Tendering:

Tendering is a competitive process used to select contractors for construction projects. It

involves inviting bids from multiple contractors, evaluating their proposals, and awarding the
contract to the most suitable bidder.

There are several methods of tendering used in construction projects. The complexity and nature
of the project will influence the choice of tendering method. Here are the most common
methods:

1. Open tendering: is a traditional method of procurement where any interested contractor can
submit a bid for a project. It involves placing an advertisement in the technical press, inviting
contractors to apply for tender documents, and evaluating all submitted bids.
2. Selective tendering: is a more targeted approach to procurement compared to open
tendering. In this method, a limited number of pre-selected contractors are invited to submit
bids for a project.
a. Single-stage selective tendering: is a variation of selective tendering where
contractors submit a single bid for the entire project. This method is often used when
the project scope and requirements are well-defined and there is a high level of
confidence in the pre-selected contractors.
b. Two-Stage Selective Tendering: is a procurement method where contractors submit
bids in two stages; preliminary bids and detailed bids. In two-stage tendering,
contractors submit a preliminary bid in the first stage. The client then selects a
shortlist of bidders and invites them to submit detailed bids in the second stage.
3. Negotiated tendering: Is a procurement method where the client directly negotiates with a
selected contractor to determine the final terms of the contract. This approach differs from
competitive tendering, where multiple contractors submit bids and the client selects the most
suitable one.

Tendering Procedures in JCT, FIDIC, and NEC3 ECC

Tendering procedures must comply with applicable laws and regulations in the relevant
jurisdiction. The specific tendering procedures will be outlined in the contract form being used
(JCT, FIDIC, or NEC3 ECC).
JCT (Joint Contracts Tribunal) standard forms of contract include provisions on tendering, such
as the preparation of tender documents, evaluation criteria, and the award of the contract. JCT
offers flexibility in tendering procedures, allowing for both open and selective tendering. JCT
may recommend pre-qualification of contractors before inviting tenders, especially for large or
complex projects.

FIDIC (Fédération Internationale des Ingénieurs-Conseils) forms of contract also address

tendering procedures, with variations between different forms. FIDIC allows for both open and
selective tendering, depending on the specific form and project requirements. FIDIC outlines
evaluation criteria for tenders, typically focusing on price, technical competence, experience, and
compliance with project requirements.

NEC3 ECC (New Engineering Contract 3rd Edition) forms of contract provides a framework
for the tendering process, including the preparation of tender documents, evaluation of bids, and
award of the contract. NEC3 ECC is flexible and allows for both open and selective tendering.
The NEC3 ECC outlines a structured approach for evaluating tenders, considering factors such
as price, technical competence, and compliance with the contract requirements.

Open tendering:

Open tendering is a traditional method of procurement where any interested contractor can
submit a bid for a project. It involves placing an advertisement in the technical press, inviting
contractors to apply for tender documents, and evaluating all submitted bids.

Open tendering is commonly used in Uganda for public sector projects, such as infrastructure
development, construction of government buildings, and procurement of goods and services.
Examples include construction of roads and bridges, procurement of medical supplies,
construction of schools and hospitals, and development of housing projects.

Process of Open Tendering:

The Public Procurement and Disposal of Public Assets Act, 2004 (PPDA) outlines the procedures
for open tendering in Uganda. Here's a brief overview:

1. Public advertisement: The procuring entity (government agency or public institution)

publishes an advertisement in the Uganda Gazette and at least two national newspapers.
 The advertisement includes details about the project, eligibility criteria for bidders, and
the deadline for submission of bids. The brief project details mentioned in the
advertisement are the location, type, scale and scope of the proposed works. Either the
advertisement, or the documentation, will explicitly state that the employer is not bound
to accept the lowest tender, or indeed any tender.

2. Tender Documents: Interested bidders (contractors) can purchase the tender documents
from the procuring entity, which typically include the scope of work, specifications,
evaluation criteria, and submission requirements. There will usually be a refundable
charge for this documentation to prevent people from applying out of idle curiosity. This
small fee will deter those not genuinely interested.

3. Bid Submission: Bidders submit their bids within the specified deadline, along with any
required supporting documents. Bids are accompanied by a bid security, which is a
guarantee that the bidder will enter into a contract if awarded.

4. Bid evaluation: A tender evaluation committee evaluates all submitted bids based on the
specified criteria in the instructions to bidders (ITB). The evaluation may include
technical evaluation (technical competence and experience), financial evaluation (price),
and other relevant factors such as compliance with project requirements. The evaluation
criteria must be objective, fair, and relevant to the project requirements.

5. Contract award: The contract is awarded to the successful bidder, who is typically the
bidder with the lowest evaluated bid that meets all the specified requirements. The
procuring entity must notify all bidders of the award decision and the reasons for their
selection or rejection.

Key Characteristics of Open Tendering:

1. Indiscriminate: Anyone can submit a bid, regardless of experience or qualifications. The

process must be transparent and free from any form of corruption or favoritism.

2. High volume of bids: Open tendering often results in a large number of bids.

3. Limited quality control: It can be difficult to ensure high-quality construction through

open tendering.
 4. Potential for low-quality bids: Contractors who are not well-suited for the project may
submit bids, leading to potential risks.

Advantages of Open Tendering:

1. Transparency: Open tendering can be a transparent process, ensuring all interested

parties have an equal opportunity to bid. Since there is no restriction, there can be no
chance of favoritism.

2. Fairness: It can promote fairness and competition among contractors.

3. It gives chance of tendering to any firm which wishes to do so

Disadvantages:

1. Inefficiency: Evaluating numerous bids can be time-consuming and resource-intensive.

Although an employer is not bound to accept the lowest bid, a committee in charge of
public expenditure is under a lot of pressure to accept the lowest. When the lowest bid is
accepted, this can easily result in the employer awarding the contract to the builder who
has the least appreciation of the complexities of the projects, or the greatest willingness to
take risks, or the lowest current workload of all the bidders. It would be unusual, or even
lucky, if these factors resulted in the best value for money for the employer.

2. Increased costs: Managing a large number of bids can increase administrative costs for
the client.

3. Reduced quality: Open tendering may not guarantee the highest quality of construction.
Being an indiscriminate request for tenders, this approach may be inadvisable because
there is no reliable method of ensuring high quality building.

4. High cost for contractors: Bidding on many jobs with low success rates can be
expensive for contractors. With open tendering it’s estimated that only about one in
twenty contractors’ bids are successful. The preparation of such tenders places upon the
industry an unnecessary burden of time, effort, and expense. This expense ultimately is
passed back to the clients of the industry.
 5. Difficulty selecting the right firm: With a large pool, choosing the most qualified
contractor can be challenging. Because of the indiscriminate nature of open tendering,
contractors can be awarded work for which they are not properly equipped, in terms of
either resources or experience.

Conclusion:

While open tendering has been a traditional method of procurement, its use has been declining in
recent years due to its limitations. More sophisticated methods like selective tendering and two-
stage tendering are now more commonly used to ensure higher quality and efficiency in the
procurement process.

However, it is still occasionally used to obtain tenders for building works. Indeed, the indications
are that, because of the effect of certain legislations, its use in public sector work is still
prevalent. This is, to some extent, unfortunate in that, having recognized the large number of
problems associated with open tendering and the European rules meant that we almost reverted
back to a far from satisfactory situation. Similar pressures apply in the international market,
especially where organizations such as the World Bank are involved. Interestingly, JCT Practice
Note on Tendering does not mention open tendering at all, other than to mention that it is
generally accepted that it is not practical due to the excessive number of bids that result.