https://theconstructor.

org/construction/types-of-tendering-methods-in-construction/6372/

2. Selective Tendering

Under selective tendering the employer advertises his project and invites contractors to apply to
be placed on a selected list of contractors who will be invited to bid for the project. Contractors
applying are given a list of information they should supply about themselves in order to �pre-
qualify�.

The advantage to the employer is that he can select only those contractors, who have adequate
experience, are financially sound, and have the resources and skills to do the work. Also, since only
half a dozen or so contractors are selected, each contractor knows he has a reasonable chance of
gaining the contract and therefore has an incentive to study the tender documents thoroughly and
put forward his keenest price.

However, since contractors have all pre-qualified it is difficult to reject the lowest bid, even if it
appears dubiously low � unless that is due to some obvious mistake.

A problem with both open and selective tendering is that a contractor�s circumstances can
change after he has submitted his tender. He can make losses on other contracts which affect his
financial stability; or may be so successful at tendering that he does not have enough skilled staff
or men to deal with all the work he wins. Neither method of tendering nor any other means of
procuring works can therefore guarantee avoidance of troubles.

3. Negotiated Tendering

Negotiated tenders are obtained by the employer inviting a contractor of his choice to submit
prices for a project. Usually this is for specialized work or when particular equipment is needed as
an extension of existing works, or for further work following a previous contract.

Sometimes negotiated tenders can be used when there is a very tight deadline, or emergency
works are necessary. A negotiated tender has a good chance of being satisfactory because, more
often than not, it is based on previous satisfactory working together by the employer and the
contractor.

When invited to tender the contractor submits his prices, and if there are any queries these are
discussed and usually settled without difficulty. Thus mistakes in pricing can be reduced, so that
both the engineer advising the employer and the contractor are confident that the job should be
completed to budget if no unforeseen troubles arise.

However, negotiated tenders for public works are rare because the standing rules of public
authorities do not normally permit them. But a private employer or company not subject to
restraints such as those mentioned in the next section can always negotiate a contract, and many
do so, particularly for small jobs.

Even when a negotiated tender is adopted it is usual to prepare full contract documents so that
the contract is on a sound basis. Production of the documents also means they are available for
open or selective tendering should a negotiated tender fail, or should the chosen contractor be
unable to undertake the work.
https://basiccivilengineering.com/2016/05/tendering-methods-procedures-construction.html

2. Selective tender

Selective tendering is the one alternatives developed to address the limitations of the open
tendering procedure. In this method, a short list of contractor is drawn up and they are invited to
submit tenders. The purpose of the elective tendering are 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 list may be prepared through
recommendation from the Client’s professional adviser whom have knowledge of the Contractors
undertaking the work in the past or advertisement through the newspaper (pre-qualification).

The advantages and disadvantages of the selective tendering are stated below.

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

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

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

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

Greater chance of collusion.

Tendering period longer because it involved two distinct stages.

Favoritism’s may occur in the short listing.

A problem with both open and selective tendering is that a contractor’s circumstances can change
after he has submitted his tender. He can make losses on other contracts which affect his financial
stability; or may be so successful at tendering that he does not have enough skilled staff or men to
deal with all the work he wins. Neither method of tendering nor any other means of procuring
works can therefore guarantee avoidance of troubles.
3. 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 single contractor but may be up to three
contractors.

Negotiation process involves are 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
documents inclusive of a nominated bills of quantities to assist 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 relationships of holding and subsidiary companies.

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

In situations where the employer finds it advantages 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 tract 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 ether the special skill
or resources to carry out the particular works.

The employer’s resources are either limited or constrained thereby making the use of the other
tendering impractical.

Disadvantages

Only reputable contractor are invited for negotiation.

The cost work is likely higher than competitive tender.

The Contractor can contribute his expertise during design stage.

Reduces the availability of work for other contractors.

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

Selection of suitable contractor

This involves the selection of a suitable contractor and the establishment of a level of pricing for
subsequent negotiations.

The objective is to select suitable contractor as early as possible is to work together with the
professional team and to establish a level of pricing for subsequent negotiation.

The criteria for short listing is normally confined to items such as technical and financial capability,
experience in similar works and extent of resources (manpower, plant and equipment).

The pricing document should be flexible enough to cater for adjustment of price fluctuation for
the period between two stages and the pricing of the second stage.

In selecting a suitable candidate, a basis for pricing the subsequent second stage should be
established accordingly.

http://eprints.utm.my/id/eprint/77998/1/OmidrezaAmirsoleimaniMFKA20141.pdf https://www.sli
deshare.net/jakechyisern/tender-55531525

https://www.jbaudit.go.jp/english/exchange/pdf/e11d02.pdf

Advantages and Disadvantages of Open Tendering and Selective Tendering