What Is a Construction Tender?
A construction tender is a formal process by which a client invites contractors to submit competitive prices for carrying out a defined scope of building work. The tender process is the primary mechanism through which construction projects are priced and awarded in the UK, from small domestic extensions to major commercial developments.
The purpose of tendering is to ensure that the client receives competitive pricing from capable contractors, based on a clear and consistent set of information. A well-managed tender process results in prices that can be compared on a like-for-like basis, giving the client confidence that they are getting value for money and that the selected contractor has priced the work accurately and completely.
Whether you are a homeowner commissioning your first extension, an architect managing the tender process on behalf of a client, or a builder preparing to submit a tender return, understanding how the process works is essential for a successful outcome.
Types of Tender
There are three main types of construction tender used in the UK, each suited to different circumstances:
Open tendering allows any contractor to submit a tender in response to a public advertisement. This approach generates maximum competition but can result in a large number of returns to evaluate, some from contractors who may not be suitable for the project. Open tendering is most commonly used in the public sector, where transparency and equal access to opportunities are important principles.
Selective tendering involves inviting a shortlist of pre-qualified contractors to submit tenders. The shortlist is typically compiled based on the contractors’ experience, financial standing, capacity and relevant track record. This is the most common approach for private sector building projects, as it ensures that all tenderers are capable of delivering the work while maintaining genuine competition.
Negotiated tendering involves negotiating a price with a single contractor, often one who has been selected based on their track record or an existing relationship with the client. This approach is used when there are particular reasons for appointing a specific contractor, such as specialist expertise, an ongoing relationship or the need to start work urgently. While it lacks the competitive element of the other approaches, a negotiated tender can still deliver good value if managed properly with the support of independent cost advice.
Tip: For most private building projects, selective tendering with three to five invited contractors provides the best balance of competition, quality and manageable administration. Ensure all tenderers are pre-qualified before issuing documents to avoid wasting time on unsuitable returns.
Preparing Tender Documents
The quality of your tender documents directly affects the quality of the tender returns you receive. Complete, clear and well-organised documents enable contractors to price the work accurately and submit competitive tenders. Incomplete or ambiguous documents lead to pricing errors, excessive qualifications and disputes during the project.
A typical tender package for a building project includes the invitation to tender letter setting out the process and return date, the form of tender for the contractor to complete, the conditions of contract (usually a JCT standard form), architectural drawings showing the layout, elevations and sections, structural and building services drawings, the specification describing the materials and standards required, a bill of quantities or schedule of works for pricing, the proposed programme, and any project-specific requirements such as health and safety information.
The bill of quantities is a particularly important document, as it provides a measured breakdown of every element of the works that the contractor prices against. Having a professionally prepared bill of quantities ensures that all tenderers are pricing the same scope of work, making the returns directly comparable. It also provides a valuable baseline for managing variations during the construction phase.
Key Point: Investing time and money in preparing comprehensive tender documents is one of the most effective ways to ensure competitive pricing and reduce the risk of disputes during the project. The cost of a professionally prepared tender package is a small fraction of the overall project cost and delivers substantial returns through better pricing and fewer problems on site.
Issuing and Managing the Tender
Once the tender documents are prepared, they are issued to the selected contractors with a covering letter that sets out the process, the return date and any specific instructions for completing and submitting the tender. All tenderers should receive identical information at the same time to ensure fairness.
During the tender period, contractors will review the documents, visit the site, take measurements, obtain quotations from subcontractors and suppliers, and prepare their pricing. It is common for contractors to raise queries or request clarifications during this period. All queries should be answered in writing and the responses circulated to all tenderers to maintain a level playing field.
If changes to the tender documents are needed during the tender period, a formal addendum should be issued to all tenderers, and the return date may need to be extended to allow contractors to incorporate the changes into their pricing. Ad hoc changes communicated verbally or to individual tenderers undermine the integrity of the process.
Allow sufficient time for contractors to prepare a thorough price. Rushing the tender period leads to errors, excessive qualifications and higher prices, as contractors add risk premiums to cover uncertainty. As a general guide, allow two to three weeks for small projects, three to four weeks for medium projects and four to six weeks for large or complex projects.
Evaluating Tender Returns
When the tender returns are received, they need to be evaluated systematically to identify the best value submission. This is not simply a matter of choosing the lowest price. A thorough evaluation considers the overall price and how it compares to the pre-tender estimate, the completeness of the submission and whether all items have been priced, any qualifications, exclusions or conditions attached to the tender, the contractor’s proposed programme and method statement, the balance of pricing across different elements of the work, and any errors or discrepancies that need to be clarified.
A tender report should be prepared summarising the returns, highlighting any significant differences between them and recommending a preferred contractor. If the lowest tender is significantly below the others, it should be examined carefully to understand why. A very low price may indicate an error, a misunderstanding of the scope, or an intention to recover margin through variation claims.
Following evaluation, it is common to conduct a post-tender interview or negotiation with the preferred contractor to clarify any outstanding issues, confirm the programme and agree any amendments before entering into a formal contract.
Common Tender Mistakes
Several common mistakes can undermine the tender process and lead to poor outcomes for both clients and contractors:
Incomplete tender documents. Issuing documents with missing drawings, incomplete specifications or ambiguous scope descriptions forces contractors to make assumptions, leading to inconsistent pricing and potential disputes later.
Too many or too few tenderers. Inviting too many contractors dilutes the likelihood of any individual winning, which can deter the best firms from investing effort in their submission. Inviting too few reduces competition and may not deliver the best price.
Insufficient tender period. Not allowing enough time for contractors to prepare a thorough price leads to errors, excessive qualifications and higher risk for both parties.
Accepting the lowest price without analysis. A low price is only good value if it is accurate and complete. Failing to investigate why a tender is significantly below the others can lead to problems during the project.
Inconsistent information to tenderers. Answering queries from one tenderer without sharing the information with all tenderers creates an uneven playing field and can invalidate the process.
How Estimating Improves Tender Success
Whether you are a client managing the tender process or a contractor submitting a tender return, professional estimating support significantly improves the outcome.
For clients and their professional advisors, having a detailed pre-tender estimate provides a benchmark against which tender returns can be evaluated. If the returns are significantly above or below the estimate, it flags a potential issue that needs investigation. The pre-tender estimate also helps set a realistic budget and manage client expectations before the tenders are returned.
For contractors, a professionally prepared estimate ensures that the tender return is based on a thorough measurement of the works, current market rates for labour and materials, realistic allowances for preliminaries and overheads, and a clear understanding of the risks involved. This reduces the likelihood of pricing errors and improves the chance of submitting a competitive and profitable tender.
When to Use a Tender Pricing Service
Our tender pricing service is designed for both clients and contractors who need professional support with the tender process. For clients, we can prepare tender documents including bills of quantities and schedules of works, manage the tender process, evaluate returns and prepare tender reports. For contractors, we can prepare detailed estimates and tender submissions from drawings and specifications, helping you submit competitive prices that win work and protect your margins.
If you are tendering for a project and need support with pricing, or if you are a client looking to ensure a fair and competitive tender process, get in touch to discuss how we can help. Our qualified Quantity Surveyors have experience across all types of building projects and procurement routes, from small domestic extensions to large commercial developments.