Title: 4 Types of Tender and Tendering Processes

Estimated reading time: 6 minutes

An effective bid management and tender process provides a positive evaluation approach that leads
not only to the appointment of appropriate suppliers but to ensure that the ongoing relationship is a
mutually beneficial. A wholly balanced and highly efficient bid and tender management process
improves the quality of the supply chain while reducing costs and managing risks.

A tender is a submission made by a prospective supplier in response to an invitation to tender. It

makes an offer for the supply of goods or services. As procurement routes have become more
complex, tenders may be sought for a wide range of goods and services (for example, on a
construction management contract the works are constructed by a number of different trade
contractors each contracted to the client) and contractors may take on additional functions such as
design and management.

The 4 main types of tenders are:

• Open tender
• Selective tender
• Negotiated tender
• Single-stage and two-stage 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 organisation 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.

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 extensively used in the engineering and construction industry commencing
from tendering till dispute resolutions. Negotiating with a single supplier may be appropriate for
highly specialist contracts, or for extending the scope of an existing contract. Costs are reduced and
allows early contractor involvement. Since the contractor is part of the project team at a very stage
of the project, this results in better communication and information flow.

Single-stage and 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.
Bid Management & Tender Evaluation is a 3-day training course held on 21-23 August 2019 (Kuala
Lumpur). The course is designed to fully equip delegates with the necessary understanding, skills,
tools and templates to swiftly and effectively implement world-class tendered procurement
strategies and processes to ensure that the organisation is able to capitalise on the many
opportunities available when utilising a class leading approach to a well-structured and thought out,
tender process.

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