What is tendering in construction?

Unsure on what a ‘tender’ is and what it’s used for in the construction industry?

Give your business a sustainable future and learn all about tendering construction projects in the public and private sectors in this article. Find out:

• What is tendering?
• Should your business tender in the construction industry?
• How to tender a client: a 4-step process
• How to make your tender more accurate with Countingup

Tendering is where a client invites companies to provide proposals and offers for a potential project and is sometimes called ‘bidding’. When receiving tenders, clients are looking to hear about expected costs, where firms can add value in different areas, and what industry experts foresee as potential problems before any work goes ahead.

After the submissions close, clients then compare offers and outlines to determine the most ‘economically advantageous option’. Naturally, no two organisations will weigh proposals the same. However, depending on the exact request a client has asked for, they may be more open to tweaks or changes to the initial project outline. 

For example, a request for a quote will likely mean clients already have a plan and are simply looking to find suppliers to fulfil the brief.

On the other hand, requests for proposals or information often allow different firms to suggest direction or highlight potential issues. This way, clients can minimise risk, maximise value and you can highlight the ways your business is better than the competition. We discuss how to write a tender in the section below.

While advertising allows your business to put out a message and invite interested customers to reply, tendering works the other way around; customers invite businesses to supply a quote or information. Therefore, tendering in the construction industry is a very common way for clients to execute projects because it allows them to find the best value for money.

Tendering can be more effective than advertising as it shortens your business’ procurement time in finding clients. This allows you to focus more on providing bespoke proposals for each project rather than launching a complex advertising campaign showcasing elements of your business. Therefore, yes –– don’t let any opportunity pass your business by and start tendering clients today.

Several options are available to you when looking for invitations to tender. You can find tenders by searching online, contacting clients proactively or using public databases run by the UK government. Use two of the following to help start your search:

• UK Gov Contracts Finder – for contracts above £10,000
• Find a tender service – for higher-value contracts typically worth over £100,000

The tendering process often begins with some sort of pre-qualification questionnaire. These are routine surveys that allow clients to make sure any winning firm abides by certain policies beforehand. 

Within the construction industry specifically, a commonly used standard is the PAS 91 or Publicly Available Specification 91. This document contains various yes/no questions for common requirements that some clients (particularly within the public sector) may look for before inviting your business to tender them. 

Once you’ve been invited to tender a client, you’ll need to make sure you provide what they’re looking for.  Clients usually indicate what they’re looking for and include any specific requirements that suppliers need to consider. These may include things like:

• A total word count and level of detail (specifying whether the request is for a quote, information or full proposal)
• A budget range or total value to meet
• A description of the work and any unique requirements
• Client information and contact details for any follow-ups
• Whether or not the project is suitable for small to medium-sized businesses
• Closing time and date for offers
• Start and end date for the contract

Therefore, you should keep each of these in mind when drafting your offer. Tenders are a way for businesses to show their value, so make sure your tender fulfils the requirements and exceeds expectations. This process may need several (re)drafts before you’re confident that your offer is suitable, but it’s a necessary step if you’re to be the successful contact holder afterwards. Just make sure you submit before the deadline.

Once the deadline for tenders has closed, the client will proceed to evaluate and compare offers. Depending on who you’ve tendered, each firm will have different frameworks during the evaluation process.

It’s therefore important you have an awareness of the critical elements a client might look for. These might be suggested in the brief, or you may come to learn what certain first value most from your experience in the industry. Do as best you can to succeed in this critical stage.

In particular, the UK Government specifies that departments and administrations don’t always have to use the cheapest offer from a supplier. The latest advice shows that your tender should incorporate and evidence price, quality and social value all in one. 

While private clients will copy some of these elements to various extents, taking a more holistic view of value for businesses (incorporating price, quality and social value), can help your business appear more competent and professional. 

If you’d like more information on what your business needs once you’ve won a tendered contract, read more in our article What is a statement of work and how do I create one?

Quoting for work or providing accurate tenders is tricky if you don’t have a sound understanding of your business’ finances. Countingup can help you gain a deeper insight into your business performance and write client tenders to the penny.

Countingup is the business current account with free, built-in accounting software. You can take advantage of the real-time profit and loss reports to see how your business grows and operates best. The unique app also offers instant invoicing and expense reminders complete with a handy receipt capture tool.

It means that you can make sure your business’ finances are always up to date, accurate, and organised. Find out more here and sign up for free today.