If you’re a contractor that’s new to bidding or you simply need a handy reference guide, read on for more about the different types of tenders you could face, and how best to tackle them to secure a pipeline of work for your business. Equally, if you’re a developer wondering how best to procure your services, you might use this to help you decide.
Public versus private: key differences
Firstly, the great divide: public sector projects versus private. Many of us will already know that the big thing that separates the two in terms of the work winning process is regulation. Schools, hospitals, prisons and any other government buildings will need to be procured fairly and transparently, and must be done through open tendering. Deadlines are gospel, any clarification questions have to be shared amongst all bidders (so watch that you don’t give anything away to your competitors!), and the scoring process is protracted.
Private sector clients are not required to adhere to the same rules and regulations, and most of the time will not have the same volume of applicants, so you may find that engagement is smoother – you can often even speak to the client directly during the tender process – and timelines are shorter. Although some jobs can still be won outright through contacts and keen business development, a lot of private clients and investors do now opt for competitive tender. This ensures their chosen contractor is market tested from the start, and also gives insight into best-for-project methodologies that they may not have considered (so, again, do be aware that your great ideas might go on to be used by the client with a rival contractor).
The differences between public and private sector questionnaires used to be more pronounced. For the former, often money was no object and the end product was key, with little emphasis on factors like the environment and impact on local area. For the latter, cost was paramount, as was proof of the contractor’s ability to work with the client and local authority to boost sustainability, local spend and input into education and community.
These lines are blurring as the construction industry moves towards more sustainable practices: private sector investors wish to be seen as cutting edge and carbon-friendly to prospective users and tenants – and as a responsible partner by local planning authorities – while the public sector increasingly sees value in terms of operational expenditure and longer term gains. Now that BIM Level 2 is an industry requirement, tender questions are also likely to shine a spotlight on your company’s digital investment and capabilities.
These are all factors to bear in mind when preparing your bid library for future tenders: when you are inevitably asked to showcase your company’s investment in sustainable strategies, social value and digital capabilities, do you have the evidence to back this up? If not, how could you tweak your current practices to make the quick and easy improvements that can make a difference?
The main types of tender
Competitive tenders have been a growing phenomenon since the 1980s, and have been part of daily life for contractors of all tiers since the turn of the millennium. In this time, forms of tender have multiplied, and it can be difficult to sort through the differences and the benefits of the various types. Here we’re going describe some of the most commonly used types of tender:
These are open to all bidders, but once parties have expressed an interest they are then required to pass a pre-qualification process (more on that later) before they will be invited to tender. No negotiation is allowed during the restricted tender process.
This is probably the most popular type of tender, because it has benefits for both parties: it allows the client to whittle down a shortlist of suitable candidates, thus simplifying the second stage. It also gives the tenderer earlier feedback, so that if you were successful you can build on this and prepare for the main tender, and if you weren’t you won’t need to wait until the end of a long process to find out.
This is often used by both private and public sector clients, and allows any company to submit a tender – most often requiring a pre-qualification questionnaire (PQQ) and a more in-depth tender response to be returned at the same time.
The idea of open tendering is that everyone gets an equal chance, and the likelihood is that costs will be kept down as parties compete to offer the best value. However, as mentioned previously, the timescales required to evaluate and award these kinds of tender are often much greater, and the prospects of winning can be reduced by the sheer number of candidates – particularly with public sector tenders.
In these types of tender a contractor will be invited to participate by the client, perhaps based on their specific project experience or an existing relationship and success in previous projects. This cuts out the pre-qualification criteria and skips you straight to the main tender – but if you’re new and trying to establish your company, you may lose out on selection.
These use a different kind of selection process, and are ideal for securing long-term pipelines of work. The client or developer uses the framework tender to select a group of trusted contractors to work with for a fixed period of time, often with the option of extension if the partnership is successful. The chosen contractors then compete to work on individual projects tendered within that framework. The client already knows the contractor’s credentials, so framework project tenders are often abridged, smaller documents with a quick turnaround.
There are other types of tender, e.g. negotiated, single-stage and two-stage, but as these do not require unique approaches to writing, we won’t look into these in detail here.
