Types Of Tenders

Types Of Tenders

Types Of Tenders

Open Tender

Open tendering is the main tendering procedure employed by both the government and the private sector. The Client advertises the tender offer in the local newspaper giving detail and key information of the proposed works and inviting interested contractors to tender. In the legal sense, such tender notices constitute an invitation to treat, a mere request by the employer for a suitable contractor to submit their bids or offers If the prerequisite to tendering on the form of possession of Cr the necessary registration has been identified in the tender notice, then the advertisement is directed to only that particular class of the public having the said qualifications. In order to reduce the number of inquiries, the earnest money is deposited (for private projects). Until the receipt of a bone fide tender selected then it will be returned. Although the price is very important in the decision on which tender or bid to accept, it is not the only factor taken into account. The client does not bind to accept the lowest or any offer. 

Advantages and Disadvantages of Open Tender

  1. it allows any interested contractor to tender. Therefore it gives an opportunity for an unknown contractor to compete for the work.

  2. The tender list can be long as there are too many cøntractors tendering for one job.

  3. Allowing the tender list to be made without bras. Clients will obtain the bargain possible. No favoritism in selecting contractors.

  4. Uneconomic use of the source.

  5. Ensuring good competition not obliged to accept any offers.

  6. Public accountability may be questioned if the lowest offer is not accepted.

  7. the traditional method of tendering, familiar to all sectors Not of the engineering and construction industry.

  8. Does not attract reputable and established contractors unless they are forced to due to lack.of work.

Selective Tender

Selective tendering is the one alternative developed to address the limitations of the open tendering procedure. In this method, a shortlist of contractors is drawn up and they are invited to submit tenders. The purpose of the elective tendering is to improve the quality of the bids received, to ensure that contractors with the necessary experience and competence are given the opportunity to submit the necessary bids, due to urgency work involved, for specific reasons of the employer, e.g. security reasons in government projects. etc. and to make the tendering procedure more manageable and less a burden on the parties involved. Such a list may be prepared through a recommendation from the Client's professional adviser who has knowledge of the contractors undertaking the work in the past or advertisement through the newspaper (prequalification). The advantages and disadvantages of the selective tendering are stated below

Advantages and Disadvantages of Selective Tender

  1. Only the competent contractors were invited to tender, then the lowest can be accepted.

  2. Reduces the availability of work for other contractors, especially new contractors.

  3. It reduced the cost of tendering (economic use of resources, reduced tender documentation, shorter tender periods, better management of the tender process, etc.)

  4. Tender Price may invariably higher than would have been in open tendering.

  5. Greater chance of collusion.

  6. Tendering period longer because it involved two distinct stages

Negotiation Tender

Negotiation tendering is extensively used in the engineering and construction industry commencing from tendering till dispute resolutions, i.e. under the styles of pre-contract negotiations and post-contract negotiations. Usually with a single contractor but may be up to three contractors. The negotiation process involved is as follows: Identification.by the employer of a suitable contractor to negotiate with. The contractor can be selected either from the employer's own list of preferences or on the advice of the professional team The contractor being apprised of the work scope. The selected contractor is issued with details such as the scope of work involved, relevant drawings, design and /or information to enable him to appreciate the extents of obligations and the employer's actual needs, Some employers prepare and issue to the contractor proper tender documénts inclusive of nominated bills of quantities to assist the contractor in pricing the works for the forthcoming negotiations. Negotiations can be applied to the following type of contract:

  • In Partnering type of contracts under the so-called win-win formula.

  • Where the employer has a long term business relationship with the contractor. 

  • In situations where the parties are in a relationship of holding and subsidiary companies.

  • Where the contractor is involved in the financing of the project. 

  • In situations where the employer finds it advantageous to employ the same contractor to continue an initial or existing contract for the new works.

  • Where there is a pressing need to have a very early start of work on the site and to complete the works on a fast track basis. 

  • In special circumstances e.g. Security reasons. emergencies etc. where it is expedient to secure the services of a particular contractor only. 

  • Where there is only a single contractor who is the only one available or with either the special skill or resources to carry out the particular works.

Advantages and Disadvantages of Negotiation Tender

  1. Only reputable.contractor-are invited for.negotiation.

  2. The cost work is likely higher than competitive tender.

  3. The Contractor can contribute his expertise during the design stage.

  4. Reduces the availability of work for other contractors.

  5. Early Commencement of work on site. It shortens the period involved in appointing the contractor 

  6. Should the negotiations be deadlocked or prove eventually unsuccessful, this causes wastage of valuable resources on both sides and loss of time for the employer, thereby delaying the overall selection of suitable contractors.

  7. Reduce the risk of failure.

  8. The best alternatives for the employer to adopt are special circumstances such as emergencies, security reasons, etc.

  9. Experience has shown that contracts let out this basis result in fewer disputes and claims during the construction stage.