visits for the tenderers. If queries from the tenderers or discussions during the mid-tender interviews result in significant clarification of, or changes to, the tender documentation, the construction manager may recommend to the client that the tender period is extended.
The client receives the tenders. They may follow a formal procedure for opening and recording tenders. The construction manager co-ordinates assessment of the tenders. This may include further interviews.
The client receives the tender appraisals from the construction manager, and instructs the construction manager to enter into negotiations with the preferred tenderer(s). A reserve tenderer may be retained in the event that negotiations with the preferred tenderer are unsuccessful.
 Entering into negotiations with the preferred tenderer(s).
The construction manager co-ordinates negotiations with the preferred tenderer(s). It is paramount in any negotiation that the individuals at the negotiating table either have authority to fully negotiate terms or make it clear from the start the limits of their authority. This may mean re-convening with the right people empowered to make decisions.
The construction manager co-ordinates the preparation of a tender report. The client considers the tender report and instructs the construction manager if any changes are required to the tender documents. If instructed the construction manager co-ordinates adjustments to tender documents and requests a revised tender from the preferred tenderer(s).
 Appointing the trade contractor.
The construction manager collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for the client and one for the trade contractor. This can take place at a specially convened signing meeting. Alternatively, the client might retain one executed contract, with certified copies being issued to the trade contractor, this can avoid potential errors in preparing two contracts for execution. The trade contractor may be required to provide: a performance bond, warranties, evidence of insurance cover and so on.
The construction manager informs other tenderers that they have been unsuccessful.
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