What is Tendering?
I won't mind sharing with you, that I had a bit of a surprise this week. No, it wasn't one of them warm and cosy surprises, but an observation from a friend. She watched me talking to another businessman passionately about Tendering, and recognised the other party didn't understand what I was talking about. This is rare for me, as I'm usually very aware. Although their business was ripe for growth through the medium, there was no way that person would understand why.
This caused me to think. Maybe there are some out there that don't understand it and need further explanation. So, in order to help readers, I thought I'd outline it.
Tendering - An explanation
Think of a tender as a quote for providing goods or services. Quintessentially, that's it. Ok, the pricing may be quite complex (depending on the works or the model in the tender), but it is a quote. In addition, there is a set of documents that goes out with the tender to bidders, which tells bidders exactly what is required. This is the Specification.
When the tender is returned, the client will usually want some demonstration of quality. This can outline to the client that you have great systems and processes and are perfectly placed to provide the goods and services required.
There is usually a tendering programme, which outlines target dates for various actions, such as deadline for notifications of interest, closing date for bids, date of award, etc.
One Stage Tender
There are no prizes for guessing how many stages there are in the tendering process. Just one. This suits simple contracts where the client knows the number of bidders will be limited, otherwise they will spend way too much time marking unnecessarily.
The tender will usually be advertised, and those expressing an interest will be sent a copy of the tender, or allowed access to a site (or portal) where it can be accessed. There will be a deadline date when it has to be returned. Once the tender is marked, the winner is announced and the contract is awarded.
Two Stage Tender
There's an extra stage in this one. It's placed right at the beginning and is called Pre-Qualifying. This is important for larger tenders, especially where there are a large number of bidders, as it is designed to weed out the best 6 or so for the final tender round. The Pre Qualifying stage will ask for lots of information (such a policies, accreditations, systems and methods of working) so that the poor quality bidders naturally never get to the second round. As a point of interest, prices are never discussed at this stage, it's all about quality.
Once you have passed this Pre Qualifying stage, you'll be invited to tender, this is round 2. Similarly, the tender will go deeper into the way you work, your innovation and how well you perform. There is also a pricing document at this stage.
Each tender will have a marking model. It is usually a combination of quality and price. It could be as simple as 100% price, but a 60/40 split is popular to make sure that a good price is reached with high quality services.
Why Have a Tender in First Place?
Grouping works will always bring in savings. Buy a pen, and it'll cost you £1, whereas if you buy 1,000 pens, they will only cost you 30p. When you then buy 1,000 you can make more detailed decisions about ink colour, material, shape, tone etc. This means you get exactly what you want, cheaper.
Tendering can be a quick way of boosting turnover. It also gives stability, as you know that you'll have a set amount of work (say 3 years). You can also borrow staff to help in other areas from these contracts when resourcing gets tough. When you have a large enough contract, you can dedicate staff to it, and it reduces your overhead costs. It can also make you more appealing as you are perceived as a more serious supplier. It'll also boost your company value, and the price will be more attractive to those with thoughts about an end game.
If you fancy having a go, read my blogs and posts. Be thorough with descriptions and never have the 'that'll do' approach, as you need to be on top of your game.
Above all, enjoy and don't give up! It's all experience!
This Post was written by Robert Harris, Managing Director for Harris Associates South West Limited. Robert single-handedly wrote a winning £500 million tender earlier this year. Contact him at Robert@HarrisAssociates.Biz or 0800 254 5000'