Works Tendering in a Post COVID-19 World

Understanding and navigating the pitfalls and stumbling blocks applicable to successful tendering activity follow prolonged high demand and unmatched supply

Project Works Tendering Post Pandemic  

Competitive tendering for project procurement involves inviting contractors to submit bids to undertake a specific construction project or scheme of works. The tendering process is designed to provide a transparent and competitive method of awarding contracts while selecting the best contractor based on criteria such as cost, quality, experience, and compliance with project requirements.

The Process

How and why

The tender package is a collection of documents prepared by the consultant on behalf of the client to invite contractors or suppliers to submit competitive bids for a project. This package provides all the necessary information for contractors to accurately price and outline how they will deliver the works or services including a detailed specification on the exact nature of each element of the work.

This method of traditional procurement is long established, however, obtaining three or more good, timely, tender returns for any given project has become increasing difficult since the onset and conclusion of the COVID-19 pandemic. Without at least three fully priced tender returns, certainty that the best value has been achieved is difficult to conclude, complicating the appointment of the contractor. 

Contributory Factors

Opportunity cost and uncertainty

Tendering for work is not always a straightforward process for contractors. Each tendering contractor is required to visit the site and return a fully priced within a fixed period and this in itself requires considerable resources, financial outlay and potentially engagement of subcontractors without any guarantee of making a successful tender offer. Even if a tender offer is submitted, which is recommended for the award of a contractor, no certainty exists that the scheme will proceed.

Many contractors are reluctant to tender for projects if they feel contributory factors may impact upon the probability of tendering success or the level of input required is too great. More than three tender offers being sought or lack of tender package detail can be enough to deter many contracting outfits. The evolution of the project works building contractor outfit, to the effect of reduced in-house labour and an increasing reliance on sub contract trade specialisms further complicates tendering and delivery efforts through lack of resource and cost control.

The well documented trades person skill shortage and material price volatility, particularly in the immediate post COVID-19 period, served as additional hurdles effecting tendering efforts.

The Permutations 

Impact and consequence

The reduced appetite for project works tendering opportunities, owing to the above and wider contributory factors has given rise to increase in costs, creating wider inflationary pressures. Further implications include a lack of confidence in securing competitive costs for works attendances and tender return date 'slippage' on an increasingly frequent basis. Material cost volatility yielded an inability of main contractors to offer fixed price tender offers or, where such were possible, maintain a fixed price for any practicable period of time post submission.

The culmination of these market forces gave rise to a temporary shift away from traditional procurement routes, with design and build solutions and / or cost plus and other such approaches to contracts works cost agreement becoming increasingly prevalent. Such means of procurement act to offer clients little cost certainty, perhaps with further lacking certainty as to whether good value was being obtained.

The New Normal 
Familiarity with flexibility

The past calendar year has, in the latter part, yielded a relative reduction in demand for project works contracting services. With this 'cooling' within the market, increased appetite for tendering opportunities has returned in many quarters, but yet a number of longer lasting consequences remain. Although product and material availability and thus price volatility have vastly improved (settled), an apparent skills shortage remains a readily apparent factor effecting tendering efforts. Many more experienced and capable operators are believed to have left the labour market in consequence and in the wake of the COVID-19 pandemic, with few new market entrants being able, capable or willing to fill the void.

Those parties whom have necessitated the attendance of frequent works through and beyond the pandemic have, in many cases, become accustom to and reliant upon new ways of working, forging fruitful and trusted relationships during that time. Though cost and value will always remain factors of acute focus, many outfits procuring works have shifted focus away from cost, instead placing high value on forward process and contractor reliance. For those contractors benefiting from these closer, comparatively more lucrative, ways of working, a return to speculative, competitive, tendering may offer little appeal.

 

Node Building Consultancy represent landlord, tenant, owner-occupier, investor and developer clients nationwide in the procurement of renovation, refurbishment and wider construction projects. From preparing detailed designs and specification documents to procuring works via design and building routes, we have invaluable specialist expertise and a proven track record of success in this field. Should you require assistance with your project feasibility, tendering or procurement, we would be delighted to hear from you.

 

Material cost volatility yielded an inability of main contractors to offer fixed price tender offers or, where such were possible, maintain a fixed price for any practicable period of time post submission.