With the recession apparently over, there is currently a glut of work available, especially in the construction sector. Whereas 2 years ago contractors were searching for bidding opportunities, now many are able to be highly selective about what they go for. What are some of the reasons why they may choose not to bid an opportunity? What steps can procuring clients take to ensure they attract a strong field of bidders?
1. Lack of soft market testing / prior information notice. Many contractors will choose not to bid an opportunity they have had no notice of. Conversely, notice of a bid allows the contractor to plan it into their work programme. Soft market testing allows the client to test the attractiveness of the opportunity with contractors and, importantly, allows the contractors to provide information on what would make it an attractive opportunity for them to bid. Clients are getting used to the idea now that they no longer hold all the cards.
2. Lack of site information. It is in neither clients’ nor contractors’ interests for caveated, qualified bids to be submitted. This can happen when there is insufficient information provided e.g. legal ownership of the site; location of underground services; access arrangements, etc. Many contractors will No Bid where they do not have the necessary information to submit an unqualified bid.
3. Poor quality design information. If working drawings are difficult to read, clients are increasing the chances of No Bids.
4. Lack of word limits. Word / page limits provide structure to bids. The absence of these can leave bidders in the dark about the level of detail required. Also, tender submission requirements that seem overly onerous are likely to be rejected i.e. 10-20 well structured questions should be sufficient for most contracts. The PQQ stage should be used to establish competence.
5. Timescales. Short turnaround bids with no option for deadline extension will also increase the likelihood of the opportunity being rejected. Clients should also take into account holiday periods – contractor staff also go on holiday so opportunities that need to be completed close to easter, xmas and during July/August may at times be turned down.
6. Lack of 2 stage tendering. 2 stage tendering where the preferred contractor can work with their supply chain before submitting a final price is favoured by construction companies. Although, this may take slightly longer, the client gets a better price at the end of it. Importantly, many supply chain partners are so busy that they will only price where there is a preferred contractor position.
7. Quality v Price ratio. If quality is important (and who would say it is not?), this needs to be reflected in the Quality v Price ratio. How often do any of us make personal buying decisions based on the cheapest price?
8. Design & Build ability. Is it buildable to the design? Make it easy to build e.g. roof pitches, sewers, etc.
9. Decision Making. Clients can establish a poor reputation by taking months to make a tender decision. Contractors have obtained prices from their sub-contractors and materials suppliers – these prices are moving upwards, so clients that are known for protracted decision-making processes may get No Bids. Sub-contractors will not sit idle waiting on a protracted decision – they will take on other work instead. Also, detailed feedback needs to be given by both clients and contractors on tender losses and no bid decisions.
10. Materials and Specifications. Some specifications are not fit for purpose. There are materials shortages and unintended consequences of certain specifications. More attention should be given to whole life costings as cheapest is often not that in the long run.
11. Risk. Some clients are looking to pass on all the risks to the contractors. Given that many contractors can pick and choose what they bid on, clients can make their opportunities more attractive by sharing some of the risk. Contractors will choose to work with clients who understand design and build risks.
12. Lack of bid resources. During the downturn, many contractors reduced their bid resource. Scaling this resource back up to match the opportunities is not always easy to achieve. Of course, this is where external bid specialists such as AM Bid Services can be engaged to support increased bid activity.
With thanks to Peter Quinn, Lovell Construction for an excellent presentation at last month’s Chartered Institute of Housing Conference in Manchester