Client tips on how to gain an edge with your tender returns (Pt 4)

PART 4 OF 4: HOW TO GAIN A COMPETITIVE EDGE WHEN TENDERING FOR £10M+ CONTRACTS.

Before we get stuck in, let’s have a quick recap…

WHY DOES GAINING AN EDGE BEFORE & DURING TENDER MATTER?

This is a fair question. If you submit the lowest price surely that should be enough to win, right?

Not quite.

Smart clients (the kind you want to work with) see the construction phase as the riskiest part of the process (and Contractors as the riskiest appointment).

This means that if a contractor submits the lowest tender price but they have a poor reputation or vague schedule of work, they will still lose.

The downside of making a poor impression during the tender stage is very expensive. Alternatively, the upside is very good.

Not only can it lead to tender success, but even if you aren’t successful, it could make you a front-runner for a future project.

HOW CAN CONTRACTORS GAIN AN EDGE DURING THE TENDER PROCESS?

All experienced contractors are familiar with this process.

Broadly speaking it is composed of 10 stages (from a client’s perspective). This is how you gain an edge at each stage of a £10m+ tender:

1. Tender List Creation 

If you’re operating at this level, you’ll already be building relationships with potential clients, Architects and Project Managers in advance of the next project.

If your whole pipeline is schemes of this size you have the luxury of time, for a while. The downside is that you have to continually secure large projects to keep your business running.

So then the question becomes, how do you connect with clients you aren’t networking with?

For projects of this size, the most valuable advertising opportunity is hoardings and other onsite branding.

• Hoardings: On large schemes, the developer/client will likely use hoardings as a branding opportunity. There is also an opportunity here for your construction brand to be included. Hoardings can be expensive. Offering to pay for inclusion on the site hoarding could be an excellent investment. You could even offer to provide a budget for the site hoardings as part of your tender return with the requirement that the contractor gets similar or equal billing as the client. If you can secure this you will have secured a 12-month+ billboard scale advertisement for a few thousand pounds. Clients with pipeline projects of similar scale always, always, spy on projects of a similar size and value to theirs. Even going as far as downloading planning drawings for comparison.
• Other on-site advertising opportunities: A potential client may not want to share the limelight with a contractor but there are other options. Scaffolding enclosures, site safety equipment and welfare cabins are all advertising opportunities. The more visible they are from the street, the better.

As mentioned above. This onsite branding should supplement other attempts to be ‘top of mind’ for those pulling together tender lists.

2. Invitation to Tender 

At this scale accepting the invitation is a strategic business decision. Tendering for such large projects requires a lot of work and clients will often invite 4 or 5 firms to tender rather than 3.

However, this is a contractor’s first real opportunity to make a good impression. Site visits are a standard. However, this exercise becomes much more useful if you can get to know the client and their needs. An engaged/professional client will want to meet you anyway.

In our experience, the contractors who ask for a design presentation from the Architect (preferably with the client present) tend to feel more familiar and engaged. The presentation also allows you to demonstrate your expertise. As mentioned before, Architects can be a great doorway to more projects. Even if you’re unsuccessful, making a good impression on the Architect will pay dividends.

If you decline the tender, you can still make a good impression by politely declining and also sharing the kinds of projects you have recently completed or are working on. ‘ For next time’.

You may not want to be on this list, but you may want to be on the next one.

3. Tender Issue (Docs are sent out)

At this contract value level, tender documents should be issued with branded proformas to allow for direct comparison between the returns.

If this isn’t provided an easy way to stand out is to check with the design team whether there is a format they would like the information to be returned in.

If the team hasn’t described one it’s unlikely you’ll get a strong steer. However, simply asking allows you to demonstrate your willingness to work together, communicate well and produce good work.

It’s simple but effective.

4. Tender queries / RFIs during the tender stage 

Tender queries are expected at this scale.

These queries give the design team a good idea of which contractors are seriously reviewing the project information. The queries are often collated together and answered together but informal communication will still occur between the PM and the client.

Tender queries are a great way to demonstrate your expertise and diligence.

An incisive question could save both you and the client a lot of pain and cost.

Another strategy that could pay dividends would be to confirm whether the client team would appreciate a price for building a more sustainable scheme. For very large schemes this may involve more work, so be sure they want it.

This is an effective way of demonstrating your sustainability credentials, up-selling and managing eco-legislative risk.

For large projects that can be phased but aren’t tendered on that basis, we would recommend providing a phased option. This will seem helpful and proactive and will protect you from mid-negotiation changes in strategy.

As projects become larger this comes more likely. Because of the scale of construction finance being secured debt cost inflation can force the developer to build one section, sell/rent it, and then finance the second phase with a new debt deal.

5. Tender Returns 

At this scale, the tender returns become very complicated. They’re large, complex and loaded with varying levels of risk.

Ideally, a data room should be provided for each contractor. If one isn’t created, I’d recommend creating one for the client team to download the return from.

