There are various pitfalls a contractor or sub-contractor can fall into when pricing tenders for a client. The tendering process provides an opportunity for the contractor or sub-contractor to demonstrate their suitability for a project compared to their competitors and provides an opportunity for the client to assess the suitability of those tenderers. There are several common mistakes made when tendering for construction projects that can harm the chances of the bid being successful. These are:
Human error is the most common mistake made in tenders, and it is a direct cause of most of the other mistakes that follow. Human error is also a difficult pitfall to prevent, as humans always make mistakes. However, there are certainly actions that can be taken to minimise these errors. Tendering is a very rushed process – often clients give contractors insufficient time to prepare the bid, often contractors are too busy to devote a lot of time to a bid, and there is also a reluctance to spend a lot of time tendering as it can often be wasted time if the contractor does not win the job.
The use of software such as CostMiner reduces the reliance on human take off and pricing, removing many opportunities for human error to influence the tendering process. It can also speed the tendering process up for contractors.
Tenderers can be penalised or disqualified if they do not follow the specified formatting that the client requested. Different types of tender may require specific documents to be submitted for the tender to be valid, so it is important to thoroughly read all the information received to ensure nothing is forgotten about.
A tenderer may request multiple copies to be submitted in different formats. For example, they may ask for a version without pricing information; or an Excel-format document to be submitted or a hard copy submission, so that different members of the procurement team can review the bid. The client may also request that questions are answered in a certain way or that value engineering proposals should be submitted. Therefore, it is important to be meticulous in checking that the tender meets the required formatting and number/type of copies asked for by the client.
Tenderers can also be penalised or disqualified if there is required information that is missing from their tender bid. For example, if a question is left unanswered, provisional sums have been forgotten, or the pricing schedule has not been followed. Sometimes the bidder may be allowed to provide the information that is missing, although this cannot be guaranteed and often the tender is simply disqualified. Another common mistake is forgetting to sign all the necessary documents in the tender. All missing information is normally a result of human error and failing to properly read the tender documents and is a potential pitfall which can be easily prevented.
The tender submission needs to demonstrate that the bidder understands the requirements and needs of the client and has considered them carefully in the development of their design. Therefore, submissions that are generic rather than bespoke are unlikely to be successful. Also, a clear misunderstanding of information or scope in the tender submission can seem highly unprofessional to a client.
Misinterpreting drawings can lead to inaccurate measurement or pricing, which can also negatively impact a tender as the estimated cost can either be too much or too little as a result.
Typically, a tender pricing document will be provided to be completed by tenderers. This makes it easier for those reviewing the tender bids to compare the various submissions. If this is submitted incorrectly, the final prices and the rest of the estimate may be discarded by the client. It is also important to not just price this schedule without looking at drawings as often items can be missing from the client-prepared schedule.
It is also important to obtain accurate and competitive prices from subcontractors to include in the bid price. This means that the scope of work/services being requested from subcontractors must be clearly defined in order to avoid unnecessary or inaccurate costs being incorporated within the tender bid. It is also important to ensure that when a lot of sub-contractors are measuring works, nothing is overlapped or doubled up in pricing in multiple packages, obviously adding unnecessary expense to a tender submission. Any costings that are incorrect will cast doubt on the suitability of the tenderer to successfully complete the project.
It is also important for the contractor to accurately price each individual item as a client may wish to remove certain items from the tender. I.e., be consistent in pricing and do not insert all profit in a few items and then under-price other items. Pricing software such as CostMiner can assist with the accurate pricing of works.
The contractor must spend an adequate amount of time reviewing the plans and specifications to be able to provide accurate measurements. Care should be taken to ensure that measurements taken from the drawings accurately reflect the pricing schedule, notes and tender information. Software such as CostMiner can allow a contractor to complete an on-screen measurement take-off very quickly, speeding up and improving the accuracy of the measure. Precise measurement is essential in ensuring that an accurate price is submitted to the client. The tenderer should also make sure that the correct method of measurement is followed on the project. E.g. ASMM or ANZSMM.
Large errors in quantification may also be noticed by the clients Quantity Surveyor, again making the tendering contractor seem unprofessional. With most contractors using the same sub-contractors within a specified geographical area, often it is incorrect measurement of certain packages by the main contractor which can win or lose a tender, as in most cases the priced rates will be the same.
Spelling and Grammatical Errors
A tender bid that contains spelling and grammatical mistakes, while not necessarily disqualifying the tenderer, may present the client with an unprofessional impression. To avoid this, documents should be carefully checked and proof-read to correct any errors before sending to the client. This step is often never carried out due to the busyness of contractors. This final proof-reading step could also prevent some of the other pitfalls from taking place as the contractor may pick up on missing information in a final review of their tender.
Failing to visit the site
Since every construction site is different, failing to visit it prior to submitting a tender can mean that the bidder does not have a comprehensive understanding of the requirements of the project, the needs of the client, and the likely conditions that will need to be considered within the bid. This can also be a problem if the bid is successful and issues become apparent once work begins.
Visiting the site is also an essential part of accurately pricing the works, allowing for necessary prelims for difficult sites, allowing for sufficient demolitions and strip out as well as finding out about the site topography and site access/egress points.
This is surprisingly common and will almost certainly result in the disqualification of the tender bid. Late submission often occurs as a result of the contractor leaving their tender bid too late to complete. This can occur as a result of busyness or human error and can be prevented by starting a bid early and allowing sufficient time for its completion.
Identifying and managing risks is probably the most overlooked aspect of preparing a tender bid. Every construction project comes with its own unique set of risks. Once the contractor has identified the potential risks, they need to analyse and evaluate each one individually so that they can be properly managed and mitigated if they occur. Risk also needs to be factored into the price for the construction work as often the risk on a project falls on the contractor.
Every construction project has risks that need to be considered. E.g. design risks, suitability of ground risks, construction risks etc.
If all contractors consider these pitfalls and pay close consideration to them when tendering they will make less errors in their bids, and should see themselves winning more projects. Whilst a lot of these pitfalls can simply be fixed by increasing levels of concentration when working through the tender and more thoroughly reading documents, some are much more difficult to predict and prevent, e.g. managing risks. It is also important to consider the positive impact the use software such as CostMiner can have in removing many of the errors in pricing and measurement.