Last edited 23 Jul 2019

Tender cost

[edit] introduction

Usually created as a response to an invitation to tender (ITT), a tender is a submission made by a prospective supplier (the tenderer) which makes an offer for the supply of goods or services. In construction terms the tender could be for the construction of an entire building or buildings, or for providing a distinct set of services such as landscaping.

A tender pricing document sets out the way in which the cleint wishes to review the breakdown of the overall tender prices provided by tendering suppliers. It is effectively an unpriced bill of quantities. The completed tender pricing document is effectively a priced bill of quantities; it sets out the tenderer’s rates, costs and totals and constitutes the tenderer’s complete offer to the client.

The tender cost is the total of all the charges contained in the tender that will be made by the supplier associated with the delivery of the tender requirements. To the client (who issued the ITT), the tender cost usually represents the total cost of taking delivery of the building or service.

Costs in the tender will be broken down and itemised against each stated requirement. This not only makes it easier for tenderers to price the document, it also means clients and their advisers can see exactly what is being offered by the various tenderers, make comparisons between them, see where value lies and where savings can be made.

[edit] Two-stage tendering

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 the supplier to begin work and in the second stage a fixed price is negotiated for the contract. It can be used to appoint the main contractor early or more commonly as a mechanism for early appointment of a specialist supplier such as a cladding contractor.

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