INTRODUCTION TO

TENDER AND QUOTATION

BST304

DR AN NISHA NUR
WELLIANA ABD RASED
WHAT IS
TENDERING OR
BIDDING?
• Tendering is the procedure of obtaining bids
from prospective suppliers and assessing
and picking the successful bidder to award
the contract.
• Tendering is advantageous in many ways,
and is often implemented in both the public
and private sector to ensure accountability
and transparency in the selection process.
TENDERING
• Tendering also allows setting criteria for
selecting the most suitable supplier. This
includes criteria such as cost, quality, delivery
time, and more.
• This helps ensure the selection process is
based on the most reliable data and
information.
• Furthermore, tendering helps to ensure that
the lowest price is offered for the project.
• It helps to ensure accountability and
transparency in the selection process.
• It is also provides a platform for competition,
offers the ability to set criteria for selecting
the most suitable supplier, and ensures that
COMMON TYPES OF
TENDER
PROCESSES
There are three common
tender processes.

Request for tender (RFT)

Request for proposal (RFP)
Request for an expression of interest
(REOI)
 REQUEST
FOR TENDER
(RFT)
This process is the most common. It is
used when:
• the scope of the required supply is
known;
• price is the most important selection
criteria;
• documentation and contract conditions
have been finalised; and little or no
negotiation is required.
 REQUEST FOR
PROPOSAL (RFP)
RFPs are more often used when there are elements
of uncertainty to a project, this may include:
• technology or procedures are new or being used
in new applications;
• documentation has been developed but not
finalised;
• the scope of the market is not fully known; or
• a purchaser is looking for innovative options.
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 REQUEST FOR AN
EXPRESSION
OF INTEREST (REOI)
This process is more often used when:

• The scope or identity of the potential market is not

known;
• feasibility is still being tested;
• a small number of better suppliers can be identified early
to save the cost of assessing a lot of tenders;
• documents have not been fully developed and market
input is needed; or
• there may be useful, but unknown, technologies in the
A short list of potential contractors are then
market.
invited to submit full tenders or proposals.
Importance of the
tender process
The tender process is critical
in construction because of
the following:

1.Preventing bias
2.Value for money
3.Healthy competition
4.Ease of entry for new
firms
1. Preventing
bias
The bids in a tender process are
evaluated based on predetermined
criteria such as quality and price,
giving all interested parties a fair
chance of selection.

2. Value
for money
The client can choose contractors and
suppliers to produce the highest
quality of work at the lowest price
3. Healthy competition
Potential contractors and suppliers to be more
efficient and deliver the highest possible
quality of work while reducing operational costs
and inefficiencies.

4. Ease of entry for new

firms
The tender process is objective and fair, making
it easier for new firms to enter the market as
long as they meet the predetermined criteria.
TYPES OF TENDERS
A client can choose different types of tendering based on
the expertise needed, the contract's nature, and the
construction's complexity.
There are three main types of tendering:

• Open tendering
• Selective tendering
• Negotiated tendering.
OPEN TENDERING
In the open tendering, the client
advertises the proposed project
publicly and is available to all
interested contractors.
Open tendering is common in both
government and public sectors, and is
widely used in the construction
industry.
OPEN TENDERING
ADVANTAGES
All interested contractors are allowed to apply,
thereby increasing the ease of entry for new players
in the market.

The client obtains the best bargain possible.

The selection of contractors is without bias or

favoritism.

Open tendering encourages competition among potential

contractors without obligating the client to accept bids.

Open tendering encourages competition among potential

contractors without obligating the client to accept bids.
 OPEN TENDERING
DISADVANTAGES

The tender list may Contractors’ The contractors may The client runs the risk
be too long because resources go to waste offer a price without of choosing a
the tendering when they spend time fully considering the contractor offering the
applications are preparing details of the lowest price and not
open to all interested tender documents but contract. getting the highest
contractors. are not selected. quality of work.
SELECTIVE
TENDERING
In selective tendering, the client only invites a
shortlist of contractors to submit their bids for
the tender.
Selective tendering is designed to mitigate
the limitations of the open tendering method.
Since a shortlist of qualified contractors is
drawn in advance, participation is restricted
to only competent and skilled contractors.
SELECTIVE It promotes the economical use

01 of contractors’ resources.

