Construction companies follow different delivery methods. The design and build approach is one of them. The delivery method surpasses the bidding phase and employs a single party for designing and building the construction project. Although this process saves stakeholders’ time, its tendering procedure might be a bit complex.
The selective tendering process in construction seeks the most suitable contractor or company for the job. It only allows invited parties to bid for the construction project, which makes it easier for clients to select the best contractor for the job. To learn more about construction bidding, you can also click this link.
Regardless, this post tells more about selective tendering and its pros and cons in the construction industry.
What is tendering?
Tendering is the process of allowing construction companies or contractors to submit bidding proposals against a construction job. Here are the relevant terms with their meaning that might be confusing for you:
- Invitation for tender – Project owners or clients, like government or social institutes, publish an invitation for tender to attract contractors for bidding. The invitation for tender technique gives insight into the ongoing construction market, and clients can set prices accordingly.
- Tender – Clients publish a document for the required construction services called an invitation to tender. Usually, a tender is open to the public, and candidates must professionally submit bidding proposals against the tender.
- Tenderer – Construction companies, independent contractors, or any other capable institute who bids for the construction tender are called tenderers.
Construction tenders are open for a specific deadline. Clients who publish the tender chooses one of the following procedures to secure the tender:
- Selective tendering
- Open tendering
- Negotiated tendering
- Framework tendering
- Serial tendering
Selective tendering in construction
Selective tendering is for only selected construction businesses. Clients invite those businesses by sending them the invitation to tender or invitation for bid via the following platforms:
It’s a research-based tendering procedure in which clients only consider those contractors or companies having relevant construction experience. That means selective tendering is not for all types of construction projects. Instead, the project’s scope, complexity, and timeline determine whether you should choose selective or general tendering.
After approaching the relevant construction companies, clients communicate with them to know whether they are interested in working on the project. Once the contractors respond, the client sends the invite to tender and gives a deadline for the bidding proposal submission.
Usually, only six potential tenderers are shortlisted in the selective tendering process. After that, the client finalizes the best bidding proposal based on the following:
Remember that experienced contractors and construction managers never discard the list of shortlisted service providers after finalizing a bid. Instead, they keep the list on record and might contact one of them if the selected bidder doesn’t meet the committed performance level.
You can also contact the shortlisted construction companies for specialized purposes depending on the project’s scope and budget.
Types of selective tendering
Selective tendering is of two types:
- Single-stage tendering – It follows traditional tendering by issuing the appointment to hire the contractor for the project. The client allows the contractor to negotiate, and both parties agree on a fixed price at the project initiation phase.
- Double-stage tendering – This approach allows the contractor to begin working on the project’s initial part, i.e., designing the project or consultation. After that, the client provides the contractor with the complete information to finalize the price.
When should you choose selective tendering?
You should choose selective tendering for two reasons:
- When the construction project is highly complex and needs a specialized team and managers.
- When only a few tenderers are available for the construction job.
Selective tendering is faster than traditional tendering because it quickly finds the relevant tenderer. You don’t need to entertain holding rigorous interviews or assessments, like in open tendering.
Since it’s a design and build delivery method, you must target only relevant companies who follow this delivery method. That automatically excludes other construction firms, making the tendering process simpler.
Clients also get confidence during selective tendering because the chances of getting the appropriate contractor are higher in this procedure.
Pros and cons of selective tendering for design and builds
Selective tendering for design and build construction is a good approach. However, you must consider the cons associated with it. Let’s first talk about the pros of this approach.
Pros of selective tendering
First, selective tendering allows you to find specific construction companies. Since you invite companies and contractors to bid for your project, you can be particular about your requirements.
For example, you can only invite those companies who offer licensed construction services with their own subcontractors in every category. Another example could be seeking a construction business equipped with the latest technology.
Second, selective tendering is less wasteful in terms of terms and resources. You don’t organize tests and interviews for numerous companies and contractors. You only invite specific construction companies who follow the design and build approach and fulfill your requirements.
So, rest assured of quickly finding the right team for your construction project using selective tendering.
Cons of selective tendering
The first con of selective tendering in design and build construction delivery is the creation of a monopoly of well-established businesses. Construction companies that are new in the industry struggle in the market due to selective tendering. You exclude them from your list while sending tender invitations to other giants with a strong portfolio.
Selective tendering creates a bias in the construction market because only the selected companies are contacted again and again for previously won tenders. The bias might be due to several reasons, including:
- Personal preferences
- Lack of awareness
Although you get the required company for your project, selective tendering kills innovation in the construction industry. New companies with potential and creative ideas don’t get a chance to work on big projects because of a lack of experience. That way, other construction giants keep getting the invitation to tender, and newcomers are left helpless.
Selective tendering is viable for complex, lengthy, and technology-demanding construction projects. Since you can’t rely on every construction company or contractor in the market, you can research on your own and send invitations to tender to only specific businesses. Doing that helps you find the best resource to efficiently complete your project.