Guide to Tendering - Acre Design
 

Guide to Tendering

Introduction to Tendering

Tendering is the important part of a project where bids to undertake the work are received. Get it right, and you’ll have a contractor that’s ideal for your home, and will help make your plans a reality. But get it wrong, and it can lead to nightmare scenarios of poor craftsmanship, lost finances, and incomplete work.

Some of our clients appoint Acre Design to run the tender process, and others undertake it themselves. We’ve written this guide to help understand what is involved.

 

Tendering is a formalised process to find the best contractor for the project, whether that’s based on price, quality, experience, or capacity. For construction projects, the Tenderers are generally Main Contractors, who will take on the responsibilities of the Construction Contract and use their own workers and subcontractors to deliver your project. But before they can do this, they must prepare a Tender for acceptance by you the Client. 

The tendering process begins once all the essential elements of the project have been agreed, and you’re ready to find a contractor. Not everything needs to be resolved at this point, e.g. clients often haven’t chosen flooring materials yet, but the more of the works that are included in the tender the better for getting a certain price.

Before starting the Tender Process, a final check is done using a Quantity Surveyor to estimate the cost. This way, if the cost comes back higher or lower than expected then the design can be amended prior to tender, using a Change Control Form. Generally, the cost reports earlier in the project have already steered the design to being on budget, and this final check captures the cost of any final changes.

All the project information is then sent out to the Tenderers, along with the construction contract and deadline (typically 3-4 weeks). This gives enough time for even in-demand contractors to price the job accurately and competitively. During this time Acre will field any questions or clarifications about the works, with the responses being sent to all Tenderers to ensure fairness. At the end of the four weeks, Acre compiles all the tenders we have received into a summary to help you choose which one to award the contract to.

achre picture 1
Cramlington 1

Evaluating tenderers

Reviewing prices is not the only part of understanding each bid. Evaluating the company is also important. Acre Design have worked well with a variety of contractors who have delivered projects for us before and we often use them again for new projects.

Research on a contractor can be done before the tender process as part of the decision to include them on the tender list, or as part of the tendering process. The following questions can help provide a picture of what type of business they run and whether they’re suitable for your project:

  • Have they provided references? These could be…
    • Professional reference, such as an architect or structural engineer.
    • A recent customer reference.
    • Past projects. If possible, it’s good to visit a project in person.
  • Have they provided evidence of their public and employers liability insurance?
  • Are they a TrustMark Registered Business? This is a government scheme which ensures all Registered Businesses are technical competent, have good customer service, good trading practices, and abide by the Code of Conduct and Customer Charter.
  • Can they provide details of their health & safety policies and record?
  • How long have they been operating?
  • How many employees do they have?
  • What geographical areas and construction sectors do they work in?

Evaluating bids

Once the tender bids have been received, they should be evaluated to help pick the best bid for the project. Price is often the most important criteria but be wary of simply picking the cheapest bid. Common criteria for evaluating bids are price, clarity, experience, quality, reliability & capacity.

  • If one bid is significantly different from the others, try to find out the reason.
  • Similarly, if a tenderer has priced one element of the work much higher or lower than the others this is worth investigating.
  • How are materials being priced?
  • How are payments arranged?
  • It’s helpful to provide feedback to all unsuccessful tenderers.
Washington
Final-39

Awarding the contract

If the evaluation hasn’t produced a clear winner, try to shortlist the best two bids and interview these two contractors to get a feel for how you’d work together and ask any outstanding questions.

Check through the contract thoroughly before signing.

Also see the FAQ entry below, entitled ‘What if I don’t want to accept any of the tenders?’.

Frequently Asked Questions

When can I go out to tender?

The more information you can provide to tenderers about your project the better, since this will allow them to price the work more accurately. Typically, the minimum we suggest is that clients go out to tender once the Building Control drawings are complete. These will cover the important technical items that contractors will need to know to build the project, such as structure, ventilation, drainage etc.

Beyond this, Construction Drawings cover a further level of detail and allow even more accurate tender bids.

What if I don’t want to accept any of the tenders?

You are under no obligation to accept any of the tenders, and contractors know they won’t win every job they bid for. If you don’t want to proceed to awarding the contract, there are several options:

  • Pick the best bid and negotiate with the tenderer. Acre will help with this at our standard hourly rate if required.
  • Revise the design using a Change Control Form and ask the top tenderers if they’ll revise their price.
  • Start again with a new tender process using different tenderers.
Is the tender price fixed?

The tender price is fixed for all items described in the tender package. Some things will still be unknown at tender stage, which is why it’s good practice to allow for a contingency in your budget. Reasons for changes in the final cost can include:

  • Items that haven’t been decided yet, such as floor finishes or lighting.
  • You opt to change something during construction, such as adding additional work.
  • Fixing hidden problems with the existing property that are uncovered during construction.
  • Contractual remedies for things out of the contractor’s control, such as prolonged bad weather.

All changes in the contract sum are controlled by the contract administrator to ensure they meet the terms of the contract and are fair. The contract Administrator can be Acre Design, a project manager or the client themselves

Is the completion date fixed?

