{"id":9499,"date":"2022-05-31T13:00:00","date_gmt":"2022-05-31T03:00:00","guid":{"rendered":"https:\/\/stage.buildxact.com\/au\/?p=9499"},"modified":"2026-01-16T07:26:53","modified_gmt":"2026-01-15T20:26:53","slug":"what-is-tendering-in-construction","status":"publish","type":"post","link":"https:\/\/stage.buildxact.com\/au\/blog\/what-is-tendering-in-construction\/","title":{"rendered":"The basics of construction tendering"},"content":{"rendered":"\t\t
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Tendering in the construction industry is the process of requesting and receiving a price for a\u00a0specific scope of work<\/b><\/a>. The tendering process helps ensure true competition based on the same selection criteria.\u00a0<\/p>\n

A tender process is used most often by public entities in their bid process but can be seen occasionally in the private sector as the process to identify a suitable contractor for a given project.<\/p>\n

The tender process starts with an invitation to tender (ITT) a construction project [may also be called a request for proposal (RFP), invitation to bid (ITB), or request for qualifications (RFQ)].\u00a0<\/p>\n

The tender document includes all the information needed to provide pricing on the proposed scope of work. Based on the tender documents, contractors\u00a0provide pricing<\/b><\/a>\u00a0to the owner. The owner or other parties involved reviews the tenders and selects the best one that fits their needs.<\/p>\n

Construction tendering process<\/h3>\n

There are several variations of the tender<\/b><\/a> process that may be used to select a contractor: open, selective, negotiated, serial, framework, single-stage and two-stage tendering.<\/p>\n

Open tendering<\/strong><\/h2>\n

During an open tendering process, anyone may submit a tender in response to the owner’s invitation. The opportunity is\u00a0advertised where contractors can see it<\/b><\/a>, and all interested contractors are invited to submit a bid. Some invitations, for example, those that involve large projects, may require that contractors are prequalified before submitting an open tender.<\/p>\n

Open tendering is the most competitive tender option, allowing anyone who is interested in an opportunity to bid on it. It allows new and emerging contractors the opportunity to win work, and encourages competition.<\/p>\n

Selective tendering<\/strong><\/h2>\n

Selective tendering involves the owner choosing a short list of contractors to invite to the tender process. In this case, only those invited may submit a tender offer.\u00a0<\/p>\n

This type of tendering process works best with specialty or complex projects, where the owner wants to limit the response to only that particular class of construction companies they deem suitable for the work. An unknown contractor is not going to participate as they might in an open tendering procedure.<\/p>\n

Selective tendering reduces what can be wasted effort from seeing proposals from too many contractors and helps ensure only the competent contractors participate. However, it excludes new and small companies who may be competent contractors, and reduces the overall number of competitive bids.<\/p>\n

Negotiated tendering<\/strong><\/h2>\n

In negotiated tendering only one supplier or contractor is selected to submit a tender, and the owner negotiates with that supplier or contractor to reach an agreement. This version is used for highly specialized contracts or the extension of an existing contract. This tendering process significantly reduces the cost, as there is only one proposal to review.<\/p>\n

However, negotiated tendering discourages competition among contractors, which can lead to higher prices and a more challenging negotiation process. Those who review negotiated tendering documents must watch out for artificially inflated prices due to lack of competition.<\/p>\n

Serial tendering<\/strong><\/h2>\n

In a serial tendering opportunity, a particular contractor provides a set of typical values for a set scope of work over a series of similar projects.<\/p>\n

The owner can select from the list of work to determine exactly what will be performed under the contract. Contractor prices may be lower with the expectation of ongoing work, less need for future tenders, and the establishment of a long-term business relationship.<\/p>\n

Framework tendering<\/strong><\/h2>\n

Framework tendering involves the selection of a contractor for on-call work over a period of time. The contractor provides a schedule of rates and a breakdown of resources and overhead charges. This type of tender reduces costs and allows owners to get a quick response to repairs, since the contract is already signed and completed.<\/p>\n

Single stage and two-stage tendering<\/strong><\/h2>\n

In a single stage tender, the tender documents are fully designed before an invitation is sent out. One contract is awarded for the entire project.<\/p>\n

In a two-stage tendering, the initial design hasn’t been completed yet. A contractor is selected to take part in two distinct stages of the tendering process.<\/p>\n

They may propose their initial fee for design or may be chosen because of their qualifications. Once the design documents are complete, another tender is submitted for the construction of the project, and a contract is drawn up for that portion of the work.<\/p>\n

The tender process<\/strong><\/h2>\n

Most construction tendering in the engineering and construction industry goes through\u00a0this process<\/a>: invitation, clarification, submission, settlement and contract execution.<\/p>\n

Invitation to tender<\/strong><\/h3>\n

The owner provides tender offers with information to potential suppliers and contractors on the work to be performed. These tender request documents may include:<\/p>\n

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