Two-stage tendering is a procurement strategy where the construction project is split into two stages.
In the first stage, one or more contractors bid on a design-build contract, framework or alliance to complete a portion of the total scope of work (under the design and build) or help in the early stages of the contract, such as design and tendering at the agreed rates, and these will also help in getting budgetary figures for the construction activities.
In the second stage, these same contractors bid on another contract to complete the rest of the scope of work. This helps ensure that costs are kept in check because only part of the work needs to be done at once. It allows contractors more time to come up with bids for each phase separately (rather than having them all down at once).
Two-stage tendering is a type of procurement method for construction projects.
Two-stage tendering is a type of procurement method for construction projects. It can be used in government and private sector projects and is typically employed when it is necessary to have multiple contractors deliver a project. The first stage is the invitation to tender, or IT, which occurs before plans are drawn up for the project. This allows companies bidding on the work time to understand what exactly they’ll be responsible for and have some cost certainty about future projects by getting an idea of how much money will need to be spent upfront. Once all bids are submitted, all parties involved examine them with a fine-toothed comb (and possibly even some magnifying glasses) until they find one that best suits their needs—and then proceed with them.
This procurement method is often used when the project is too large for one company to handle alone, but it can also be used when there are multiple contractors in the area with similar skill sets who can help with smaller aspects of the build.
Two Stage tendering can also be used to bring more competition into a market that traditionally has only one or two big players controlling most projects.
When to use two-stage tendering
Two-stage tendering is a good choice for projects that are large or complex. It’s common for a project to be too big or complicated to complete in one contract, especially if there are multiple phases, each with its own requirements. In these cases, two-stage tendering can help break up your work so that you can get your foot in the door and then proceed with more confidence. Two-stage tendering also allows you to take on risk in manageable chunks—if something goes wrong at any point, you won’t end up losing all of your investment for the entire project. Finally, two-stage agreements allow both parties (the buyer and seller) more time to understand each other’s needs and expectations before making commitments.
This is particularly important when dealing with a new buyer or seller.
The benefits of two-stage tendering
- Cost savings
- Time savings
- Reduced risk in the project’s execution phase
- Improved contractor performance due to early involvement during the design phase. This can lead to better quality work, reduced subcontracting, and lower costs for materials and equipment. In addition, two-stage tendering offers cost certainty on some aspects of a project because you can be reasonably sure of the final contract price at an earlier date than if you were working with only one tenderer at that time.
What you need to know about two-stage tendering
Two-stage tendering is a type of procurement method for construction projects. It is used when the scope of work still needs to be fully defined, and it’s also an effective tool used in situations where there are multiple contractors who can do the work.
The two stages of two-stage tendering are:
- The first stage is the submission of a tender based on the scope of works available at the time (for example, a design contract). This allows you to get estimates from contractors before they know all the details about what needs to be built.
- The second stage is when you put out another tender request once more information has been gathered (for example, an invitation to submit bids). This allows contractors interested in bidding for your project before but weren’t given enough information about what was needed—such as pricing details or technical requirements—to resubmit their bids for consideration after getting more details about your project’s complexity and expectations from them.”
Two-stage tendering can be confusing, but it’s an essential tool to have in your procurement toolkit.
We hope this article has helped you understand what two-stage tendering is, why it’s useful and when it might be appropriate. I