TENDERING
Reduces tendering costs

ADVANTAGES 02
because the client invites fewer
contractors to submit their bids.

• It helps to save time

03 because the tender process

is shorter.

The client can select the lowest

offer because only qualified
contractors are considered.
04

The tender process is easier to

05 manage because reduced tender

documentation.
 SELECTIVE TENDERING
DISADVANTAGES
It presents a barrier or entry for
other contractors, especially new
contractors.

It increases favoritism.

The tendering period may be longer.

There is a risk that contractors may

overprice their services and collude.
NEGOTIATED TENDERING
• Commonly used in the construction industry, as negotiation starts
from the tendering process to the dispute resolution stage.
• Negotiated tendering involves two phases: the pre-contract
negotiations and the post-contract negotiations.
• This tendering process typically involves a single contractor but has
an allowance for a maximum of three contractors.
• The negotiated tendering process begins when the employer
identifies a suitable contractor to deal with.
• The employer can select the contractor from their list of preferences
or through the guidance of the professional team.
• Once the client identifies a contractor, they give them the project
details. Negotiation tendering is suitable for types of contracts
where:
• The contractor is involved in funding the construction project.
• The employer and the contractor have a long-term business
relationship.
 NEGOTIATED TENDERING
ADVANTAGES

• Negotiated • The tendering • The contractor • It is the best

tendering process is is brought into tendering
minimizes significantly the project method for
the risk of shortened as early and can particular
failure in the the most contribute circumstances,
construction suitable their expertise such as during
industry. contractor can to the design. emergencies.
NEGOTIATED TENDERING
DISADVANTAGES
This method increases the barrier of entry for
new contractors and reduces the availability
of work for non-selected contractors.

Contractors are likely to quote higher prices

than in more competitive tendering
processes.
 TENDER IN
PUBLIC Vs PRIVATE
PUBLIC SECTOR PRIVATE SECTOR
Traditionally, public sector
PROCESS Private sector tenders, on
tenders were split into the other hand, also
three distinct stages. roughly have these stages,
• Expression of Interest but have preferred to use
(EOI). acronyms beginning with
• Pre-qualification “R”, and any number of
Questionnaire (PQQ). other alphabet-soup
• Invitation to Tender combinations besides:
(ITT). • RFI – Request for
Information.
• RFT – Request for Tender.
• RFQ – Request for
 TENDER IN
PUBLIC Vs PRIVATE
PUBLIC SECTOR PRIVATE SECTOR
• Public tenders more
PUBLISHING &
• Much harder to source
simply SOURCING • tendering of any form is not
• It is very nature, the obligatory
public sector is open to • A private company may
public scrutiny. already have suppliers it
• All public sector regularly uses. They will
contracts must therefore negotiate with them
be put out to tender directly for the delivery of
the services they provide.
 TENDER IN
PUBLIC Vs PRIVATE
PUBLIC SECTOR PRIVATE SECTOR

FEEDBACK

Oblige public sector bodies to provide clear They have no such obligation and are
explanations on how the tender will be more often not to explain how they chose
assessed and then to provide some sort of the successful bidder
(hopefully meaningful) feedback to
 TENDER IN
PUBLIC Vs PRIVATE
PUBLIC SECTOR PRIVATE SECTOR
• Public sector has
THE DOCUMENT
• They have developed
developed a series of their own internal set
standard-type questions. of “unregulated”
• For example, the questions.
Standard Selection • Private tenders are
Questionnaire has now more likely to insert
completely replaced the “touchy-feely”,
pre-qualification stage sometimes
with a set formula of philosophical type
standardised questions questions.
THANK
YOU