Tender procedures will vary depending on the nature of the goods or services that are being procured, but very broadly they can be classified as either single stage or two stage.
Single-stage tendering is the more traditional route, used when all the information necessary to calculate a realistic price is available when tendering commences:
- An invitation to tender is issued to prospective suppliers (perhaps following completion of a pre-qualification questionnaire and / or a pre-tender interview). The invitation to tender will include information describing the goods or services required in sufficient detail to enable prospective suppliers to prepare an accurate tender.
- Tenders are prepared and returned by prospective suppliers (this may involve questions and answers and a mid-tender interview to clarify the client’s requirements).
- Submitted tenders are then assessed and compared (this may involve further interviews).
- The preferred tenderer is selected and negotiations opened.
- Subject to the outcome of those negotiations the preferred tenderer may then be appointed.
See Tender for more information.
However, increasingly it is becoming useful to obtain input from prospective tenderers before there is sufficient information available for the main contract to be awarded. This can allow early input from the main contractor, or early appointment of a specialist contractor, such as a cladding contractor, before the main contract has been awarded. A two-stage tender process may also be adopted on a design and build project where the employer's requirements are not sufficiently well developed for the contractor to be able to calculate a realistic price. In this case, the contractor will tender a fee for designing the building along with a schedule of rates that can be used to establish the construction price for the second-stage tender.
See two-stage tender for more information.
Two-stage tendering enables the client to transfer design risk to the contractor, but the client inevitably loses leverage as the contractor becomes embedded in the team and competition is less of a threat. However, whilst tender prices for two-stage contracts may initially be higher than single-stage tenders, which are subject to full competition, the final account tends to include fewer variations and fewer claims.
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