The types of tender and tendering processes are a means of productive bid management. The tender process empowers a medium of trial and evaluation that could lead to the selection of a supplier or contractor for a particular business. In this relationship, the employer and the contractor have a mutually beneficial relationship after a period of selection.
To ensure that the quality of supply is received while cutting down costs, the tender process for evaluating contractors proves very important and useful. To understand the types of tender and the tendering process, however, it is essential to know what a tender means.
A tender is a process of submitting a proposition by several candidates regarded as potential suppliers. This submission is made as an acknowledgment of an application to tender the requirements of particular services for specific purposes. Knowing that there are a lot of suppliers, the employer seeks a wide range of service providers to select from the poll of them– the best who will deliver both quality and timely products.
Open tender: open tenders are often required by both private sectors and the public sectors of any society. They are primarily required for engineering construction services. The use of open tender is for an employer to publicize a project he wishes to execute. Such an employer then makes an open call to interested contractors to apply and tender their documents based on research on the proposed project. A document which involves the price of the project.
By this, a potential contractor or supplier tenders his documents and waits to be either awarded the contract or otherwise. However, this tender type and selection process have its advantages and disadvantages.
One of the advantages is that it permits an employer to review many potential suppliers’ documents after research on the cost of the project. By this, an employer can select anyone he likes for a mutually beneficial agreement on the cost of the project.
However, the disadvantages abound. First, it wastes the supplier’s resources on both research on the project and the time spent on the research. Open tender often has a lot of applicants so the successful contractor doesn’t know if his stress would be acknowledged after all or otherwise.
Also, some contractors acknowledge that the chances of gaining the contract are slim. They simply disregard studying the details of the project hence provide an arbitrary price that may cut off the profit to be gained on the project. That is, the cost of the project isn’t fixed based on research for wistful guessing, the supplier gives an arbitrary price which may happen to be the least of the prices.
Once the employer sees a contractor with a minimum price, he may be tempted to select the supplier even if he’d conducted little or no research. This often led to the provision of poor products and low-quality materials for the project.
Although open tender gives room for competition even from new engineers who want to exhibit their skills in the field, the risk involved may not be appreciated after all.
Selective tender: under this process of tendering, an employer advertises his proposed project and invites a specific list of suppliers to apply. Under this process, suppliers submit with a given list of information, more like qualification criteria which could rate them above others. This makes this tender process restricted and relatively formal.
However, the advantages and disadvantages abound too.
One of the advantages of the selective tender is that an employer can easily select contractors with adequate experience, resources, and skilled labor to carry out the project. Also, each contractor who is of high repute would devote time to reviewing and researching the project to arrive at a reasonable cost. This ensures that all of the potential contractors are not armchair contractors but active ones.
However, the disadvantages abound in the stance that eventually, the best supplier may not gain the contract because of the other least prices provided by other contractors. However, even if the best contractor wins the contract, he may be confronted with a catastrophic loss which may affect his finances and mental fitness to take over the job.
More so, a contractor may have a shortcoming at having a lot of skilled laborers. This would affect the nature of the contract.
Negotiated tendering: this tender process is characterized by the invitation of a supplier by an employer. An employer may check the list of those he’d worked with previously and invite them to submit prices for a particular contract. This form of tender is used for requirements of specific pieces of equipment or an extension of an already established project. Most times, the negotiated tendering is done based on an emergency, and when a deadline is fast looming.
This process tolerates the invitation to a familiar contractor who then negotiates prices to the mutual benefit of both the employer and the contractor. By this, there is often no complication in reaching a resolution that will avert future problems from the duo. There are also advantages and disadvantages to this tender process.
One of the advantages is that the project finds an easy contractor and the project can be done within the stipulated period. Also, a contractor provides adequate and quality research because the opportunity may eventually be opened up for the open tender. Thus, providing a comprehensive document of research still gives a contractor an edge over others.
However, this tender type is limited to the private sector alone as the public sector doesn’t permit this process. Also, should the contractor fail to respect the negotiation, the contract will be opened up for the open tender processes?
Single-stage and two-stage tender: in the single-stage tender, all information necessary to arrive at a realistic price is used. By this, an employer invites prospective contractors, the tenders are prepared and are returned to the employer after which the most preferred contractor is selected and invited for negotiations.
The two-stage tendering process is however used to permit early recognition and actual appointment of a contractor. By this, the critical information to be provided isn’t yet complete, there is no fixed price for the project. However, the first stage permits an exclusive form of appointment which permits project construction to begin without resolving at a price for the project.
Of course, this form of tender also has its advantage and disadvantage. Should plans eventually go south, the contractor would record losses and not be paid. This is why this project is often given to trusted persons with the skills and financial ability required for the contract.
Also, serial tendering, framework tendering, and public procurement are regarded as types of tender. Serial tendering pertains to the preparation of tenders founded on a particular or abstract bill of the required quantity or schedule of works.
Framework tendering enables the employer to ask for tenders from suppliers of goods and services to be executed over a while. This is mostly done on a call-off basis strictly as and when required. While public procurement is most times for public projects handled by the government.
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