Bidding and tendering is the process that allows organizations to solicit bids from service providers or submit bids to win the right to complete a particular project. This process enables businesses seeking external contractors to find the most qualified bidders for a specific job while allowing external contractors and organizations to earn the right to partake in project work. Read on to learn more about external projects and the tendering and bidding process.
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What is the Bidding and Tendering Process?
The bidding and tendering process is a process by which a business or organization invites third-party contractors to bid for a project through a document called a tender. Once an invitation to bid has been tendered, businesses can submit a proposal in response, indicating their interest in the project. Businesses will then compare the submitted bids and accompanying proposals against specific criteria to identify the best provider or supplier for the project.
Why is the Bidding Process Important in Project Management?
When organizations lack the expertise or experience to meet a specific requirement of a project, it is more cost- and time-efficient to seek an outside contractor rather than train in-house staff. In cases like this, the bidding process is essential to ensuring that organizations find the best fit for the job. This process is especially common in industries such as game development, construction, and marketing.
Moreover, the bidding process ensures that specialty project managers with significant experience in a particular area or industry find work that’s appropriate for their interests and skills. For example, if a construction project manager is looking for construction-specific work, reviewing the details of an organization’s tender document can help them decide if the project is a good fit for their skills and background.
What Types of Bid Processes Exist?
Open Tendering
In an open tendering bid process, also called competitive bidding, an organization opens up the floor for bids from any party, which can come from another organization, business, or even an individual in some cases. This type of bidding is highly competitive and often occurs when an organization wants to review a wide range of candidates for a project across a diverse talent pool at various price points.
Selective Tendering
In a selective tendering bid process, the organization accepting bids preselects only a few top organizations or applicants to apply. This process makes the bidding pool smaller and typically only involves vendors that have a preexisting relationship with the organization (though this is not always the case).
Negotiated Tendering
In a negotiated tendering bid process, a single vendor is preselected to complete the project. The selected vendor is typically a business with a notable track record in the industry or has a preexisting relationship with the project owner. In this process, the vendor and the organization accepting bids go back and forth to negotiate the terms of the project and work contract.
The Bidding Process
Step 1: Request for Proposals
After an organization has decided to open up the floor for bids on a particular project, it will issue an invitation for bid (IFB), a request for quote (RFQ), or a request for proposal (RFP). While these terms are unique, they all serve the same purpose: to express public interest in receiving bids for a project. From there, a tender manager prepares a more detailed package that fills in any remaining information about the project, issuing organization, and what types of skills and services they’re looking for.
The package will include details about deadlines, expectations, specifications, supporting documents, and details about what requirements and supplementary information potential bidders should include in their bids. Depending on the type of bid process the organization prefers for the project, the invitation to bid will be extended openly or to a limited number of preferred applicants.
Read more: RFQ, RFP, RFI: What’s the Difference?
Step 2: Bid Preparation and Submission
Once the request for proposal has been issued, it’s up to interested parties to assemble their bid and submit it to the organization accepting bids. During this time period, parties assemble as an organization to fully review the requested document and the project’s terms.
Before drafting a proposal of any kind in response, the team must first make sure that they understand the client’s needs and have the bandwidth and capability to deliver on those terms successfully. If the team determines that the project is a good fit for the deliverables and services they can provide, then they can begin assembling a project proposal.
Once the proposal has been drafted, the team should take one final look at the document as a collective before sending it back to the client for their official review.
Step 3: Bid Evaluation and Selection
During the bid evaluation and screening process, the organization accepting bids reviews the various bids and project proposal submissions from outside contractors. While this process can take weeks or even months, it’s important to review each proposal thoroughly and carefully. After the organization reviews each proposal, they will select the vendor or vendors that they want to grant the project to.
Step 4: Contract Negotiation
Once a vendor has been selected, they will negotiate back and forth with the hiring organization to establish agreed-upon terms and conditions for project satisfaction. During these negotiations, both parties may discuss the project timeline, compensation, access to resources, and more.
Step 5: Project Delivery
The final step of the bidding and tendering process is project delivery. This phase marks the official beginning of project work and encompasses the entirety of the project lifecycle. At the conclusion of this phase, the client receives all of the key deliverables and project outcomes that were discussed in the initial planning phase.
What is the Bidding Process for Project Managers?
In the tendering and bidding process, project managers play either of two roles: as a tender manager or a bidding manager. Tender managers are project managers who act as representatives for the organization seeking a vendor. Bidding managers are the project managers who act as representatives for the parties interested in providing the service or product.
Read more: Project Proposal Templates and Examples
