What is a tender and how does it work?

Published : 21/06/2022

When it comes to certain businesses, there is a lot of dealing and trading of goods and services that take place. These deals not only require the companies to make a formal offer for the exchange of goods and services with other organizations but also negotiate the best deal. This offer or bid is put forward in the form of a tender. To understand the criticality of a tender in the business industry, let us go through the term in a little more detail and see how it actually works.

  • What is a Tender? A tender is an offer or invitation to bid for a project or to accept a formal offer such as a takeover bid. Additionally, this process commences with a government and financial institution that puts forward an invitation to a bid for large as well as small projects. These bids have a submission deadline.
    On the other hand, a request for tender or RFT is a formal request or invitation to the suppliers which asks them to submit their best competitive bids to supply products, services and raw materials for a required project. In the private sector, a request for tenders or RFT is usually referred to as a request for proposal or RFP. These requests allow the potential bidders to respond to the needs of the issuer.

    The government of India has asked the private and public suppliers to send in their bids for a civil work tender - the construction of a bridge. Here, the government of India is the issuer of the tender whereas, the various private and public businesses/companies who send in their bid to bag the project are the bidders.

  • What are the different types of tenders in India? In India, there are various types of tenders like open tender, selective tender, serial tender, negotiated tender and term tender. To understand each of them in brief, let us go through them one by one.
  • Open Tender Both private, as well as government organisations, can accept an open tender. This is considered to be the main form of tender in which the client or the customer advertises the tender openly in a newspaper or on the e-tender platform along with some important information about the proposed works to invite the interested contractors and suppliers.
  • Selective Tender Selective tender was developed as an alternative to the open tender procedure to address the latter’s limitations. The main focus of this type of tender is to boost the quality of bids received while also ensuring that the contractors with the requisite expertise are given the right opportunities to submit the required bids on time.
  • Serial Tender The process of serial tendering is a more hybrid or advanced tendering method which combines normal competitive tenders added with a scope of negotiation. This competitive tender can be either single stage or two stages. This type of tendering is mostly used for clients who have a number of phases of similar work.
  • Negotiated Tender As the name suggests, a negotiated tender is used largely in the engineering and construction industry. This is because these industries are subject to pre-contract and post-contract negotiations.
  • Term Tender This type of tender is mostly used in large projects which require high maintenance. Through this tender, the contractor is asked to cover specific buildings or constructions in various locations. Term tender is limited to a fixed time and can demand certain criterion which is to be met by the supplier adhering to the needs of the client.

    Now that you know what tendering is, you should also know that varied types of tendering processes are used across different industries from different sectors including all public, private and non-profit sectors. While we saw how tendering is a common process in various businesses and industries, this process is more common in certain areas like information technology, business consulting, engineering and construction.

    Currently, India has a robust e-tender process that is not only well structured but also ensures the task is done reasonably and efficiently. Keeping this in mind, most institutions have a specific procurement procedure that is carried out in a well-defined process and have fixed policies that direct the institutions on how to make a decision and which tender to accept.

    TenderTiger, is one such online tender information portal that makes available a brief snippet on various tenders in India and globally free of cost, aiding you as a bidder to decide which project to bid on.