Do you know that Estimating and Tendering services are being modified into a more dynamic and essential service in today’s world;

Its procedure is a relevant sphere in the construction industry that professionals – mainly Quantity Surveyors — practice

A lot– such as E-tendering, serial tendering, etc. — has now become part of modern quantity surveying services

in this article, we will look intensively into what Tendering & Estimating in construction really is?  The bidding process; The difference between Tendering and Estimating? Modern current Tendering and Estimating services — practised in today’s world.

Next, we’ll look into clients’ involvement in the tendering and estimating process, types of tendering, and Modern tendering procedures/methods. The difference between manual tendering and E-tendering and conclusively must have tendering books.

What is Tendering and Estimating in Construction?

Tendering and estimating are pre-construction practices, they involve the entire process of predicting the cost for construction and submitting quotation estimated to execute a project

Tendering and Estimating processes are important, Quantity Surveyors are the key professionals in the construction industry fully involved in it.

However, Tendering and Estimating are not the same thing nor do they have the same process, they are entirely different but work hand in hand together

Estimating involves attaining a cost for the project; whilst Tendering is a bidding process in order to be awarded a project contract for execution, this is the difference between estimating and tendering.

As we proceed in this article, we would explain distinctively what Tendering means; its types, procedures, and processes likewise estimation, and its process

However, let’s quickly look into clients’ involvement in the estimating and tendering process.

Client involvement in the estimating and tender process?

Tendering and Estimation process in the Construction Industry
Tendering and Estimation process in the Construction Industry-Clients involvement.

A Client can be any individual, group of people, company, or government ministry that is in need of any Construction service.

Clients are random human beings involved in their various activities of life, they have little or no understanding of contractual activities — such as Tendering and estimating — that happen during contractual preparation and execution.

Clients want to see their dream projects actualise at the expected quality, cost, and time frame.

A client — first of all — consults an Architect who converts his brief idea and outline into a representable working drawing plan;

Thereafter, he consults a quantity surveyor who does the estimating (Pre-tender estimate) and helps out in tendering (bidding) process.

Professionals involved become part of the Client’s team and thus represent the client.

In view of this fact! the Client’s team evaluates and selects the most economically advantageous tender that meets up with the best Quality, Cost, and Time frame.

Tendering and Estimating are important to the Client’s team but the Client is not necessarily involved in the process.

The client’s team evaluates and selects the best and most suitable contractor to execute the contract, not the client per se!

Howbeit, it all bottles down to the client making the final decision or giving professionals in his team the power of attorney to select in his stead.

Whichever, the client’s best interest is optimal.

let’s look critically into Tendering is in Construction, all it entails, and its essence as earlier highlighted

What is Tendering in construction?

Tendering is the process of selecting the most suitable contractor from competing contractors who are all interested in executing a contract for the client.

It is an act of submitting a bid or tender made by tenderers who have the interest to execute the project for the client.

The process of selecting a suitable contractor by the client’s team is done via various different tendering methods and procedures.

A Tenderer can be a medium-sized construction company or the highest calibre of contractors interested in the client’s project.

A Quotation is the estimated cost price the contractor needs to execute the project.

A Tender is a sum of money, time, and other conditions required by tenderers to carry out construction work.

know that tendering is a process, the whole tendering procedure involves both the client’s team and the interested contractors or construction firms.

The client’s team will select the most suitable contractor to be awarded the contract.

These procedural activities are what Tendering entails; thereby a ‘process’ because it involves stages.

Type of tendering in construction

The two types of tendering in construction are Competitive and Non-Competitive tendering 

Competitive tendering

Competitive tendering is a type of tendering where any qualified contractor or contracting firm is allowed to submit a bid or tender.

The client’s team evaluates all submitted tenders and finally gets to select the most suitable contractor amidst all submitted tenders.

In competitive tendering, any contracting firm or construction company can submit a bid or tender if such a firm meets the client’s requirements.

This promotes competition and makes the procurement process more transparent.

It also gives new firms the opportunity of proving themselves,

Common examples of competitive tendering: Open Tendering, Selective tendering, Two-Stage tendering, serial tendering, E-tendering, etc.

 

Non-Competitive tendering

Non-competitive tendering is the opposite of competitive tendering, in this type of tendering; the client’s team selects or nominates a construction company automatically — without competing– to execute the contract.

Non-competitive tendering is rare — yet essential — A type of tendering method practised in today’s construction world.

In this type of tendering, there is no competition or evaluation of other construction firm tenders.

The construction firm would be specially nominated and notified if willing to accept the contract.

Clients practice this tendering method in cases such as: where the project is a special one that requires some certain level of expertise and experience beyond the general one;

Where the project is complex or original (first of its kind) and requires special construction companies known to be capable of fulfilment;

Where the project is massive! Civil or Heavy engineering projects such as marine works, airfields, dams, stadiums, etc.

