Everything You Need To Know About Negotiated Tendering
Negotiated tendering is one of the lesser-used types of bidding in construction that’s suitable in certain circumstances.
It’s mainly adopted for more complex projects where the job owner negotiates solely with their preferred contractor rather than opening up the position for public bidding.
Owners who also have a strong relationship with a contractor may go down the negotiated tendering route since it eliminates making the project public and waiting around to find the right candidate.
If you have a project ready to get started and a contractor in mind to do the job, keep reading to find out everything you need to know about negotiated tendering.
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What Is The Definition Of A Negotiated Bid?
The negotiated tendering process refers to a bidding method in which the buyer directly negotiates with contractors to agree on a fee, specification, and deadline.
It’s an approach where the client and the contractor engage in open conversations to try to form an agreement that suits both parties. These meetings can take place more than once and can possibly drag on for an extended period of time because one party isn’t happy with the requirements.
Usually, they’ll discuss the project details, costs, and timelines, all of which are up for debate. Rather than adhering to the confines of a sealed bid off the bat, it’s a toss of ideas and preferences that leads to a mutually agreeable contract price and terms.
The Negotiated Tender Step By Step Process
Want to find out exactly what’s involved in the negotiated tender process? See the step by step process below.
- The job owner writes up a brief of the construction project with architectural plans, drawings, and any other specifications.
- With the bid manager, the job owner chooses and contacts the preferred contractor they want to carry out the work.
- If the contractor is interested, they’ll submit an expression of interest (EOI) for the project.
- After submitting an EOI, they will be then sent an invitation to negotiate (ITN) with the basic details of the project.
- A sequence of negotiations will take place between both parties to discuss the overall costs, deadlines, etc.
- Once both parties agree on the negotiated construction contract, the contractor will be awarded a contract, and all they’ll have to do is then sign it before the work begins.
The Advantages And Disadvantages Of Negotiated Tendering In Construction
The Advantages Of Negotiated Tendering
The negotiated tendering bidding method in construction presents a multitude of advantages for project owners and contractors alike.
Let’s look at some of them.
- It allows some room for flexibility, like for designs and the terms of the contract.
- There’s more chance of accurate price projections the first time around than other forms of competitive bidding in construction since all parties can collaborate and determine a fair price between themselves without having other offers hanging in the background.
- Things get done faster since there are only two parties involved.
- Less risk since the contractor usually has a proven tracked record and has been head-hunted for their expertise.
The Disadvantages Of Negotiated Tendering
Negotiated tenders, like the other tenders in construction, have their own set of disadvantages.
Here are some of the negative aspects of the negotiated tender procedure.
- It’s hard to get the job done at an affordable price since the project owner will be working with an expert in their field.
- Negotiations can take a while as the contractor will have some leverage.
What Type Of Job Owners Will Use Negotiated Tendering?
This goes without saying; some bidding methods are better suited to specific job types.
Here are the ones suited for Negotiated Tendering.
- Complicated projects.
- Renovation jobs.
- Personalised homes.
- Sensitive projects.
A Final Note On Negotiated Tendering
We have given you a comprehensive understanding of the negotiated tendering bidding procedure in construction and all that’s involved with it.
In essence, negotiated tendering plays a massive role in the construction industry for job owners who already have their eye on their chosen contractor; it may be a friend of theirs or someone in the local area. It may not be for everyone, but it sure does work for some.
Let Us Help You!
Are you in need of a masonry estimation service near you in Florida or somewhere in the USA to help you with your estimating and tendering? Well, Mo Engineers is here to help you.
Let’s start your project today by sending us your CAD drawings through our Contact Us Page and receiving a free quote.