17 Aug

What Does Tendering Mean to the Construction Sector?

What is tendering in construction?

Tendering is a vital business development strategy for most construction firms. Why? Because tendering is an effective way of securing new contracts from buyers you may not have had access previously to or even be aware of.

So, what is tendering? As in all industries, tendering is an approach that is ultimately deemed to be the fairest way of procuring works, goods and services. The tendering process, however, can vary slightly depending on your industry sector. It is normally a formal process, aimed at procuring the most economically advantageous option.

In order to secure the work, businesses have to demonstrate why they are the most appropriate supplier for the contract. You must answer the buyer’s specification and evidence how you will meet the criteria of the contract.

What is the process?

Pre-qualifying stages

Initially, buyers may request that suppliers complete and submit a PAS-91. This method of pre-qualifying suppliers is becoming increasingly popular in the construction sector. It was developed by the British Standards Institute to save suppliers time filling out multiple types of PQQs.

In a nutshell, the PAS-91 takes the same ‘what have you done’ approach as the PQQ. The main purpose is to ensure that suppliers who bid for the contract, have the capability to deliver the services/goods if successful.

Requests

Depending on the contract, the buyer can ask for this information by publishing various different requests. For example, buyers can publish:

  • An RFQ (request for quote)
  • An RFP (request for proposal)
  • or an RFI (request for information) and more besides.

If buyers require more than just a quote, they will divide their evaluation weighting into pricing and quality. For example, the buyer may mark the tender responses based on 60% price and a 40% quality. We have also seen this the other way around in a variety of different ratios.

When quality is required, this means that the buyer is assessing your written responses to their questions. They may also request to see three previous, relevant, contract examples and potentially turnover evidence in the form of accounts.

Evaluation

Once you have completed the tender and submitted your bid, the buyer will then evaluate the submissions against the specification.

The highest-scoring supplier will be awarded the contract and the work will commence on the contract start date. 

Why do businesses tender for work?  

Securing contracts through tendering is a proactive approach to your business development strategy. When asking yourself, ‘what is tendering in construction?’ the answer is simply, being practical about growing your business.

It’s great when you get inbound leads through marketing or word-of-mouth. However, to really grow your business sustainably, you need to invest in self-generation.

Tendering opens up a new world of possibilities. If you’re a smaller business, relying on word-of-mouth, imagine the difference that securing a construction contract with the council could make to your pipeline of work. You can secure long-term, 10+ year contracts with local authorities and know that the work is guaranteed for the future.

As well as this, the Prompt Payment Code means that you are guaranteed to be paid on time. All too often we hear of businesses who have been caught in difficult situations when clients miss payments. The Prompt Payment Code means that government authorities have 30 days to pay invoices. 

What if you’re an SME? 

If you’re an SME business and you’re asking yourself ‘what is tendering in construction?’ you can think of it as a way of opening doors.

We have been supporting businesses with their tendering efforts for almost two decades. In this time, we have realised that SMEs are often under the impression that they are too small to tender.

Under this impression, you could potentially be losing out on multiple opportunities for business growth.

In terms of government construction contracts, the UK government has a target to spend every £1 in £3 with SMEs. This means that public sector buyers want to award contracts to SMEs in order to meet this target.

Of course, there will be contracts that are simply too big for SME businesses to deliver. However, for businesses that are new to tendering, we always recommend starting small and working your way up. It is likely that with smaller contracts, you won’t be competing against the “big players”. They will be bidding for the larger projects. By building a portfolio of contracts, you are preparing your business for winning big in the future.

Where do I find tendering opportunities in construction? 

By simply Googling ‘Construction Tenders’ you will be confronted with a plethora of platforms who will source these opportunities.

However, if you’re looking to save time when sourcing these tenders, you should be aware of issues with CPV codes.

CPV codes (or common procurement vocabulary) are how buyers categorise their tenders. In theory, each industry has its own code and buyers simply select the service with the correct code when publishing a tendering opportunity.

However, when we conducted research, we found that a third of tenders were tagged with incorrect codes. The problem is that these opportunity tracking platforms rely on algorithms to collect their data and the algorithms track CPV codes.

That’s why our Construction Tenders platform is different. We don’t rely on codes or algorithms to source our tenders. We have a dedicated team of Opportunity Trackers who manually search thousands of sources, daily. They read the buyer’s requirements and tag each tender with industry-driven keywords.

What does this mean for you?

When signing up to Construction Tenders, you will simply be able to enter the keywords that represent your services and instantly find opportunities. The tenders you see will be relevant to your service offering and ultimately, this will save countless hours, searching through hundreds of irrelevant contracts.

We source tenders for services including;

Refurbishment Tenders

Brickwork Tenders

Scaffolding Tenders

Insulation Tenders

Small Construction Tenders

Building Works

Civil Engineering Tenders

Electrical Tenders

Surveying Tenders

Demolition Tenders

Flooring Tenders

Glass Tenders

M&E

Cost Consultancy

Painting & Decorating

Masonry and many more.

Book a free live demo of the portal to see the current opportunities and see how the system can help your business.

How do I win?

When you find the perfect contract, it’s easy to get excited and imagine winning the tender. Then, you look at the requirements and see that the buyer has asked for quality responses totalling 10,000+ words. How will you complete this to a high-standard whilst delivering your current contracts?

That’s why we developed our sister company, Hudson Succeed. This is our bid writing division. Our Bid Writers have vast experience supporting construction businesses with their tendering efforts. The team proudly holds an 87% bid success rate and they are trusted by over 700 businesses, globally.

Get in touch with the team for a free consultation. Our consultants will be happy to discuss your current tendering strategy or how to get started with your first bid. Call 0203 051 2217 or email hi@tenderconsultants.co.uk.


Shovel-ready projects… 11th August 2020 A Guide to Finding th… 5th November 2020