How to frame your responses
Have you done your research into the client’s needs and wants? Do you have clear and compelling examples of how you can meet these? Before you decide to invest your time and resources into a tender, you should be able to answer these questions confidently and positively.
Of course, every client will lead with questions about the themes that are important to them, and the specific challenges associated with the project or framework being tendered. Each tender response should be bespoke, answer each element of every question clearly and directly, and speak to the client: there is no room for repetition, standard sales material or re-hashed text from a similar bid.
Keeping ‘bespoke and specific’ as your mantra, there are still some helpful broader tips and general differences in style between pre-qualification, invitation to tender and framework documents in particular, which we will quickly outline below.
Pre-qualification Questionnaires (PQQs)
These tend to be ‘backward looking’ (but not 100% of the time, so do always read the questions carefully and answer appropriately!). At this stage the client wants to know about what you’ve done before and, in a sense, what your company values. They are likely to ask for your company policies (make sure these are relevant, signed and up to date!), proof of your financial standing and your health and safety record. They may ask for details of your team’s experience and an organisational structure, and will almost definitely ask for case studies of previous similar projects that show comparable experience. Often these are required to be concise and word- or page-limited.
You may have noticed that all of these items have something in common: they can all be done at any time, and not necessarily when you have a tight deadline to meet! If you’re bidding regularly, you’ll find that by far the easiest way of meeting the quick turnarounds sometimes required is by updating your case studies, project profiles, CVs and policies on a regular basis (at the very least as soon as a project is completed, or when a new regulation changes the wording of a policy). If you can do this, then when the time comes you’re ready to go and all you need to do is fine-tune your existing information to ensure they highlight the most relevant aspects.
Invitations to Tender (ITTs)
By now the client has whittled the tenderers down to a smaller, select group. At this stage, they are interested in your ability to deliver their particular project or required services, including the timeline and cost criteria, and they’ll want you to explain to them clearly and concisely how you’re going to do this. So speak their language: play back their own terms and words, show that you’ve read and understood all the documentation they have issued alongside their tender.
The writing style of an ITT is ‘forward looking’. You are telling the client what you ‘will’ do for them (not ‘would’, which can sound self-effacing), and you’re explaining why your way of doing it will best meet their requirements. Make sure every paragraph (every sentence, even – particularly where word limits are involved!) passes the ‘so what?’ test: can you justify why that paragraph is there? Which element of the question does it help to answer? Remember: bespoke, specific and relevant are the watchwords.
In the PQQ you were asked to provide case studies, but in an ITT the expectation is that you support your proposals with evidence to show you know that your methods work. So sprinkle evidence amongst your ‘forward-looking’ words – prove that there is substance to your choice of methodology and link it back to your previous successes.
The difference between framework tenders and project tenders will most likely be obvious from the questions that are asked by the client. In a project ITT, the client will want to know about key members of the project team that will be managing the site; in particular, the main contacts they will be liaising with, like the Project Director or Project Lead.
In a framework, in addition to their questions regarding how you will deliver projects and services, there may also be questions regarding the overarching framework team (indeed, even if there are no specific questions about this, this should still be borne in mind as a key emphasis). The framework team will be asked to convene with the client and other contractors in the framework on a regular basis to share ideas and discuss overlaps in areas such as procurement and employment opportunities. If framework contractors are working in close proximity to each other, e.g. on different phases of the same large site, they may also discuss interface items like logistics and sequencing.
Framework bids will outline these framework team members, who are often in senior roles, and their experience of previous frameworks, in addition to any project experience that is relevant. A university could set up a framework for a range of buildings on its campus, for example, and you can provide evidence of work on similar university buildings. Likewise for a PFI looking to build several hospitals, or a broader public sector framework that could encompass smaller and larger government-led projects or services within a certain geographical area.
The client will want reassurance that you can help them to manage the overarching and strategic implications of works being delivered within the framework, and the framework tender is your chance to give them that.
We’ve given an overview of some of the most common types of tender and hopefully provided some useful tips on how to begin to approach your tender returns. As a developer, the tender type you choose for a given project or scheme will be based on a balance of factors, including level of specialism required, local market and budget. For contractors, review carefully which opportunities you pursue, and remember to frame your responses according to the stages we’ve outlined.