The ABC of Construction Tenders

Construction tenders are procurement notifications and purchases made in different set-ups in the public and government sectors such as by the central/state government, by municipalities, and by corporations. These tenders could be goods tenders, service tenders and works tenders. As an example, construction tenders could be construction work that is defined by specifications and drawings such as the building of roads and buildings, the supply of a specified quality requisite materials, the supply of the labor that is required for the completion of a specific construction work and the transport of the materials needed for construction work.

Governments all over the world have embraced open tendering as a way of fighting corruption and getting the best possible value for money. Once a government, a municipality or a corporation advertises a construction tender, interested parties write bids for construction tenders which are written offers to undertake the tendered work for a certain amount of money. Once bids are taken in, the tendering committee sits down, opens all tenders and chooses the tender that promises the best work for the lowest amount of money. Note that the lowest bidder is not always the one that gets the tender.

Bids for construction tenders could be negotiated bids, selective/limited competition bids and open competition bids. With negotiated construction bids, only a single contractor is approached and the price for the work is negotiated. The drawback of this method is that it does not provide the client with comparative prices. This method is used in situations where the client knows the methods used and the policies of a particular contractor. This bidding method is not used in most governments and corporations, but you will benefit greatly if you land yourself such a tender because there will be no competition. With limited competition construction bids, the client only contracts some contractors that he/she has used in the past with excellent results. This type of bidding is common in the public sector such as in specialized industrial construction and it is very rare in the government sector. By far the most popular bids are open competition construction bids. Here, the client places a public advertisement and bids are opened on a pre-determined day by a tendering committee. In most cases, it the lowest bidder who gets the tender, but this is not written in stone. This type of bidding is particularly popular with central and state governments, with municipalities and with establishments such as hospitals and the military which are guided by strict laws.

When clients advertise construction tenders, the information contained therein includes the mode through which bids are to be submitted, the most common of which is bids in sealed envelopes, the form of bid, the name of the inviting authority/client, the nature of the work, the location of the work, the estimated cost of the work, time limit within which the work must be completed and the deadline for bid submission. Information on where to get the relevant documents is also provided. Note that the client has reservation to reject any bid. Note that more and more governments and corporations are advertising e-tenders over the Internet.

Swapnil Anand is the author of this article on Tenders. Find more information on Tenders India here.