General Principles of Commercial Construction Tenders in the UK and Europe
- 1.1 Conclusion
The commercial sector is the largest contributor to the construction industry, amounting to over 75% of all construction projects in the UK alone. As such, this sector is subject to various tender types and contract models used during procurement processes.
By using smart software for commercial tenders, you can make scoring these projects incredibly easy. To understand the different types of tenders within commercial construction, it’s important to have an understanding of the general principles that guide the process.
General Principles Of Commercial Construction
1) Invitation to Tender (ITT): This formal request invites a company or contractor to submit an offer and compete for the contract. This tender typically requires companies to provide information such as their capabilities, financial resources, experience and references to be eligible.
2) Design-and-Build: With this tender model, one contractor takes on complete responsibility for the project from conception to completion, including design, construction, commissioning and handover.
3) Fixed Price: A fixed price tender sets out an agreed cost for the project’s duration, including all materials and labour costs. This is usually used when there’s minimal scope for variations during the process.
4) Competitive Dialogue: In this tender process, the client would invite several contractors to discuss the project requirements in detail and make an offer. This is most suitable when there’s a complex scope of work to be completed.
5) Negotiated Tender: A negotiated tender involves the client and contractor entering into a dialogue to decide on the best overall solution for both parties. The scope of work, cost, timeline and other factors are then agreed upon through mutual negotiation.
6) Target Cost Contract: In this type of contract agreement, the client sets a target figure as the maximum they’re willing to pay for the project. The contractor will then aim to bring in costs lower than that figure but take responsibility for any significant overruns.
7) Framework Agreement: A framework agreement is a long-term arrangement established between a client and a contractor to complete multiple projects over a set period of time. This type of tender allows clients to benefit from bulk discounts and secure continuity with one preferred contractor. It also enables contractors to plan ahead and secure steady revenue streams.
8) Early Contractor Involvement (ECI): In this type of procurement process, a contractor is appointed at the earliest stages of the project to help identify and develop design solutions. This tends to be used when complex technical requirements are involved, or a significant amount of innovation is required.
These are just some of the most common types of tenders used in commercial construction projects in the UK and Europe. It’s important to note that certain public sector clients, such as government-funded bodies or local authorities, may also set out specific tender processes.
As such, it’s always recommended to research your contract requirements carefully before submitting an offer. With so many options available, understanding each type of tender can make all the difference when choosing a suitable agreement for your project. By familiarising yourself with the different types of tenders and researching their requirements, you can find the right tender model for your business.