The procurement world can seem daunting to an outsider given how much technical jargon are involved. But it doesn’t have to be that way.
In this article, we will be explaining what the general tendering process is about, common misconceptions, and how to prepare for tenders. At the end of the article, we will provide you with a link to download the Ultimate Tendering Guide we have prepared for you.
What is tendering?
A tender is a formal offer put out for suppliers to bid for and secure a contract and the right to complete the project. Tendering is the most common way in which a buyer will find someone to supply goods or services.
When it comes to procurement, there are both private and public sector contracts. Private tenders are from non-government organisations, and they could be either direct or indirect purchases. Meanwhile, an example of a public tender could be one put out by the Ministry of Transport to help construct a new MRT track.
The tendering process is generally a structured process that allows organisations to control their spend and find vendors who are able to provide products or services they require. The selection process can be very stringent, with many factors such as cost and the sellers’ track record all taken into consideration.
Once the tender has been released, companies who are keen on the contract can submit their relevant documents and kickstart the bidding process.
The invitation to tender (ITT) stage of the bidding process is the part where you need to explain how you will deliver the contract. During this part of the process, sellers can pose questions to the buyer and have their doubts clarified. Key details that need to be included are your technical solutions and pricing proposals.
Your company must provide high quality, persuasive responses to demonstrate why you are best suited to the contract. Businesses do this by submitting several types of procurement documents.
While many may assume submitting a quotation is enough for a tender, it could be to your advantage to also submit a project proposal, especially for more complex tenders. With a proposal accompanying your quotation, you would be able to outline your solutions and alternative methods for the buying organisation to consider.
Once this stage has been completed, the company that put out the tender will then shortlist the most suitable bidders, before finally selecting a winning tender.
As part of the procurement process, you will be evaluated on several criteria set by the buying organisation. Some organisations may also share their Evaluation Criteria as part of their tender documents.
Based on these criteria, the buyer makes an informed decision at the selection process, on who is best to deliver the contract. As most tenders do not allow for resubmissions once it closes, there is no margin for error and you must get the tender process right.
Note that your bid documents may not be evaluated solely on the lowest price; most organisations will have a list of requirements when selecting their preferred vendor.
Common misconceptions people have about tendering
1) Only big companies can win tenders
This is a common myth that deters younger, smaller companies from tendering.
It is simply not true. Even if you’re an SME, there is no reason to be discouraged from tendering. In fact, 80% of local government contracts went to SME’s in 2017.
This means if you’re an SME, you have a good chance of securing a contract for work.
As a small business, there are several ways you can win contracts. Just because your resources are limited does not mean that you cannot win big contracts.
2) You have to look through many different websites to find tenders
This is only true if you are not using a tool.
You don’t have to frequently dig through multiple websites to source the right opportunity for your business. You should be using a site that does the work for you, hosting both public and private tendering opportunities.
Caption: e-Procurement platforms like TenderBoard is a good way for finding new business opportunities.
3) The bidding process is a price war
The fact that SMEs with lesser financial resources can win big contracts does not imply that winning a contract is simply about the lowest offer.
The procurement process is meant to help buying organisations find legitimate vendors who can do the job well. When it is time for you to propose your solution, it’s then important to emphasise both the price and value provided.
Competing vendors may sometimes price themselves very low to win the contract, but it can be hard to believe that they can provide the best resources, and this may be hard to sustain over a longer period of time.
It’s all about finding the right balance between price and value.
How to prepare for tenders?
Caption: The four key steps businesses should take to prepare for the tendering process. Source: Ultimate Tendering Guide by Tenderboard.
There are four key steps businesses can take to prepare for the tendering process. These are namely:
- Starting your research early
- Strategically choosing the right tender to bid or not to bid for
- Sell yourself well
- Engage in post-bidding activities
To learn more about how you can take these steps in detail, download our Ultimate Tendering Guide here.
As you can see, the tendering process need not be too difficult. We hope that this article has given you a better understanding of how it works.
For more educational articles on procurement, check out our blog!