Define tender and types of tender?
There are three types of tendering methods used in construction industry!
1. Open Tendering
2. Selective Tendering
3. Negotiated Tendering.
Open tender is an arrangement where an advertisement in local newspapers or trade journals invites contractors to apply for tender documents.
A deposit is usually required to ensure that only serious offers are made;
Presumably it is needed to cover the cost of copying the documents. Local authorities have been advised against open tendering because it often leads to excessive tender lists where the cost of abortive tendering is considerable. There are instances of selection criteria being applied after the tender has been submitted, so a bid could be rejected if a contractor does not belong to an approved trade association.
Advantages of Open Tender
The main advantage of such tendering is as follow:
- Give high level of competition and contractors tend to give best prices as compare to other tendering method
- There is no list of restrictive tenderer, which does not allow favoritism
- It is very transparent process which ensures that only the contractor with the best price and meeting all the technical requirements will win the tender.
- This process is usually manage by procurement board where its staff are trained for such exercises and board ensure that all the procedures involved in tender are followed.
Disadvantages of Open Tender
The low price usually detriment of quality and often result in the client obtaining poor quality job and late completion of work.
Given that its open tender and thus there are no restrictions on the number of contractor who can bid and become bulky and lengthy job for tender analyses which often result in delays and high cost.
Selective tender: Selective tendering consists of drawing up a list of chosen firms and asking them to tender. It is by far the most common arrangement because it allows price to be the deciding criterion; all other selection factors will have been dealt with at the pre-qualification stage. There are three ways in which selective tendering lists are drawn up:
- An advertisement may produce several interested contractors and suitable Firms are selected to tender.
- The consultants may contact those they would wish to put on an ad-hoc list.
- Many local authorities and national bodies keep approved lists of contractors in certain categories, such as work type and cost range. Contractors who ask to be included on select lists of tenderer are usually asked to provide information about their financial and technical performance, particularly about the type of work under consideration. The National Joint Consultative Committee for Building (NJCC) has written the 'Standard form of tendering questionnaire - private edition' so contractors can prepare answers to relevant questions in advance. The questions mainly deal with projects carried out during the previous three years. Once the form has been completed, it can be used for specific projects or for those compiling lists of selected contractors.
Ngotiated Tender :under this method normally one contractor is approached and such tender mainly used for specialist work such as lift system or airport project at big level, in such case there are limited number of contractor who do such work in the market .it is based on one-to-one discussion with contractors to negotiated the terms of contract