Not only is this easier than sending a large email, but it also provides a digital audit trail for the process. This allows a contractor to demonstrate that they work in an organised manner.

For the avoidance of doubt, data rooms should be structured in a logical way with logical file naming and key docs at the top of the structure. Any file revisions need also to be highlighted.

Even at this scale, the thought process of the client can still be ‘if they can’t format a tender return, can I trust them with my very expensive project’.

C-Link’s whole approach is based on best-practice tendering. It standardises the tendering process and gives a great insight into how high-value tenders are considered client side.

An additional risk for clients at this scale is the solvency of a contractor. If accounts aren’t requested, I’d recommend sending them along with your tender return as well as up-to-date insurance certificates and recent client testimonials.

A final point on sustainability. Large buildings/projects create more CO2. As a result, the whole value chain (from lenders to developers and end tenants) has become much more focussed on sustainability. To date, the focus has been on sustainability during operation.
Now the focus is shifting to sustainability during construction.

Contractors on frameworks will soon (if they aren’t already) be required to prove that their operations are decarbonised and that their Scope 1, 2 and 3 GHG (greenhouse gas) emissions are at acceptable levels.

There are a few ways contractors can decarbonise their onsite operations.

• Batteries: An emerging trend among large contractors is the use of electrically powered vehicles. In turn, this has led to the growing adoption of large, stationary, grid-connected batteries. These batteries are used to draw down cheap or renewable energy and to power site plant and facailities.
• Solar Energy: Solar-powered welfare cabins (with mains connections) may be the most seamless way of decarbonising some site activities.
• Material Specs: Value Engineering is a typical feature of construction projects. However, changing specs to reduce carbon and considering the carbon rating of replacement specs is becoming more common. Developing a supply chain that is local or more sustainable will make contractors more attractive to this new breed of client.

Developing a subcontractor supply chain that is local to every project while maintaining trust and quality is difficult. This is where C-Link can help. C-Link grants contractors access to vetted and pre-approved subcontractors all over the country. As a result C-Links national and multi-regional clients are able to source expertise and reduce the carbon profile of their construction teams.

6. Tender Return Analysis 

There isn’t much that a contractor can do at this stage to gain a competitive advantage.

7. Value Engineering / Initial Negotiation and clarification

Material Cost inflation has made Value Engineering even more important.

While most teams are good with costs they are less familiar with lead times.

In the Contractor’s Proposals, it would be advantageous to add supporting commentary on lead times and materials scarcity. This can be in relation to substituted specs or the base tender spec. Both would be helpful to the design team and would communicate mastery of your supply chain.

At this scale, a contractor with a deep supply chain and strong purchasing power will have an advantage and win confidence. In place of this, a contractor with clear commercial awareness will also stand out.

As mentioned above, mentioning the carbon profile of the proposed replacement specifications would send a strong signal to the client that they could be working with the most sustainable contractor.

8. Tender Award (Contractor is selected and unsuccessful are notified)

Good manners and a gracious receipt will be sufficient for this stage. The worst thing you can do at this stage is be rude, unreachable or evasive.

It can be tempting to keep quiet about any problems you noticed in the contract documents.

Don’t.

Surfacing any concerns will help build trust and avoid problems later.

9. Building Contract Negotiations and clarifications (Insurances, Contract Sum Analysis, Appointments, Novations etc)

Building contract negotiations at this scale can be intense. Not least because the scale of the project requires more complex and bespoke contract amendments.

At this scale projects start to be ‘forward’ and/or institutionally funded.

As a rule institutional funders can be very tricky and expect non-standard guarantees.

Conversely, they also tend to rely on retained Project Managers because they rarely understand construction or development.

In these scenarios, the best way to stand out (positively) is to use a solicitor. The ideal scenario would be for a construction solicitor to support a commercial director/manager.

Engaging a solicitor may seem costly but it’s not more costly than getting the contract wrong.

The added advantage is that the solicitor will be able to provide some distance and keep things civil.
On points of difference offering an explanation as to why you can’t / won’t accept certain amendments and proposing compromises will keep things moving smoothly and set the tone for the working relationship.

10. Contract Signing and Commencement 

On projects of this scale, it makes sense to celebrate the new or ongoing working relationship. This should include the design team as well as the client.

It’s a small gesture but it will set the tone for working together.

HOW ELSE CAN I GAIN AN EDGE IN COMMERCIAL TENDERING?

C-Link is helping market-leading contractors save hundreds of man-hours by digitising and streamlining their tender processes.

If you’d like to discuss how C-Link can help you do the same, drop us a note here.

If you’re not ready but you’re intrigued, why not check out our platform?

 

Photo by Christopher Burns on Unsplash

About Martin Prince-Parrott

Martin is an ESG Real Estate Developer and former Award-Winning Architect. He’s spent the last decade designing and developing a billion-pounds worth of mixed-use institutional-scale real estate. He’s worked with and for market-leading companies such as Gensler, Microsoft, Barratt Homes, Legal & General and Barclays Bank.