Assignment # 01

Types of Construction Tenders

Submission Date:
10-Oct-2019

Submitted By:
Adil Ali
BSCT-01181006

Submitted To:
Sir Zeeshan Islam
 Types of Tenders

What is a Tender in Construction Business?

A tender is a submission made by a contractor in response to an invitation to tender. It makes an

offer for the supply of goods or services. Tender documents are prepared to seek offers (offers).

Tender documents may be prepared for a range of contracts, such as equipment supply, the main
construction contract (including design by the contractor), demolition, enabling works, etc.

The 5 main types of Tenders are:

 Open tender
 Selective tender
 Negotiated tender
 Single-stage and two-stage tender
 Term Tender

Types of Tenders
in Construction

Single Stage &

Negotiated
Open Tender Selective Tender Two Stage Term Tender
Tender
Tender

 Open Tender:

Open tendering is the main tendering procedures employed by both the government and
private sector. Open tendering allows anyone to submit a tender to supply the goods or
services required and offers an equal opportunity to any organization to submit a tender.
This type of tender is most common for the engineering and construction industry.

Open tendering provides the greatest competition among suppliers and has the advantage
of creating opportunities for new or emerging suppliers to try to secure work. However, not
all those who bid may be suitable for the contract and more time is required to evaluate the
tenders.

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 Types of Tenders

 Selective tender:

Selective tendering only allows suppliers to submit tenders by invitation. These suppliers
are those who are known by their track record to be suitable for a contract of that size,
nature and complexity required. Selective tendering gives clients greater confidence that
their requirements will be satisfied. It may be particularly appropriate for specialist or
complex contracts, or contracts where there are only a few suitable firms. However, it can
exclude smaller suppliers or those trying to establish themselves in a new market.

 Negotiated Tender:

Negotiated tenders are obtained by the employer inviting a contractor of his choice to
submit prices for a project. Usually this is for specialized work or when particular equipment
is needed as an extension of existing works, or for further work following a previous
contract.

Sometimes negotiated tenders can be used when there is a very tight deadline, or
emergency works are necessary. A negotiated tender has a good chance of being
satisfactory because, more often than not, it is based on previous satisfactory working
together by the employer and the contractor.

When invited to tender the contractor submits his prices, and if there are any queries these
are discussed and usually settled without difficulty. Thus mistakes in pricing can be
reduced, so that both the engineer advising the employer and the contractor are confident
that the job should be completed to budget if no unforeseen troubles arise.

However, negotiated tenders for public works are rare because the standing rules of public
authorities do not normally permit them. But a private employer or company not subject to
restraints such as those mentioned in the next section can always negotiate a contract, and
many do so, particularly for small jobs.

Even when a negotiated tender is adopted it is usual to prepare full contract documents so
that the contract is on a sound basis. Production of the documents also means they are
available for open or selective tendering should a negotiated tender fail, or should the
chosen contractor be unable to undertake the work.

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 Types of Tenders

 Single-Stage & Two-Stage Tender:

Single-stage tendering is 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, tenders are prepared and returned, a preferred tenderer is selected
and following negotiations they may be appointed.
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 to allow work to begin and in the second stage a
fixed price is negotiated for the contract.
Other types of tender include serial tendering, framework tendering and public
procurement. Serial tendering involves the preparation of tenders based on a typical or
notional bill of quantities or schedule of works. Framework tendering allow the client to
invite tenders from suppliers of goods and services to be carried out over a period on a call-
off basis as and when required. Lastly, public procurement is for public projects held by the
government.

 Term Tender:

Term tendering normally used on major maintenance projects. It may be awarded to a

contractor to cover a range of different buildings in different locations. It is often limited to a
fixed time scale, although the needs of the client may often require this to be extended. It is
like a standing offer to undertake a loosely defined extends of work usually within a fixed
time period. The type of work is usually specified and priced in a schedule of rates. The
contractor will initially be offered the work to cover a number of different trades usually on
the basis of prices contained in a schedule prepared by the client. Where the client supplies
the rates for the work, the contractors are given the option of quoting a percentage addition
or deduction from these rates depending upon their desire to win the project. The contractor
offering the most advantageous percentage to the client will then be awarded the contract.
An indication of the amount of work expected over the specified period of time will assist the
contractors in the consideration of the percentage to be quoted.

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