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What Is The Bidding Process?
The bidding process (also known as the tender process) is a method to select the most suitable service provider or supplier, by comparing proposals against specific criteria.
There are times when product owners, clients, or project teams need to outsource services or purchase goods to fulfill project deliverables. When this happens, picking an organization or subcontractor to work with can be crucial for a project’s success.
The bidding process provides a thorough way of evaluating a partner’s competencies before a contract is awarded. The process is essential for organizations who want to work with the public sector, but is also common in industries such as construction, game development and advertising.
The Bidding Process
Step 1: Request For Proposals
owners or project teams first need to issue a request for proposal (RFP) or invitation to bid (ITB) to initiate the bidding process. A tender manager then prepares a package that indicates specifics about the project.
The package should effectively communicate the goals, priorities, and requirements of the project so that bidders have a clear picture of what needs to be done. This should include deadlines, expectations, specifications, supporting documents, and the list of requirements that the bidders should submit.
Due diligence is essential when evaluating bidders: it is typical to request the bidding company’s profile, project portfolio, personnel resumes and financial statements.
The invitation to bid can be open to everyone, or strictly by invite.
Step 2: Bid Preparation Of Interested Parties
Once an RFP is issued, interested parties will begin to evaluate the proposal. In this context, the project manager who prepares the bid is called a bid manager.
The bid manager communicates with the project team to verify the availability of resources that they’re about to commit, as well as liaising with the company that issued the RFP for clarifications.
If the bidding party is a general contractor, this process may include facilitating another bidding session with subcontractors or third-party vendors.
Once all details are compiled and organized, the bid can then be passed to the requesting organization.
Step 3: Bid Evaluation And Selection
After collecting the bids, tender managers compare them against each other and their requirements.
Contrary to some beliefs, the lowest bid doesn’t always win. The most popular way to pick the best vendor or service provider is the MEAT criteria (most economically advantageous tender). Apart from the cost, MEAT criteria consider quality, accessibility, social value, innovation, and more.
Selection can be a two-step process where applicants are shortlisted before the final tenders are selected.
Communication between the buyer and bidders is expected during this stage. The tendering organization can also request presentations or interviews for more clarification.
Step 4: Contract Negotiation And Awarding
The final stage of bidding is negotiation and selection.
After picking the preferred vendor or service provider, the tendering organization will inform them of the final approved price and additional requests if applicable.
The management and administrative departments of the project team’s organization can start getting involved at this stage. Legal terms, payment terms, deliverable schedules, and other important details are documented and signed by the involved parties to solidify the agreement.
What Is The Bidding Process for Project Managers?
While bid and tender essentially mean the same thing, tender manager and bidding manager are used differently to distinguish a project manager’s role in the bidding process.
Tender managers are project managers who represent the organization seeking a vendor or service provider. They collect information, evaluate requirements, and generate RFPs. They also relay important information to bidders. Once bids are submitted, tender managers assist with communication, selection, and negotiations.
Bidding managers are the project managers who represent the parties interested in providing the service or product. Their role is to communicate with the project team and relevant stakeholders to ensure that all resources committed in the bid will be available if they win the contract. They also facilitate brainstorming, planning, and documenting the proposal’s specifics.
Project managers can take on the role of a tender manager or a bidding manager during the bidding process.
Selecting good contractors, subcontractors, outsourced services, and vendors is crucial in project management. The companies and people you work with can determine the success of your endeavor.
Although it can be tedious, the bidding process provides an effective way for organizations to vet suppliers and service providers. It’s also an effective way for project teams to get clients whose requirements align with their expertise.
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