Are your local authority construction tenders receiving fewer bids than expected?
Here at Procure Partnerships Framework, we help public sector organisations achieve construction project success through proactive procurement methods. My name is Jordan, and in this article I want to discuss some of the common reasons why your tenders may be experiencing fewer bids – presenting common challenges and the necessary solutions. In this article, we will cover:
- Why local authorities may receive fewer bids than expected for construction tenders
- Ways in which you can improve tender participation
- How you can encourage enhanced contractor engagement.
Budget Approval and Allocation
The challenge
Do you provide clear guidance on budget status?
Contractors may avoid bidding if it’s unclear whether the budget is fully approved and allocated. Due to the time and resources invested in preparing bids, if contractors sense any level of uncertainty around funding, it is likely they will deprioritise bidding for the tender. In some cases, they will prefer to avoid the opportunity completely.
The solution
- Ensure budgetary approval is confirmed before publishing tenders, and clearly communicate the budget status in all tender documents
- Use current, up to date cost plans to give contractors the confidence the budget is realistic
- Include a GIFA (gross internal floor area) during market engagement to enable potential bidders to run a cost per square metre analysis. This gives them the opportunity to determine for themselves if the project is affordable.
Tendering Process – Single Stage vs. Two Stage
Your choice between a single stage or two stage tendering process can have a significant impact on the number of bids you receive.
The traditional single stage tendering process is when the local authority issues their entire project requirements, and contractors submit bids to compete for all elements, from start to finish, based on price.
In a two stage tendering process, the local authority provides an outline project design against which contractors compete for preferred contractor status. Only the preferred contractor reaches stage two, at which point they enter into a detailed contract negotiation.
The challenge
Contractors often have preferences when bidding for tenders, based on risk and project complexity. Single stage tenders can often feel riskier; more so if the building design is not fully developed.
The solution
- Choosing a two stage tender process allows for enhanced collaboration and early stage clarity of the tender brief. This will help to avoid costly changes or errors during project delivery.
- You should be strategic and transparent in your choice of the most appropriate tendering process to attract a wider pool of bidders.
Design Element and Early Engagement
Early engagement takes place before procurement activities begin. It is a soft market test to gauge the level of interest and capability of the whole bidding pool, rather than specific contractors.
The challenge
By providing contractors with earlier stages of design, this allows the contractor to be a more collaborative partner allowing them to propose the likes of value engineering solutions to potentially reduce costs. A lack of early engagement can deter bidders if they feel the design is underdeveloped or suspect their input won’t be valued.
The solution
- Where there is a significant design component, early contractor engagement is essential for mitigating risk and ensuring buildability
- Adopting a two stage tender process will allow you to bring contractors in at the first stage for design development and construction planning.
- A ‘design and build’ contract can be used to engage the contractor in the design process. This facilitates early involvement for a more collaborative approach
- Clearly communicating the design responsibilities in the tender documentation will give potential contractors critical information about what they are bidding for.
Tender Window – Timeline and Duration
The challenge
Contractors may be put off bidding for tenders when there is a short tender window that doesn’t give them enough time to prepare a thorough, competitive bid. Especially for complex projects, contractors need time to review documents, raise any queries, liaise with their own supply chain and ensure their pricing is accurate and compliant.
Short tender windows can result in bids being rushed and substandard, or no bids being submitted at all.
The solution
- Give contractors time to submit a high quality, competitive bid. Construction tenders for local authorities generally have a minimum tendering period of 35 days, or 30 days if submitted electronically. Wherever possible, give contractors more than the bare minimum in time to submit their bids. This will also indicate to contractors that you are committed to detail and awarding the tender to the most competent bidder.
- Be courteous and respond quickly to any questions or concerns raised by potential contractors, to avoid causing them delays in compiling their bid.
- Clearly define the weighting and scoring system for the evaluation of bids, so that contractors know where to allocate more time. This also makes the processing of bids fairer.
Additional Practical Tips to Boost Bidder Engagement
- Provide clear, concise tender documentation
- Provide the opportunity for open dialogue and engagement with potential contractors. Perhaps organise clarification meetings or site visits
- Ensure the project pipeline is communicated transparently to the market, so contractors can plan their resources in advance.
For support with local authority construction tenders, contact Procure Partnerships Framework
Procure Partnerships framework averages contractors express an interest to tender on each lot. We offer a range of pre procurement support and will work with you to find the most suitable contractor partner for your specifications. If you’re looking for procurement solutions and your projects are based in the South East or London, and need clarity on how our framework could successfully help deliver them, contact me today on 07507 295782 or via email jordan@procurepartnerships.co.uk
