Published : 5/07/2022
From our previous blogs, what a tender is, is well understood. Briefly, a tender is an invitation to bid for a project or accept a formal offer such as a takeover bid. Tendering usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. These tenders are usually conducted in four stages: Prequalification; the issue of tender documents; tender evaluation; tender award. Let's look at each of them in detail.
a. Prequalification saves the owner of the project time and money by eliminating unqualified contractors from the start.
b. It acts as a narrowing funnel wherein contractors who possess the required competencies matching with the contract terms, i.e. the financial and technical ability to undertake the work.
c. In the case where prequalification is used, only contractors which have been pre-qualified are eligible to bid on the contract.
The tender documents usually set out in detail the various conditions applicable to the tender procedure itself. Moreover, the contract conditions that will govern the relationship between the employer and the successful tenderer is defined. Sufficient information must be provided by the buyer in order to attract relevant yet worthy contractors for bidding.
Evaluating RiskBefore commencing a tender procedure, employers and consulting engineers should be aware that the fewer details given or the more vague the specifications and information contained in the invitation to the prospective tenderers, the greater the risk that irresponsible bidders will participate. It is believed that more the detailed engineering information available in the tender document, the lesser the risk the contractor has to bear towards the accomplishment of the work.
A high-priced contact may seem unfair for the short term but will have a heavy risk-taking appetite, that will keep the buyer satisfied in the long run.
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