These Projects are not regularly done by general contractors, but by special contractors or Construction companies and firms.

however, contracts as a result of this type of Tendering are known to be very expensive

The Tender sum is most likely higher compared to competitive tendering methods because of the absence of competition

Non-competitive tendering methods include Negotiated tendering and Selective tendering.

5 Modern Tendering methods/procedures and bidding process

Open Tendering

Open tendering is a tendering method open to all interested tenderers to bid or submit a tender

Advertisement is public and open to all!

Whoever meets up with the client’s requirements is free to submit a tender

Though, a small non-refundable fee (Retention fee) is usually attached to pay before collecting the documents from the client’s team;

Every interested contractor must pay before they can participate in the tender process

This is done to scare uninterested contractors as well as attract interested contractors to apply for the tender.

This tendering method gives new construction companies the opportunity to prove themselves capable.

Open tendering is the best method for getting genuine tenders from tenderers.

Selective Tendering

Selective tendering can be Competitive tendering or Non-competitive tendering depending on the process.

Selective Tendering in terms of Competitive tendering is where the application is only eligible to some selected construction companies or firms

Most clients do keep a register of contractors or construction companies in their database — they invite contractors from their database to apply.

When the project is too important to a client, he is most likely to prefer this type of tender, this is because there is a higher assurance of good performance from the selected shortlisted contractors.

Other processes of open tendering — such as Retention Fee — are sometimes also applicable to selective tendering

Competitive selective tendering is also referred to as Restrictive Open tendering.

 

Selective tendering in terms of Non-competitive tendering is where the clients specifically nominate a contractor or construction company to execute the project.

The Contractor is deemed capable and suited for the project and thus is automatically selected without any competition from other contractors.

Read Non-competitive tendering to understand more about why clients do prefer this type of tendering method for some projects.

Serial tendering

Serial tendering is often used in cases where the clients have similar work in phases and series e.g Hostel phase 2 extension, Supermarket Block B, Apartment 2 Avenue, etc.

With this, the client is assured that the original contractor would be capable of continuing other phases of projects successfully since the first was.

Due to time variation and other factors, Renegotiation and new Contractual agreements between the clients and the contractor is made for the new phases of work.

An advantage of serial tendering is that the client is certain of the delivery from the contractor selected

Hence saves the clients the stress to advertise for another invitation

However, the disadvantage is that room for re-negotiation and renewal of the contract still applies, this grants an advantageous edge to the contractor when renegotiating.

Negotiated Tendering

Negotiated tendering is a non-competitive type of tendering where the client approaches a contractor based on a track record between the both of them.

The client and the contractor are used to each other contractual terms and obligations

The contractor is directly notified and negotiation to execute the contract begins immediately

This type of tendering is common among special projects and heavy constructions where not just any contractor executes.

Two-stage tendering

Two-stage tendering is also known as Two-tier tendering, it is a type of tendering that occurs when the clients want the project to commence as soon as possible

The client is desperate for the project to start immediately with emphasis on the cost being minimal

The contractor can be invited through an open or selective tendering method

Contractors in this type of tendering mostly do have a special contribution to give to the project that other contractors don’t

Two-tier in the sense that project execution can commence with just preliminary drawings and a dummy bill prior to when the main drawings and actual bill will be ready; hence the name “Two-stage”.

Note that in this type of tendering the Client and the Contractor has a good relationship background as trust is essential in a Two-stage tendering procedure.

The major purpose of Two-stage tendering is to save time.

The difference between manual tendering and E-tendering

Manual tendering vs E-tendering
Manual tendering vs E-tendering

Manual tendering is the regular old traditional tendering method where the interested tenderers get the tender documents manually i.e. hardcopy  While E-tendering  known as electronic or digital tendering is where all the tender documents are given online (digitally)

in today’s world, Technological advancement has made E-tendering commonly practised, now contractors are invited to tender a contract without collecting it manually.

all the requirements and the fee would be displayed online and submitted online as well (all digital)

However irrespective of the type of tendering — Manual or E-tendering — the opening of the tender and award ceremony is mostly physical

Though, the concept of virtual tender opening and award of contract ceremony is gradually surfacing among developed countries.

 

Tendering books you should have

To understand more about tendering and estimating in the construction industry;

  1. Here are some recommended tendering books to read and download in pdf
    Estimating and Tendering for Construction Work
    By Martin Brook, a 5th Edition
    Copyright Year 2017  link 
  1. New Code of Estimating Practice
    The Chartered Institute of Building
    Wiley, Technology & Engineering – 288 pages link
  2. Estimating and Tendering for Building Work
    Ronald Carl Smith
    Routledge, 19 Dec 2013 – Technology & Engineering – 400-page link

Other tendering books pdf, likewise estimating and tendering for construction work pdf are available and quite resourceful to help broaden your knowledge in tendering and estimating.

