Often in the procurement world, different jargon gets thrown around which might catch you off guard if you’re not paying attention. In this blog post, we’ll take a deep dive into such insider terms used to refer to the types of tender documents that exist. Each of them comes with their own different advantages and disadvantages but what’s more so, each has its own particularities making it better suitable for some situation than for others. The tender document types which will be covered are open (or public) tenders, selective, negotiated, single/ two-staged and term tenders.
This is the most popular form of tendering across both the public and private sectors. In this case, the invitation to tender is public and applications are open (as the name entails) to any interested parties. One big advantage of public tendering lays in its accessibility: all applicants (albeit many in number sometimes) are offered an even chance of winning, regardless of expertise, resources or renown. Accessibility is, unfortunately, a double-edged sword, as it often leads to high levels of competitiveness among participants. The time required of contractors to evaluate all bids is also considerably lengthier than with other types of tenders.
Knowing how open tenders can take longer to choose from, contractors may sometimes send out tendering invitations to a preselected range of companies. Fewer new entrants or smaller companies have access to these sorts of tenders, as the preselection criteria often include a company’s proven track record and their industry renown. This is the main disadvantage regarding selective tenders. Despite this seeming inequality of chances, the promise is hard to turn down – a faster tendering process and perceived increase in the quality of applications on behalf of the contractor.
Negotiated tenders are also directed at a preselected ranged of companies, the main difference being that they often imply an already existing working relationship between the two parties. Most commonly, these kinds of tenders will only be sent to one tenderer, but the number can go up to three depending on case. The main advantage in these cases is based on the continued relationship between contractor and tenderer which enhances communications and leads to better project coordination. On the other hand, costs can vary (hence the name) and may even bring the project to a halt if the two companies are not able to agree on enough terms. The latter rarely happens, still, as research has shown that this sort of tender results in fewer disputes during the work stage.
Both cases represent variations to the estimation processes of other tenders. The difference between them lays in the moment of settling on a contract price. Single stage tenders are straightforward in nature – the costs are clear from the beginning, which allows the tendering to progress faster. In the case of two-staged tenders, the contractor will seek tenderers who are willing to commence work based on an estimated price. A time frame is also settled upon, allowing for both the contractor and the tenderer to gather enough data before deciding on a final price.
This type of tendering is most often used in large scale maintenance projects, where the tenderer is expected to take care of a range of different facilities and locations. Term tenders contain a loosely defined scope of work spread across a fixed period that can be extended depending on case. The contractor usually fulfils payments on a rate basis that matches specific points over the project’s duration. Tenderers are offered the chance to manipulate this rate by a certain percentage margin depending on the amount of work expected.
Hopefully, knowing these terms will give you a slight advantage next time you are answering a tendering invitation – or during your next heated lunch break debate on tender document terminology. Regardless how you choose to use this information, keep in mind that there are always more important elements of such documents that you should be paying attention to. From finding tenders to meeting award & knockout criteria, answering tender invitations can be very effort demanding and time consuming. If you are interested to hear about how Brainial can reduce the time spent on these tasks and increase your chances of winning tender document after tender document, get in touch with us or request a demo.