Collaborative tendering – a peaceful solution to the construction bidding wars?

September 3rd, 2012 Posted in: Industry Issues

Competitive bidding is a long-standing tradition in the construction industry and as a result, the appointment of both main and specialist contractors alike has largely become a numbers game with work being awarded to the ‘lowest bidder’. Taken on face value, this process enables the client to feel like they are getting the most cost-effective deal and so, as budgetary constraints are always paramount, it is easy to see why this type of tendering has become the norm. Scratch the surface of competitive bidding however and it soon becomes clear that any savings made at the tendering stage are at risk of being lost when the project gets underway.

Undoubtedly one of the main limitations of competitive bidding is that is it essentially speculative, and with possibly only a one in five chance of being appointed, contractors are unlikely to be able to invest the necessary time and resources in their tenders. Specialist contractors in particular may also be reluctant to reveal too many details of how they would tackle a job that they can’t be sure will be awarded to them. Although competitive tendering processes may generate the best prices, it doesn’t always encourage best practice or design innovation.

Recognising these potential short falls in the tendering process, a number of main contractors have set the precedent of reducing their supply chain in order to develop stronger and more productive working relationships. Involving the specialist contractor on a ‘one to one’ basis at bidding stage has numerous benefits, particularly as innovative technical solutions can be adopted much earlier and value engineered to minimise any potential risks of delays and additional costs to the client post contract. Moreover, more detailed technical support of the main contractor’s tender submission helps to enhance the main contractor’s chance of securing the contract.

For its part Lakesmere is fortunate to have developed close relations with many of its clients that has facilitated such collaborative working practices and the success of this can be seen on a number of projects such as the St. Pancras Renaissance Hotel and the new rail station developments at both Farringdon and Reading.

Collaborative tendering therefore promotes the ‘value’ rather than the ‘cost’ of the service provided and increasing recognition of the advantages of collaborative tendering to the main contractor and ultimately the client is fortunately changing the industry’s views on methods of competitive tendering.

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3 Comments to “Collaborative tendering – a peaceful solution to the construction bidding wars?”

  1. googlepo Says:

    i loved the article added to my favourites

  2. Brittany H Martin Says:

    Congrats ~ Found your blog on Google while searching for a related topic, your site came up, it looks good, keep them coming!

  3. Cameron Says:

    Brent
    i agree that the it promotes the value over the cost, but you must be on par or have the brief right to make it count better that other competing! great article.

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