What is Estimating in Construction?

Estimating in construction
Cost estimator (Quantity Surveyor)

Estimating is the process of computing the overall cost needed to execute a particular construction project; it is a technical process of calculating the total cost for a construction project.

The estimator measures the exact quantity of work then builds up rates for the measured quantities to get the total cost

Most clients don’t understand the essence or usefulness of estimation; they carry out a layman’s analysis of the cost from a material price approach alone.

There is more to estimation than just total building material cost.

Take note of the “Overall” in the definition above, it takes more than materials alone to erect a construction work from start to finish, especially large-scale e.g. university campuses, 5-star hotels, etc.

Another misconception from clients is they think “similar structures have the same estimate” irrespective of the location, period, and project duration it took the former project.

Incorrect! there are lots of factors to consider when estimating.

No two buildings are the same — even if similar — some conditions or factors differentiate them;

Factors such as labour, rate, legal works, economy, location, etc. all contribute to the overall estimate, most of which are not familiar to the client.

This is why a Quantity surveyor is a member of the client’s building team; he’ll carry out a pre-tender estimate and duly represent the client in terms of cost.

let’s look at types of estimation in construction during and before a tendering process

Types of estimation in construction

The two major types of estimation in construction are the Pre-tender estimate and the Contractor’s estimate

Pre-Tender estimate

A pre-tender estimate is the overall cost computation done by the Client’s Quantity surveyor.

The estimate serves as a guide for analysing contractors’ submitted tenders

when contractors’ tenders are submitted for evaluation, their estimate is been compared with the Pre-tender estimate

The tender submitted closest to the pre-tender estimate has an upper chance of being awarded the contract

No two tender is exact but it is expected that a well-prepared tender should be in close range with the pre-tender estimate plus or minus fifteen per cent

A pre-tender estimate is important and should be prepared correctly because it serves as a reference point in evaluating contractors’ estimates.

thus, Clients Quantity Surveyors should be careful to avoid mistakes when making pre-tender estimates.

Contractor Estimate

A Contractors Estimate on the other hand is the overall computed cost prepared by the Contractor Quantity surveyor.

Firms and Construction companies show interest by receiving the tender documents; Quantity surveyors from these construction firms prepare the estimate from the tender documents collected.

The estimate prepared is used to generate the tender or bid that would be submitted back to the client

This submitted estimate ought to be within range of the pre-tender estimate

it shows the authenticity, competency and accuracy of an estimate

Different contractors’ estimates would be submitted, the estimated tender closest to the pre-tender estimate has a higher chance of being awarded the contract.

Difference between Tender, Estimate, Bid, and Quotation.

Tender, estimate, bid and quotation are often used interchangeably but they do have slight differences

A tender is a sum of money, time, and other conditions required by tenderers to carry out construction work.

An estimate is the overall computed cost or money needed to compile a tender that is to be submitted

A bid is a process of submitting a tender after showing interest to partake in a contract

A quotation is the total monetary amount i.e. estimate submitted by contractors to bid for a contract

Importance of Quantity surveyor during Tender and Estimating Procedures

Importance of Quantity surveyor during Tender and Estimating ProceduresQuantity Surveyors are key to ensuring a successful process in every tendering and estimating procedure.

Tendering and estimating is a major aspect of the construction industry that Quantity Surveyors are well trained for.

Estimating is a technical function and a vital process practised for accurate cost prediction; that is why it is essential that clients consult a Quantity Surveyor always.

More so, it is the job of Client’s Quantity Surveyors to make clients understand where their every penny is going.

This brought about the emergence of Quantity Surveyors being referred to as financial cost advisers in the built environment.

CONCLUSION

In this article, we got a brief introduction to the essence of Tendering and Estimating services in today’s world, then delved into the definition of Tendering and Estimating in the construction industry

We learnt about ‘competitive and non-competitive tendering’- the two types/categories of tendering

Thereafter we learnt about 5 commonly practised tendering methods which are Open Tendering, Selective Tendering, Serial tendering, Negotiated Tendering, and Two-stage tendering.

Then looked into the difference between Manual and E-tendering, with important tendering books to have as pdf.

Next, we learnt about Estimation, and the different types of estimation i.e., Pre-tender estimate and contractors estimate.

This overview on Tendering and estimating shows how important it is in the construction Industry

And how essential Quantity surveyors are in terms of Tendering and estimating services.

Feel free to read our other related articles, thank you our dearest reader for sticking with costecon. 

 

 

Author

Growing up, I get fascinated gazing at construction activities, this stirred up a passion in me for the built environment. As a candid lover of mathematics, quantitative & logical reasoning, I chose a construction & finance-related discipline i.e Quantity Surveying. I'm a prolific writer and likewise an avid reader. Enjoy!

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