Overview of the Difference Between Bidding and Tendering

Bidding and tendering are two terms commonly used in the construction and procurement industries. While they are often used interchangeably, they represent distinct processes in project procurement and contract award.

1. Bidding

• Definition: Bidding refers to the process where contractors or suppliers submit their offers, or "bids," for a project or contract based on the requirements outlined by the client or project owner. The bid outlines the price at which the bidder is willing to complete the work or supply the goods and services.
• Types:
  • Open Bidding: Open to all contractors.
  • Closed Bidding: Restricted to a selected group of contractors.
• Process: Bidders analyze the project specifications, formulate a proposal, and submit it. The lowest or most appropriate bid often wins, depending on the selection criteria.
• Common Uses: Primarily in construction projects, government contracts, and procurement of goods and services.

2. Tendering

• Definition: Tendering is the formal process of inviting bids for a project. It is typically used when there is a formal invitation for contractors or suppliers to submit offers to complete a project. The tender document provides all the detailed requirements of the project, including timelines, specifications, and terms.
• Types:
  • Open Tendering: Invites all interested parties to submit a tender.
  • Selective Tendering: Only a selected few contractors are invited to tender.
  • Negotiated Tendering: The client negotiates with one or more contractors after receiving their tenders.
• Process: The client invites tenders by advertising or directly sending tender documents to chosen contractors. The contractors respond with their tenders (proposals), which are then evaluated.
• Common Uses: Common in public sector projects, large infrastructure projects, and procurement contracts.

Key Differences:

• Bidding is a process where offers are submitted in response to a request, while tendering is the formal procedure used to invite those offers.
• Bidding can refer to the act of submitting an offer or competing for a contract, while tendering involves the detailed procedures and documentation required to make an offer official.
• Tendering is more formal and structured, especially in public-sector and large-scale construction projects, whereas bidding is the action of participating in the tendering process.

In essence, tendering is the formal invitation to submit bids, and bidding is the submission of a proposal or offer by a contractor or supplier in response to that invitation.

Thu Jan 23, 2025