The construction tendering process in Australia can vary depending on the project, but for the most part, it is similar across the board.
What is a tender you ask?
Tenders are a formal process for businesses, both head contractor, subcontractors and more, to submit responses to a request for work. This can be construction related (which is why we’re here) all the way through to corporate contracts.
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The Construction Tender Process
The tender process itself is never easy. There are a number of important steps to go through, and the timeline can be long. You also don’t get paid for the quote and tendering process, but that’s okay, it can be well worth it in the end.
The process for head contractors and subcontractors is basically the same, it’s just between different parties.
From the head contractors perspective, the tendering process can be broken into three important periods:
During construction tender preparation, the project is defined and scoped, documentation is prepared and the selection process is begun.
During the tender period, the contractor will call for tenders, this is the most important period for subcontractors, which we will focus on in this article.
After receiving the tenders, they will be analyzed,clarified, and eventually selected/awarded
Within those periods, we’ll break down the timeline specifics you need to know as a subbie.
Step 1 – Head contractors are invited to tender
The very first step of the tendering process involves an invitation to tender, usually between the client and the head contractor. They will get all the documentation that outlines what they need to respond to.
This process typically follows after the completion of a pre-qualification questionnaire and sometimes a pre-tender interview.
These steps (yes, steps within a step – tendering isn’t quick) help the client create a shortlist of potential contractors that would be suitable for the project.
Invitation to tender can include different parts such as:
- Letter of invitation to tender
- Form of the tender
- Any preliminaries relevant to subbies
- Form of the contract itself, contract conditions any any amendments
- Tender pricing documents
- Drawing schedules
- Design drawings
The head contractor will usually break down tender documents into different packages (still with only one main contract) so that they then can be passed onto the suitable subbies responsible for each part of the project.
Step 2 – Request for quotation (RFQ)
Once the head contractor has all their ducks in a row, this is where you’ll start to get involved as a subbie.
Head contractors will split all the documentation into trade packages and use notice boards like ours to send out invitations to subbies.
Some head contractors might also put together a bill of quantities (BOQ), which will outline what’s needed and how much.
If you receive this, quote directly against this.
Step 3 – Clarification
This step is where any and all questions are asked by all parties. This is a great way for the head contractor and the subcontractors to foresee any potential problems or opportunities in executing the project.
During this phase, there also may be changes made to architectural drawings due to errors or pitfalls pointed out by the quoting subbies who know their trade inside out.
These usually result in an amendment of the tender documentation and can also result in an extension of the quoting period at times. It’s likely during this process you receive multiple notices of addenda.
Any amendments will need to be circulated to all parties involved so that everyone is on the same page. Don’t worry though, each conversation is confidential; they won’t be giving away any of your unique proposals or advantages to other potential subbies.
Step 4 – Submission
This step seems pretty obvious by the heading right? This is the part where you submit your quote. Usually the builder will be looking for 3-5 quotes per trade package.
The head contractor will set the date for all subbies to submit and you’ll need to meet it.
If there’s one thing we recommend you focus on quite a bit, it’s your pricing – this is where you’ll have the most competitive advantage.
However, there is of course all different parts that you will be assessed on.
Things you can include in your response:
- Business details
- Schedule of rates
- Demonstration of capabilities
- Resources and materials
- Prior experience as a business
- Terms and conditions
- All tenders and quotes are different so this is by no means an extensive list. We do recommend you check out our guide to bidding for construction tenders so that you can work towards your best tender response possible.
Step 5 – Head contractor submits
You guessed it. This is when the head contractor collates all the information and subcontractor quotes and submits to the client.
Sometimes they may come back to certain trades if they don’t feel like they have covered the trade enough. They will then quote to the client based on what they’ve learned from the various trade quotes along the way. Typically a builder will look for between 3-5 quotes to ensure they’ve got a good idea of how much each package will cost.
Step 6 – Qualification and settlement
As we get towards the end, the process doesn’t become shorter itself but the explanations do because most of the hard yards have been covered.
At this point, we reach the point where the client will assess the tender responses, weigh up pros and cons, and as always, compare costs.
This is where they will ultimately assess and select the winning head contractor. From there, any negotiations and contracting will occur.
Step 7 – Subbie engagement
Last but not least, this is where the estimating team within the head contractors business will handover to the delivery team.
The delivery team (including the contract administrators) will look at quotes provided by subbies and their personal contractors and will pick the right subbie for the job.
At this point, it’s not unheard of that a head contractor may ask you to ‘sharpen your pencil’ (aka lower your price).
If you’ve reached this point in the timeline it’s fair to say you’re competitive in market but there’s always room for improvement!
Quick tips for Request For Quotation (RFQs)
The lengthy process that is the tendering and quoting process is also heavily reliant on your response. Your quote is everything and you need to put your best foot forward in all possible ways.
We could go on forever about how to master the tender response process (which we do, in our guide to bidding for construction tenders).
Don’t forget to also check out our subbies section to keep up to date with live tenders now.
You can also upgrade and get access to awarded contract information so you can track projects all the way through after they are won by a head contractor. This way you can reach out when your trade is likely to be needed.