What is the Tender Process in Construction? A Guide to Types and Steps

The construction tender process is a formal, competitive bidding system where clients select contractors to complete projects based on predefined criteria like cost, capability, and timeline. Understanding the different types of tenders—from open to negotiated—is crucial for both contractors seeking work and clients aiming to secure the best value and quality. The most effective approach depends on the project's complexity, budget, and required specialization.

What Are the Main Types of Construction Tenders?

Choosing the right tender type balances competition, control, and efficiency. Each method serves a distinct purpose in the procurement lifecycle.

• Open Tender: This public invitation allows any contractor to submit a bid. It maximizes competition and can lead to lower prices but often attracts many unqualified bidders, increasing the client's administrative burden. A pre-qualification questionnaire (PQQ) is often used to filter suitable candidates from a large pool.
• Selective Tender: Here, the client invites a shortlist of pre-vetted contractors to bid. This method, based on an approved supplier list, ensures higher quality and relevance but limits opportunities for new market entrants.
• Negotiated Tender: The client approaches a single, preferred contractor for direct negotiations. This is common for highly specialized work or project extensions. While it saves time, it lacks competitive price pressure.
• Framework Tender: This establishes long-term agreements with multiple suppliers for future projects. When work arises, clients can issue a "call-off" order, streamlining procurement and reducing costs over time.

The table below summarizes the key differences:

How Does the 4-Step Tender Process Work?

A structured tender process ensures fairness, transparency, and the selection of the most suitable contractor. The following steps are standard industry practice.

1. Invitation to Tender (ITT): The client issues a tender package containing project drawings, specifications, and contract conditions. This document is the foundation for all bids, ensuring contractors are competing on a like-for-like basis. Mid-tender interviews may clarify requirements.
2. Tender Submission: Contractors prepare and submit detailed bids by a strict deadline. A comprehensive submission typically includes a pricing document, a programme of works (timeline), a construction phase plan (CPP) for health and safety, and CVs of key personnel to demonstrate capability.
3. Tender Negotiation: The client evaluates bids and may invite the preferred contractor(s) for negotiations. This stage clarifies ambiguities and finalizes terms. A revised tender may be submitted before both parties agree.
4. Contract Execution: The final, agreed-upon contract is formalized through engrossment (preparation of the final document) and execution (signing by all parties). This legally binds the contractor and client to the project terms.

What Should You Consider When Preparing a Tender Response?

For contractors, a winning tender response is both accurate and compelling. Beyond just price, clients assess risk, capability, and understanding of the project. Key elements include a clear method statement, a realistic timeline, and robust safety plans. Based on our assessment experience, responses that directly address the client's stated and implicit needs—such as minimizing disruption—often stand out.

In summary, a successful construction tender relies on strategic selection and meticulous execution.

• Clients should choose a tender type that aligns with project goals, whether that's broad competition (Open Tender) or controlled quality (Selective Tender).
• Contractors must respond with detailed, compliant bids that showcase their unique value beyond just the bottom line.
• The formal 4-step process provides a framework for transparency and fairness for all parties involved.