Two Stage Tendering Advantages And Disadvantages

Two Stage Tendering Advantages And Disadvantages

Two stage tendering, also known as negotiated tendering or two stage selective tendering, is a unique construction procurement method that consists of two separate stages. In the first stage, potential contractors are selected based on an outline price for the works, preliminary costs, design and site program, and other relevant information.

The contractor with the most favorable stage one offer is taken through to the second stage, where a fixed price for the complete works is determined.

Two stage tendering offers several benefits, including early contractor involvement, improved practicality and affordability of design, reduced uncertainties and risks, and more collaborative project teams.

However, there are also disadvantages, such as extended procurement lead time, difficulty in negotiating with the preferred bidder, and potential increased consultancy costs.

Key Takeaways:

• Two stage tendering is a construction procurement method involving two stages of contractor selection.
• The benefits of two stage tendering include early contractor involvement and reduced uncertainties.
• Disadvantages of two stage tendering include extended procurement lead time and potential increased consultancy costs.
• Two stage tendering is best suited for bespoke and complex projects that require early contractor engagement.
• The process can be combined with Design and Build Contracts for improved cost certainty and collaboration.

When Should Two Stage Tendering Be Used?

Two stage tendering is a procurement process that offers numerous advantages in the construction industry. It is particularly beneficial for bespoke and complex projects where early contractor engagement is crucial. By involving the contractor in the initial stages of the project, two stage tendering allows for the finalization of the design and ensures efficiencies in terms of time and cost.

One of the main benefits of two stage tendering is that it promotes collaboration between the contractor and the design team. This collaborative approach minimizes uncertainties and risks, resulting in better cost certainty and a more streamlined project delivery.

Furthermore, two stage tendering is often used in conjunction with Design and Build Contracts, where the contractor takes on the primary responsibility for the design after the second stage. This integration between the contractor and design team leads to improved practicality and affordability of the design.

However, it is important to consider the potential drawbacks of two stage tendering. One disadvantage is that the process may lead to higher prices if the scheme is tendered too early based on limited design information. Additionally, the extended procurement lead time can be a drawback for projects that require a quick turnaround.

Furthermore, negotiations with the preferred bidder during the second stage can be challenging, as the contractor may have more power over the employer. It is crucial to carefully evaluate the project requirements and consult with industry professionals when determining whether two stage tendering is the right approach.

Advantages	Disadvantages
Early contractor involvement	Extended procurement lead time
Improved practicality and affordability of design	Difficulty in negotiating with the preferred bidder
Reduced uncertainties and risks	Potential increased consultancy costs
More collaborative project teams

Overall, two stage tendering is a valuable procurement method for complex construction projects that require early contractor involvement. It offers numerous advantages, including improved design practicality and affordability, reduced uncertainties, and more collaborative project teams.

However, it is essential to consider the potential drawbacks, such as extended procurement lead time and potential difficulties in negotiations. By carefully evaluating the project requirements and consulting with industry professionals, the right procurement method can be selected to ensure successful project delivery.

 

What is a two stage selective tendering?

Two stage selective tendering is a procurement method that involves a two-step process to select suppliers for a project. It begins with an initial request for information (RFI) to potential suppliers, followed by the shortlisting of a smaller number of suppliers who are then invited to submit formal proposals.

This approach offers several advantages. Firstly, it allows organizations to gain a better understanding of project requirements before committing to a more detailed Request for Proposal (RFP). This early assessment of suppliers’ capabilities helps in selecting the most suitable ones for the project.

Secondly, it enables more accurate pricing as suppliers have more information about the project. This can lead to better cost control and avoid any hidden surprises during the later stages.

However, there are also some disadvantages to consider. Two stage selective tendering can be more time-consuming and expensive compared to other tendering methods due to the additional step of shortlisting suppliers.

Additionally, it may create barriers to entry for new suppliers who may not meet the criteria for shortlisting. Finally, there is a risk of collusion between suppliers during the process, which could compromise the fairness and competitiveness of the tendering process.