The 3 broad classifications of Tenders
Tendering and bidding are two commonplace words frequently used in business circles. For numerous people, this nature of work forms primary or secondary source of income.
When applying for government tenders in India, these terms are often put to use. But the application of these terms is not limited to the same.
When any organization is looking for service from another organization, then it will create an open Request For Proposal. This will include the details of the expected services. Next, the initial organization will invite bids on this Request For Proposal.
Then, if any of the organizations are interested in offering their services, they bid on the projects. Alongside, they share relevant details such as deadline of the project and the cost.
Following the due date, when sufficient bids have been received, it is, now, decided that the project will be allocated to whom? This is done by the organization that is asking for services, and multiple criteria are used for finalizing on this decision.
Let us now consider tender in further detail:
Tender
One of the definitions of tender is a process wherein any entity, government or private invites another entity, company or an organization to work for them. Herein, the entity will post the details related to their work. This could be over their website, or also in the local and national newspapers.
Now, the people or organizations who intend to work with this entity will bid on this work via their quotes. The parameters for selecting the organization or people to whom the work is going to be allocated will be quality, days of completion and bidding price.
In general, people or organizations who take tenders regularly are frequently more interested in bidding for government tenders in India. The safety of payments is an important factor to be kept in mind here. But, when we take the government entities into the perspective, this does not come by as a problem.
Tenders may, hence, be defined as Request For Proposal for inviting bids any work that is under consideration. Upon the completion of the bidding process, a suitable organization is allocated the work.
3 types of tenders
- Open tenders
Open tenders are open for bidding by anyone. Herein, the proposed project is advertised and anyone can bid.
- Selective tenders
Selective tenders are open only to selected people for bidding. So, before or after advertising the project, the entity offering the work wants people to share certain information with them. Based on this information shared, a bidder may be selected or rejected.
- Negotiated Tenders
When the work is allocated by the organization to the contractor of its choice, then, it is known as a negotiated tender. There are different reasons why the work is allocated to a particular contractor. This may include the quality of work that was done in the past, or a prior record of on-time completion of work. It is based on a contractor’s reputation that he persistently earns work from an organization.