The very thought of using a tender process to procure services may seems like a long winded exercise, or even unnecessary if you already have a preferred contractor. However, it is a necessary evil if you want to ensure you receive the most competitive quote.
In fact, if run correctly, tendering provides clarity of your project requirements, it confirms the project objectives and sets clear timescales for the works to be completed. Going to the open market is an effective means to examine if you have the best supplier for the job, and it does not preclude the reappointment of the incumbent contractor should they be the best available to provide the services required.
This is why you shouldn’t always reappoint your existing design and build team without considering other options. Sticking to what you know might not necessarily be the best or safest option. Companies can get complacent and if they fail to keep up with technological advancements or changing industry standards, you might not be getting the best value for money.
Here are five key benefits to tendering out your next project:
1. Securing a pipeline post-COVID
The landscape has changed significantly over the past year. Not only did businesses have to cope with the COVID-19 pandemic but also the UK’s exit from the EU. This has had a knock-on effect on supply chains and cash-flow for many firms.
The slow adoption of digital technologies and other factors within the construction sector has left some businesses poorly equipped to handle these disruptions in the market. So, whilst you might have a preferred contractor in mind or feel tempted to avoid tendering out your next project, in this current climate its worth considering more than one option.
2. Due diligence – Securing best value for money
Sticking to what you know isn’t always the best option. Familiarity breeds contempt and if your contractor knows you will continue to provide them with work, you might not get the most competitive price.
Tendering out works to more than one company provides you with an opportunity to challenge your existing contractor on the quotes provided and helps ensure you are getting the best possible price. Not only does it filter out good suppliers that want to give their best performance, but it also ensures that the agenda is being driven on your terms.
3. Compliance and regulatory requirements
From a legal point of view, tendering work ensures the company selected is compliant with regulations and follows industry standards. Whilst you might have already done this exercise in the past with your preferred contractor, accreditations, memberships, and insurances can expire and its best not to assume that your contractor has renewed them. You will want to ensure that individuals appointed to the job have received health and safety training, are qualified, and their accreditations are still valid.
4. Market alternatives
Technological advancements are transforming the construction sector. There are more efficient ways of working, new materials available, and better services on offer. If you want to make sure you are getting the best value for money, you will need to do a little research.
Have a look to see what’s out there on the market. You might be able to find a contractor that specialises in your particular project, or one that has an innovative approach to construction or refurbishment works.
Going through a tender process can be a good method of filtering out contractors that are committed to your project. Companies that are prepared to invest time and effort to respond to your tender are most likely going to dedicate that same effort into delivering your project.
You want a team that is passionate and excited about working with you. Whilst there is nothing to suggest you won’t get the same level of commitment from your existing contractor; without a competitive tender process, you might not get the same level of enthusiasm.
Tenders should be seen as an important part of your business strategy and not just formality to remain compliant with company policies or regulations. Many companies only run tenders when an existing contractor goes through a merger or acquisition, the client / contractor relationship breaks down or if a new leadership team comes in and wants to shake things up.
Whilst there will be times when a tender process is simply not appropriate, it should be seen as best practice that not only secures a competitive rate but also drives value and innovation within your company.