What Is Construction Tendering?

What is construction tendering?

Before we kick things off, we need to clarify that there are different types of tendering in construction:

1. Developers tendering a construction project to Head Contractors (competing against other Head Contractors).
2. Head Contractors tendering individual trades to Subcontractors (competing against other subcontractors)
3. So on and so forth down the supply chain

In this article, we’ll be focusing on Head Contractors tendering with Subcontractors.

Construction tendering is the process that Head Contractors follow when they need to request and receive prices for a specific piece of work within a project. Tendering sits within the wider procurement process to ensure that Head Contractors are getting the best value for money and the best quality when it comes to construction work.

How does construction tendering work?

The construction tendering process begins when a Head Contractor sends out invitations to tender to subcontractors. This invitation needs to include some key details:

• Scope of the project
• Timeline for completion
• Criteria used to evaluate bids

Subcontractors then have a set amount of time to submit their tenders. These tenders will typically include:

• Details about the subcontractor's experience
• Their proposed approach to the project
• Responses to the Scope of Work
• Estimated cost and timeframes for completing the work

Once all the tenders have been submitted, they’ll be reviewed against each other in an apples-for-apples comparison by the head contractor.

The head contractor will consider a variety of factors:

• The subcontractor's experience
• Their proposed approach
• The price they’ve quoted
• Scope of Work, inclusions and exclusions
• Subcontractor's history and existing workload.

Once the comparisons are complete, a recommendation will be put forward, reviewed and ticked off following a predetermined approval framework.

Challenges of construction tendering

1. Time constraints

   Depending on the size of the subcontract, the tendering process could be time-consuming and may require a significant investment of resources from the subcontractor.

2. Incomplete or outdated documentation

   A common problem facing construction projects in their entirety is time constraints. There’s a lot to do and not a lot of time to do it, which means sometimes an invitation to tender may be sent out without complete information, which results in inaccurate quotes being returned. On the other side, subcontractors responding to tenders without the correct documents can also prove challenging.

3. Lack of visibility

   Knowing who you’ve gone out to tender with, and what the status of those tenders are, can be a challenge, especially if it’s been done through one person's email. Knowing who’s intending to quote, who’s declined, who’s viewed documentation or who’s responded with a question are all critical bits of information. If all communication is done through one person, it reduces visibility and increases risk for the rest of the organisation.

4. Getting enough responses

   The risk here is not getting sufficient coverage of quotes to accurately price the trade & meet the budget. The construction industry is extremely busy, so getting subcontractors to respond to your invitation to tender in a timely manner, if at all, can be a challenge.

5. Manual processes

   Many parts of construction tendering are extremely manual. Generating Scope of Works in Word documents, manually contacting subcontractors with invitations to tender, chasing subcontractors to respond, manually comparing quotes in Excel documents and managing the status of all the moving parts via email and other disconnected systems.

How to improve construction tendering

These challenges can be avoided or mitigated, thanks to the emergence of specialist construction procurement software.

Construction procurement software with tendering functionality can integrate with Construction Management Software that handles Document Control, for example, Procore or Aconex.

This improves tendering processes by helping Head Contractors quickly and effortlessly compile tenders, send invitations to tender, compare quotes and make recommendations.

It can also track the status of tendering in real time, meaning you and your entire organisation have 24/7 visibility on the status of tenders.

Construction tendering is an important process that helps to ensure that construction projects are completed on time, on budget, and to the highest possible standard.

Promoting transparency and competition can help to drive innovation and efficiency in the construction industry, ultimately providing better value for money.

However, construction tendering isn’t perfect, and there’s a massive opportunity for Head Contractors to improve their tendering process through the adoption of technology.