Construction bidding is a rough competitive process. It is essential for obtaining the best price for goods or services, ensuring efficient and effective spending of public funds. Without a consistent plan, your construction business stands a good chance of not getting a bid to build the project.

In the UAE construction bidding is a structured and regulated process, particularly in the public sector. In this article, we will touch on the details of bidding in the UAE, as well as give a couple of recommendations on how you can improve your chances of getting a tender.

Construction bidding involves the submitting and approving bids between a contractor and its customer. It also includes how subcontractors secure work from the contractor after a job has been accepted.

A construction bid must be accurate. The bidder estimates a realistic cost by utilizing blueprints, construction plans, and material quantity takeoffs. The cost includes a profit margin and ensures the project’s feasibility.

There are several types of construction bids.

In open or competitive tendering, the project owner or general contractor asks all interested contractors to submit bids. They publicly share a bid package with project details and specifications, both in print and online, ensuring fairness and competition. Contractors propose their prices for the specified work.

This method is widely used in public construction but is rare in private projects. It boosts competition, leading to lower-priced bids. Yet, to ensure qualified contractors bid, project owners and general contractors (GC) often include a request for qualifications (RFQ).

In cases where a private developer needs more trusted contractor relationships or the project requires expertise, they may open the bid to all contractors to get competitive bids and build partnerships with local contractors.

Negotiated tendering is a procurement method used in the construction industry where the client approaches a single supplier based on their track record or a previous relationship with the supplier. The supplier is then asked to deliver the work, and the buyer and supplier negotiate the contract terms.

This method is usually appropriate for highly specialist contracts or for extending the scope of an existing contract. The advantages of negotiated tendering include reduced duration and costs of tendering, early supplier involvement, and the confidence of working with a supplier the client already knows. There is also potential for cozy relationships between the client and the supplier, which could be more desirable.

Selective tendering involves inviting a chosen group of bidders to submit proposals, commonly seen in private construction projects requiring specific expertise. Contractors are selected based on existing relationships, past performance, or expertise. Bid solicitation may be done through a bid management platform, and larger contractors use pre-qualification processes.

This method ensures quality control by choosing contractors with a proven track record, reducing project risks. However, it limits overall competition, potentially leading to higher prices. Despite this, project owners often prefer working with trusted partners.

Selective tendering with known contractors can lead to quicker project starts and fewer delays, resulting in cost savings for the buyer.

Serial tendering in the construction industry involves submitting multiple bids for the same project, one after another, until the employer gets an acceptable bid. It generally consists of preparing tenders based on a typical or notional bill of quantities (BOQ) or schedule of works. This approach allows for a more flexible and iterative bidding process, enabling the employer to select the most suitable bid for the project.

Serial tendering is often used in civil infrastructure projects and is considered better than other types regarding cost reduction.

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In the UAE, the tendering process is generally conducted in a fair and open manner, with all potential suppliers having equal access to the tender documents and information. The construction tendering process involves several stages, including pre-tender, tender advertisement, and selective tendering.

Some of the complications in the UAE construction industry's tendering process include contractual disputes related to variations and breach of contract, which are highly prevalent and often lead to delays and disruptions.

The standard tendering methods used in the UAE construction industry include:

Here is how the construction industry’s bidding process flows.

The bidding process begins with the project owner or architect advertising that the project is open for bid, making bid documents accessible to potential bidders. This process can be facilitated by the owner, an owner's representative, the construction manager, or the project architect.

Types of bidding requests:

The owner sends a package containing an RFP, RFQ, or ITB. This may be selectively sent to specific general contractors or openly advertised for you to bid. The package comprises project drawings, specifications, reports, and a draft contract. Such information as bid date and time, whether the bid opening will be public or private, and how bids will be scored is also included.

Once a general contractor is about to bid on a construction project, he thoroughly reviews the project documents to identify the types of work required for successful completion. The following actions are:

Near the bid date, subcontractors send their bids to you bidding on the project. You need to:

The goal is to compare subcontractors in the same trade. Though, be prepared. This is not easy because everyone bids on projects differently. Ask subcontractors to revise their pricing, provide more details. Also you can submit revised proposals based on your requests

You select the winning subcontractors for each trade based on the criteria given for the project. This may include having a particular skill set, experience with similar projects, a working relationship with you, or a low price. While it's true that the lowest bid usually gets chosen, it isn't always the case. Having experience with similar projects and establishing a working relationship with GC are good ways to win bids.

Next, you compile the final bid price for the project:

Fill out the bid form and include any additional documents requested by the owner.

Bids are then opened either publicly or privately.

In the bid submission phase, interested contractors provide project documentation including their business information, timeline, and costs. General contractors request bids from subcontractors for specialized aspects of the job and combine them to prepare the bid submitted to the property owner.

In order to create an accurate bid, contractors must develop a precise estimate for all project costs, which includes:

Contractors can nail down a competitive bid by reviewing project specifications, calculating overhead and profit margin, and performing material takeoffs. A good bid reflects high quality at a reasonable price.

Contractors may need to submit a bid bond with their bid to be considered for a project. The bond guarantees that the contractor will complete the project as per their bid.

Once all the general contractors submit their bids, the owner or architect reviews the packages and compares them based on the criteria in the request for proposal. Various factors may influence the selection of the general contractor.

Usually, the primary consideration is the lowest bid, especially for public projects where there may be legal requirements to choose the lowest-priced contractor.

Owners also value contractor’s experience in similar projects. If a request for a proposal asks about past projects, then experience will likely be a factor in the selection process.

Once the project owner picks the general contractor, they discuss the contract. The process the following:

Typically, a contract is created by either the owner or the contractor, and both parties review it. They might negotiate further on aspects like payments, damages, or insurance. If they can't agree on terms and prices, the owner can choose another contractor for the project, and the negotiation process begins anew.

After all negotiations, the parties sign the contract.

Contractors can still negotiate specific provisions even if the owner uses a standard contract form like AIA or ConsensusDocs. Once both parties agree, they sign the contract, and executed copies are distributed to relevant project team members. The GC also provides requested documentation, such as insurance certificates and bonds.

To succeed in bidding, it's important to understand the process and its complexities. As a contractor, you need to adopt the right strategy to increase your chances of winning the bid. This means having a comprehensive understanding of the details involved and being well-prepared.

ERP software can greatly assist with construction bidding by streamlining tender and bid management processes, optimizing efficiency in construction projects, integrating and automating business processes, and providing real-time monitoring of data and information.

First Bit provides software for better management of construction projects, minimizing time you spend on manual tasks and increasing transparency of the project. It contains: