The commercial construction tendering process exists to help Head Contractors and Project Managers find competitive, quality bids for specific scopes of work. If you are a subcontractor, commercial tenders can make your booking sheet look a lot healthier, and a successful quote can be well worth the time it takes to submit.
Australia’s construction industry is made up of small operators, with over 98.5% of construction firms employing less than 20 people. 91% of the industry consists of microbusinesses with under five workers. This creates a lot of competition, especially in the world of tenders. Your quotes need to be accurate and commercially sound to stand a chance at success.
What is the tendering process in construction?
The construction tendering process is looking for the most suitable suppliers for a construction project. It’s a structured series of steps that will provide options to the Head Contractor so they can pick the best price, technical capability, experience, and delivery capacity.
The Head Contractor will begin the process by splitting the main contract into specialised trade packages. These packages become individual tenders, which are then offered to Subbies who compete by submitting detailed quotes.
Tendering is a search. While competitive bids need to offer a fair price, the non-financial criteria are just as important. Methods, safety management, capability levels, and delivery timelines are as crucial as the number on the invoice.
A good tendering process ensures that potential bidders have all the necessary information to quote on an equal basis. This levels the playing field so the Subbie with the right capability and accuracy wins the job.
What are the steps in the tendering process?
Tendering is often a multiple-stage process. The following are the usual steps in the commercial project tendering process:
Step 1: The initial request
A Request for Quote (RFQ) or Request for Tender (RFT) is the first step, and these can include:
- An introduction letter/invitation
- Pre-construction information
- A waste management plan
- A pricing document
- Design drawings/Existing building information
- Other crucial specifications
Subbie Tip: Know when to tender
Before investing the time a tender requires, consider whether you can realistically meet the criteria. Obvious things, such as specific insurance levels or certifications you don’t hold, can be instant deal breakers. Focus on the tenders that match your capabilities to improve your win rate, and always explain your reason for passing on the tender if you have been specifically invited to apply.
Step 2: Document review and scope clarification
Once you are confident you’re a good fit, review the tender thoroughly, looking for:
- Ambiguous specifications
- Missing information
- Potential scope gaps or trade overlaps
- Site-specific challenges
- Materials that may require long lead times
- Discrepancies between drawings and specifications
Scope creep is costly, and a misinterpretation of requirements can lead to it. Your quote’s scope of work section should detail the necessary inclusions and explicit exclusions.
Step 3: Clarification period and requests for information (RFIs)
Most commercial tenders have a formal clarification period where questions can be asked or construction issues can be identified. The Head Contractor will release official responses to the questions from all bidders via Notices of Addenda, so every competing Subbie receives identical information.
If you find any ambiguities or risks, you can submit a Request for Information (RFI).
Subbie Tip: RFIs can be strategic
When you identify and point out an error in project documentation, you’re offering valuable technical expertise. While this is technically uncompensated labour, submitting intelligent questions enhances your reputation. Conversely, failing to ask questions about obvious risks can increase your liability later. Our guide on how to prepare a quote for construction work can make sure you are best-positioned here.
Step 4: Estimating and preparing your quote
The quote is your formal offer. It should accurately estimate:
- Labour costs
- Material quantities (including wastage and delivery fees)
- Equipment hire costs
- Site setup, supervision, and any administration
- Your profit margin
The information should be clear, with an obvious total price backed by detailed line items. This level of transparency makes your quote easier for the Head Contractor to justify against a less detailed competitor. Learn more about winning subcontractor tenders through strategic bidding.
Step 5: Submission and compliance verification
Always submit your complete quote package before the deadline, and be sure to include:
- Pricing documents and schedules
- Capability statements
- Project timelines
- Case studies/Examples of experience
- Mandatory compliance documentation
Compliance is one area where many subcontractors drop the ball. Commercial tendering mandates comprehensive documentation, like a detailed Work Health and Safety (WHS) Management Plan that covers risk management, specific hazard procedures, emergency protocols, and training records.
Step 6: Possible negotiations before contract award
Once the Head Contractor compiles the quotes, they will select a final Subbie for each package. A post-tender negotiation can follow, and if you reach this step, your quote is competitive but may need a final adjustment.
This doesn’t always mean you need to start cutting the price. Value engineering, scope adjustments or payment term improvements can help get your quote to the finish line.
When everyone is happy, a formal Letter of Award is issued, which you must review carefully before signing. Australia’s Security of Payment (SOP) legislation protects subcontractors with things like progress claim entitlements and mandated payment timeframes. However, SOP protects cash flow after the contract is executed, which means unbalanced terms that you’ve already accepted are on you. For more information about what happens next, read our article on awarded construction contracts.
The information should be clear, with an obvious total price backed by detailed line items. This level of transparency makes your quote easier for the Head Contractor to justify against a less detailed competitor.
What are the different types of tenders in construction?
There are three primary types of tendering, and your approach to each process can directly impact your chance of success, how much effort will be required, and your potential profit margin. Understanding these different tender types helps you allocate resources strategically.
| Tender Type | How it Works | Pros | Cons |
| Open
|
Publicly advertised, so all qualified Subbies can apply
|
Lots of potential work is on the table
|
Highly competitive; substantial time investment with low win rate; lowest price is a big factor
|
| Selective
|
Invitation sent to a pre-approved group
|
Much easier to win the contract
|
Requires a proven track record; difficult for new businesses
|
| Negotiated
|
A single preferred Subbie is approached
|
Work is basically guaranteed; builds long-term relationships
|
Requires established relationships; limited price negotiation leverage
|
Single-Stage vs Two-Stage Tendering
Single-Stage Tendering often means the project design is ready to go, so you can bid on a fixed, fully defined scope. Two-Stage Tendering begins before the design is complete. Subcontractors are selected based on qualifications, then bid for construction delivery.
Two-stage gives you a chance to influence specifications and materials during the design phase, which also helps position you as the preferred contractor, reducing the need to be the cheapest bidder.
Our guide on types of tenders in Australian construction can tell you more about this.
Practical tips for tendering success
Winning a tender is great, but you also have to make sure the job is profitable. Here are our top three tips that we’ve created based on many years of experience in the construction tendering industry:
- Use estimating technology that enables faster, more reliable quotes. Never rely on implied understanding. Explicitly state brand names, measurements, and assumptions to prevent scope creep.
- Treat your WHS plan as a document demonstrating capability, not just mandatory paperwork. Quality project-specific safety documentation distinguishes you from competitors.
- Open tendering is a great place to start, but your goal should be to move toward selective and negotiated tendering. You do this through relationship building, consistent quality delivery, meeting deadlines, and proactive communication.
The commercial construction tendering process in Australia is competitive
Understanding how the commercial construction project tendering process works is a proactive business strategy. Success requires accuracy, clarity, and compliance, but also means more work, good profit margins and a sustainable business.
The tendering process can be overwhelming, but E1 exists to take the hassle out of finding tenders. As Australia’s largest tender noticeboard, we are the place to find work in the Australian commercial construction industry. With an E1 subcontractor account, you can browse active tenders, connect with Australian builders and suppliers, submit quotes directly, and more find out more today.
