Tendering is an invitation for bids to fulfil specific requirements, often from large companies whose budgets are well worth the time and energy the tender responses require. When an organisation is in need of goods or services, it invites providers to submit a proposal via a Request for Tender (RFT).
The request can look different to a straightforward quotation as RFTs often involve more documentation to satisfy the requirements and needs of the project in question. The supplier, the person or organisation responding to the tender, needs to exhibit their experience, capability, and capacity, along with their best price.
Responses are often gathered from several organisations and evaluated to find the one that offers the best value and most appropriate service. Once selected, the supplier will receive a contract and the work can begin.
Is tendering a good idea?
Tendering is an excellent idea for many organisations due to its numerous benefits. For government bodies, policy is in place that determines the tender process is a must when projects will run over the cost of around $150,000. The total number of Commonwealth contracts in 2023–24, of 83,453, had a value of $99.6 billion. For private companies, tendering is a great way to make sure you are getting the best of the best on your most important projects. Want to sleep well knowing that you’ve found the perfect supplier for the job at a great price? Tendering is how you get there.
Tendering benefits, for the buyer and the supplier, include:
- A simple way to compare prices from different suppliers while encouraging cost-effectiveness and value
- A way to be fair, transparent, and equal to suppliers of all sizes
- A process that looks beyond price to understand which supplier is offering the best and most suitable quality standards/requirements
- A networking opportunity that can build supplier relationships and establish long-term relationships
- Reduced risk of a single supplier echo chamber
For businesses or subcontractors that are considering responding to RFTs, your experience, network and bottom line will be glad that you did. Tendering is a great way for small-to-medium businesses to secure larger work packets, and even though the process can be overwhelming, winning these jobs will help your business grow.
Understanding the different types of tenders
We mentioned the RFT, but as with lots of words in the English language, ‘tender’ can be used to refer to different things. Both the request for work and supplier response can be called a tender.
The common types of tenders include:
- Request for Proposal (RFP)
- Request for Information (RFI)
- Request for Quote (RFQ)
- Invitation to Offer/Respond (ITO/R)
Despite the variants, if a buyer is requesting goods or services and asking more than one supplier to reply, it is a tender. The type of requests above can be important to familiarise yourself with, however, as terms and required documents can vary significantly between them.
What is involved in responding to tenders?
For suppliers, tenders should be looked at as new business opportunities. In 2023/24, 94.1% of Australian Government contracts were awarded to local suppliers, indicating a significant amount of work available to those willing to participate in the tendering process.
That being said, there is a significant amount of work required in the tendering process as well. Studies show that 43% of tender submissions require 20 or more hours to complete. The average success rate for tenders is 66%, but this number increases to 95% for those who have won contracts with the organisation previously, indicating a compounding effect on the time and energy suppliers dedicate to tenders.
Responding to tenders may seem overwhelming, but it doesn’t have to be. Whether you’re preparing for commercial construction tendering or a government tender, you’ll get better at it the more you do. Having a structured response process is key to submitting stronger and more successful bids.
Breaking down the tender response process
Here are some actionable steps to help you tender with confidence:
Tender preparation
Streamlining your response process is easier when your key documents, case studies, credentials, and Work Health & Safety materials are organised in advance. Create a tender-ready library featuring the most commonly requested documents and information to make each submission efficient while ensuring quality.
Leveraging technology
Businesses that made use of integrated digital tendering tools save an average of 10.5 hours every week. These tools can reduce stress and help to improve the quality of your submission.
Reading everything
Missing a question in a tender can deem your submission non-compliant, and you will have wasted whatever time you put into your bid. If a question is answered poorly, the evaluators may move on to the next submission. For these reasons, it’s essential to read everything, including the tender questions, documents, conditions, scope of work, and all other relevant information. We recommend having all the information online and in one place, and platforms such as E1 can help with this. We’ll allow you to find what you need in one platform, so nothing is missed.
Defining your value
The whole point of the tendering process is to show the buyer why they should choose you. Your value proposition needs to be clear and compelling, showing how you’ll solve the buyer’s problems, improve their situation and deliver specific benefits.
Focusing on tenders, you have a good chance of winning
You may think that bidding for every tender you can find means you’ll eventually win one. In our many years of experience in the world of tenders, we’ve seen that tendering less often is better if you win the ones you tender for. Pass on the tenders that you may not be perfectly suited for, and save your time for the ones that you are. If you have been asked to tender and decide not to apply, we recommend responding with a reason why.
Here are some questions to ask to see if you should submit a proposal for a tender:
- Do I suit the pre-qualification requirements?
- Can I comply with all tender conditions?
- Do I have the labour resources to meet the contractual requirements?
- Do I have previous experience of a similar scope?
- Do I have the time/skills/expertise/qualifications/accreditations/permits?
Your tender response
If you have made sure of the points up to this one, the big step is much easier. When creating your bid, use the tender document as a guide. Mimic the format the buyer has used and be sure to include essential details and mandatory criteria such as:
- ABN
- Company profile/capability statement
- References
- Prices for each product or service
- Conditions affecting the price
- Delivery details
- A proposed schedule
- GST/taxes
- Insurances
- Variations in meeting the conditions of the contract
Submission
Always have someone double-check your tender response for errors before submitting. Attention to detail is important, and the quality of your tender reflects the quality of the work you are proposing that the buyer selects.
Showing how your business is different to the competition
The tendering process becomes much easier and far more fruitful when you understand this simple rule: Successful tenders stand out.
A successful bidder does more than just meet the criteria, and showing that you’ve gone above and beyond what was expected plays to your advantage. How can you give your submission an edge to help it stand out in a sea of competitors? Knowing who your competitors are is the first step in determining your point of difference.
Tender writing is a skill, and the more you work at improving it, the higher your tender success rate will be. The time you spend on tendering is an investment in the growth and success of your business, so treat the task with the respect it deserves, and you’ll soon see the benefits.
Tendering can be an overwhelming process, but there are tools and platforms, such as E1, to help make it easier. We’ve helped thousands of subcontractors find and win work by simplifying the tendering process. Learn more today.
