Last edited 01 Sep 2020

Open tendering of construction works

A 'tender' is a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods or services. In construction, the main tender process is generally the selection, by the client, of a contractor to construct the works. However, procurement routes have become more complex, so tenders may now be sought for a wide range of goods and services.

Irrespective of the goods or services that are being sought, securing tenders generally follows one of a number of basic procedures:

Open tendering allows anyone to submit a tender to supply the goods or services that are required. Generally, an advert will be placed giving notice that the contract is being tendered, offering an equal opportunity to any organisation to submit a tender.

On larger projects, there may then be a pre-qualification process that produces a short-list of suitable suppliers from the respondents expressing interest in the contract. This short list will then be invited to prepare tenders. The selection of a short list can include pre-qualification questionnaires and interviews. This sort of pre-qualification process is not the same as selective tendering. Selective tendering only allows suppliers invited from a pre-selected list to take part in the tender process.

Open tendering has been criticised for being a slow and costly process, attracting tenders or expressions of interest from large numbers of suppliers, some of whom may be entirely unsuitable for the contract and as a result it can waste a great deal of time, effort and money. However, open tendering offers the greatest competition and has the advantage of allowing new or emerging suppliers to try to secure work and so can facilitate greater innovation. The number of firms tendering can be reduced (ideally to a maximum of 6) by a pre-qualification process, and if this uses a standard pre-qualification questionnaire, then the time wasted by unsuccessful applicants can be minimised.

Whilst often seen to be more efficient, selective tendering can exclude potential suppliers, it can be seen to introduce bias into the process, and it can result in prospective suppliers continually contacting clients and consultants to check that they are on the appropriate lists.

On public projects, or projects that include an element of public funding, it may be necessary to advertise contracts as a requirement of the Public Contracts Regulations. This is intended to open up public procurement within the European Union and to ensure the free movement of supplies, services and works (see OJEU for more information).

Open tendering can be either single stage or two stage. Two-stage tendering is used to allow early appointment of a supplier, prior to the completion of all the information required to enable them to offer a fixed price. In the first stage, a limited appointment is agreed, allowing them to begin work and ine a fixed price is negotiated for the contract.

For a more detailed description of the procedures for open tendering, see Tender.

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