Introduction to competitive tendering

Introduction to competitive tendering

Alan Tawse
01. Dec 2020 | 4 min read

Introduction to competitive tendering

The process described relates to a formal competitive tendering process where the customer or client issues an inquiry document or package and suppliers submit sealed bid responses. The client will evaluate these and may engage in further clarifications and or negotiations with some of the bidders, before selecting the successful company. The tender process is completed by the signing of the final contract(s) with the successful bidder(s).

 

Duration

The size of the tender (in terms of financial value and duration) determines the amount of work that both client and bidder will invest. A large tender with a multi-year duration may easily mean more than a years work to prepare and issue. Companies that are pursuing the work may begin their preparations up to two years in advance, as they try to understand the client's requirements and key issues, so that they can try to influence the client's thinking, and position themselves to win the tender.

 

Structure

A tender process will normally consist of two main parts, Commercial and Technical, though sometimes Contractual may be a separate third element. These will normally happen simultaneously, but on occasion they may be separately conducted. If so, it is likely that the first phase will involve the technical submission. Based on the client's evaluation of the technical offers, they will decide how many of the bidders will be invited to proceed to the commercial stage and eliminate those that were unsuccessful.

 

The parties

The tendering process involves a number of different parties on both sides, all with their own goals, but the most important can be grouped are three main teams:

  • Client's end user team (e.g. operations, engineering, HSE, materials, logistics, finance, etc.)
  • Client's procurement team (a team or department of procurement professionals)
  • Bidder's tender team (e.g. tender support, sales, operations, HSE, finance, legal, etc.)

In practice, the parties that want to work together are separated by the client's procurement team, and the tender process is a barrier that needs to be overcome, before the supplier can deliver their products and services to the end users in the client organization.

 

Procurement team

While the client's end users and the supplier sales team are experts on the products and services that are being used, in most cases the client's core procurement team will not be. The client's procurement process will therefore require input and participation from their end users to help construct the tender inquiry documents. The procurement team will be the owners of the tender process and the additional personnel will be resources to assist where and when needed. In most cases, they are likely to be ad-hoc or part-time as they will still have their normal job to attend to, but in some large or complex tenders, they may be assigned full-time for the duration of the tender process.

The procurement team will need to gather information about the products and services required, technical specifications that should apply, any applicable standards, and information related to experience, capacity, support services and other aspects that may be important to the end users. Other portions of the tender can be built from standard processes such as delivery terms, HSE standards, invoicing routines, standard contractual terms and conditions, so the procurement team may also include HSE, finance and legal representation. The client's procurement team is likely to own the key areas of building the tender strategy and the commercial pricing and evaluation model.

All communication during the tender process will be directed via the procurement team, which will make the recommendation to management about which supplier(s) will be awarded the work. Once approved they will inform the successful bidder(s) and their own internal end user team which supplier(s) they can now use.

 

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Alan Tawse

Alan Tawse

Alan has worked in the oil and gas industry since 1974 in various administrative, operational and managerial roles in the UK, Netherlands and Norway. In 1993 he joined Halliburton in Norway as country manager of their new Drilling Systems division. Following a merger with Dresser industries in 1998, he moved to Business Development where he established a BD support team providing centralised expertise for tendering, contract management, market intelligence and various BD software systems. After managing up to 200 tenders and proposals annually for over 20 years, Alan retired at the beginning of 2020 with plans to explore Norway, and spend time with family overseas, He enjoys downhill skiing in the winter, golfing in the summer and following the Formula 1 racing season throughout the year.

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