Contractors do their best to finish on time, but delays do happen. In that event, the construction contract stipulates if any deduction occurs to the final sum. This can help cover the cost of alternate accommodation while the project is finished. If the delay is due to circumstances outside the contractor’s control, the contract details how they can claim for extra associated expense, such as longer scaffolding hire.

Why is it important for competitive tenders to be fair?

Fairness is beneficial to the client because it means bids can be compared on an equal footing. It also helps contractors. When contractors prepare a bid, they spend significant time understanding the project and how to deliver it, with no guarantee of that time being compensated. For this risk to be worthwhile, contractors need to be assured their bid will be treated fairly so they have a chance of winning the contract. If contractors don’t feel a tender process is fair they may just submit a quick bid at a high price. Fairness includes measures such as:

  • Only inviting tenderers who have a genuine chance to win the contract, i.e. not merely inviting them to put pressure on other tenderers to lower their prices.
  • Giving all tenderers the same time to complete the tender bids.
  • Providing the same information to each tenderer.
  • Allowing the same access to the site for each tenderer.

Glossary of Common Terms

Bid: A formal proposal to deliver goods or services at a specified price, describing that the tender contract requirement will be met. Tender bids are sent by contractors in response to an Invitation to Tender.

CDM Regulations: Health and safety legislation for Construction, the Construction (Design and Management) Regulations 2015.

Closing date: The date and time that a Bid needs to be received. Bids submitted after this date may not be considered.

Competitive Tender: A tender process whereby tenderers compete to offer the best bid.

Contract Administrator: The person or organisation responsible for administrating the contract, e.g. architect, project manager. They are not a party to the contract but will be stated in the contract.

Awarding the Contract: Follows when the procurement process is finalized, contracts are awarded to the winner of the tender competition.

Contract Drawings: The drawings which describe the works to be completed as part of the construction contract.

Construction Contract: A binding agreement between two parties to deliver specified goods and services, for the construction of a building project.

Contractor: A person/company who agrees to supply materials, works or services in accordance with a contract, such as vendor, supplier, manufacturer, fabricator, construction contractor or subcontractor, etc.

Evaluation Criteria: Tender evaluation criteria are used to compare bids and decide which to pick for awarding the contract. Common criteria are price, experience, quality, reliability & capacity.

Health and Safety Executive (HSE): Government body responsible for health and safety regulation in Great Britain.

Invitation to Tender (ITT): Also called request for tenders. This is the initial step in a tendering process where selected suppliers are invited to compete and submit an offer within a specified timeframe.

Lump Sum Contract: A contract with a single lump sum price for all of the works, and the contractor is responsible for completing the project within the agreed fixed cost set forth in the contract. Also known as a Fixed Price Contract.

Main Contractor: A Main Contractor is responsible for the completion of the project under the contract terms and conditions. The Main Contractor can utilise and manage subcontractors or hire people for specific parts of the work to complete the project.

Negotiated Tender: When a Contractor and Client (or Client’s Agent) negotiate the details of a tender bid, as opposed to a Competitive Tender. Although even a competitive tendering process will often include a small amount of negotiation at the end before the contract is awarded.

Offer: Tender offer. Same as bid (see ‘Bid’).

Out to Tender (OTT):The period of time between Invitations to Tender being sent and the Tender Deadline, during which tenderers will prepare their bids.

Parties:A person or organization involved in the signing of the contract. Normally comprise of a supplier and a client with shared rights and responsibilities.

Procurement:The process of obtaining good and/or services from an external source, usually through a tendering or bidding process. This includes determining requirements of the acquisition, selecting suppliers, award selection and other related functions.

Quote:A price for completing a project, typically less formalised than a tender bid.

RFI (request for information):A request by a Tenderer for clarification or additional information to complete the tender.

RFT (request for tender): A formal, structured invitation to contractors to submit a bid to deliver the contract works.

Schedule of Work: A written list of the works to be carried out under the contract.

Subcontractor (Subbie):A Subcontractor is a company or individual being contracted by a main contractor to help deliver the project. See ‘Contractor’.

Supplier:  A person or organization responsible for supplying goods.

Tender List:The list of tenderers who will be invited to bid for a contract.

Tender Process: The process of bidding for work or contracts. A client seeks the best bid from a selection of prospective contractors.

Tender Stage: The stage of a project after construction information is complete and before the construction contract is signed. Includes Pre-Tender services and the Tender Process.

Tender submission: See ‘Bid’.

Tenderer: The person or organisation who submits a tender bid, typically a main contractor.

Tendering: See ‘Tender Process’. Can also mean being ‘Out To Tender’.

Vendor: See ‘Supplier’.

Works: Materials & services provided by the contractor to complete the project. Often simply called The Works.

Let us help build your dreams

Let us know a bit more about you:

Download FREE Resources

Where shall we send the pack?

By clicking you are accepting our Privacy Policy.

That's Great!

 

We will send you an email shortly.

 

 

If you would like an Expert to give you a callback, just drop your phone number below and one of our talented team can arrange a time to go through any questions you might have.