Before a contract can be awarded, a selection process is likely to have been undertaken which might involve:
- Adverts placed, or recommendations received for a long list of potential tenderers.
- A pre-qualification process.
- Identification of a short list to be invited to tender.
- An invitation to tender.
- Tender receipt.
- Selection of preferred tenderer(s).
- Contract award.
- Contract engrossment (printing) and execution (signing as a deed or as a simple contract).
There are a number of different bases upon which a contract can be awarded:
In this simple method, the lowest priced tender (or best price) wins the contract. However, following this method excludes other elements of the tender, such as relevant experience, being taken into consideration when awarding the contract and does not always result in best long-term value for the client. Low prices can produce low quality, or result in claims and conflict between the client and the supplier.
This method allows for factors other than, or in addition to, the price to be taken into consideration, such as quality, experience, competence, capability, capacity, estimated time for completion, life cycle costs, and so on. If this method of awarding is to be used, it should be set out in the tender documents, along with the system of weighting that will be applied to each of the selection criteria.
 Mean value
This method awards the contract to the bid that is closest to the mean value of the proposals. This is commonly adopted where numerous proposals are expected, but can leave suppliers uncertain where to pitch their bid.
 Exclusion of the extremes
This method is used to take away the bids that deviate most, lowest and highest, before then proceeding with one of the three methods above.
 Contract award procedure
If OJEU procedures are being followed, it may be necessary to publish a formal contract award notice once the successful tenderer has been selected. A ‘standstill period’ may then be required. This is a pause of at least 10 calendar days between the decision being notified to all tenderers and the final contract conclusion. This allows for suppliers to challenge the decision.
The contract administrator (or sometimes the cost consultant) then collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for the client and one for the supplier. Alternatively, the client might retain one executed contract, with certified copies being issued to the supplier, this can avoid potential errors in preparing two contracts for execution. The supplier may be required to provide a performance bond, warranties, evidence of insurance cover, and so on.
Contract award and contract execution may not necessarily happen at the same time. In fact it is relatively common (although not advisable) for contracts to remain unsigned until well after work has begun.
Contracts may be executed under seal (signed by the parties, witnessed and most importantly made clear that they are executed as a deed) or under hand (a 'simple contract' that is just signed by the parties). See Contracts under seal v under hand for more information.
 Related articles on Designing Buildings Wiki
- Back to back provisions in construction contacts.
- Bid evaluation.
- Contracts under seal v under hand.
- Construction contract.
- Contract conditions.
- Contract documents.
- Contract negotiation.
- Guaranteed maximum price.
- Letter of award.
- Negotiated contract.
- OJEU procurement procedures.
- Procurement route.
- Record keeping.
- Tender documentation.
- Tender processes.
Featured articles and news
This article explains the Buildings Regulations completion certificate, what it is, and when its needed.
Graphene has many potential applications, but when will it start being used in civil engineering?
Increasing productivity – now more than ever as we lead up to Brexit – should be the sector’s number one priority in 2018.
Carillion's collapse causes Construction Leadership Council to delay the construction sector deal report.
Urban Heritage, Development and Sustainability: international frameworks, national and local guidance.
What will the General Data Protection Regulations (GDPR) mean for you when they come into force in May?
Business Secretary chairs a new taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation.
Sir John Armitt is appointed the new chair of the National Infrastructure Commission.
High quality and high density homes - is it what we need or is it storing up trouble?
Government announces its intention to strengthen planning rules to protect music venues and neighbours.
National Audit Office reports that there is little evidence that PFI offers better value than other forms of contracting.
What is liquidation and how does it apply to contractors in the construction industry?