Tendering for work can be a time consuming and costly exercise.
Long tender lists and the law of averages mean the lowest price is often a stuff up.
Some more enlightened Clients (when referring to Clients I also include Main Contractors subcontracting work on large projects) have processes for weeding out abnormally low bids but most will find it difficult to resist a very low price and will reconcile their decision to accept it on the basis that the price saving provides a war chest to deal with the inevitable claims and variations that will follow as the ‘successful’ bidder struggles to turn around a loss-making project.
The larger the project the more information Clients require to be submitted as part of the tender in order to demonstrate that the Contractor understands their requirements. In some cases, failure to provide the requested information can invalidate the tender.
Not surprisingly then, Contractors spend a great deal of time poring through the tender documents, compiling checklists to ensure that nothing is missed and all requested information is provided.
Unfortunately, this is often to the detriment of analysing what the Client really wants.
What do I mean? – surely the Client knows what they want and have clearly articulated their requirements in the Invitation to Tender (ITT)?
Well here’s a news flash for you – this rarely happens – for any number of reasons including: lack of time available to prepare the tender documents, outsourcing of tender packaging without an appropriate brief and preparation of documents by the newly appointed contract administrator freshly back from a Contiki trip to Europe.
Alternative Tenders
Alternative tender submissions are submissions that depart from the strict requirements of the ITT. They can be used to give the Client something else to think about, including:
- Different products / technologies from those specified that enable the project to be constructed for less money.
- Opportunities to complete the work quicker than requested. This can be particularly attractive in respect of commercial buildings as the Client might be able to start earning revenue from the development sooner or in the case of a Main Contractor, save on overhead cost.
- Alternate construction methodologies that minimise disruption to existing stakeholders. This can be a key consideration for public infrastructure works but also with alterations and refurbishments to existing buildings.
Most importantly, Alternative Tenders provide an opportunity to secure work outside of the main chook raffle.
I was once part of a team that convinced an International Oil & Gas major that a Lump Sum Hard $ form of contract was not the best way to go on their high-risk project in the middle of nowhere and that our alternative incentivised cost reimbursement proposal would provide greater value for money. So nothing is out of bounds when it comes to preparing an alternative submission – not even the form of contract.
In some cases, a Client will actively seek such submissions and provide details of how they should be submitted and how they will be dealt with but just because an invitation to tender contains no mention of alternative submissions doesn’t mean they will not be received or considered.
In many cases ITTs will include a pre-condition that a compliant submission must be made before an alternative will be considered. Irrespective of whether they do or not, this is good practice as it keeps you in the game if the Client is not interested in considering alternatives – but in my experience this is rare and Clients are always willing to consider offers that save time, money or provide a better end product.
So go ahead and tick the boxes – but if you want to improve your chances of being successful, don’t forget to think outside of them as well.
Jon Davies
Principal of Brackenway Consulting
QS, Commercial Manager & Contract Facilitator