Two-stage tendering is not a new concept by any means, but it is becoming more prevalent in the construction tendering space, with 37% of those surveyed using this process. It is becoming especially important for major building projects as budgets tighten and materials and skilled workers become more expensive.

Approaching a project in this two-stage process allows for a more firm and certain cost plan. Getting a contractor and estimator in early to discuss the full cost of the project can ensure contractors can get a scope of the site and discuss what sub-contractors are needed. This negates some of the risk of running over budget when additional staff are needed. This does not, however, reduce the risk associated with inflation, so this percentage should be accounted for as a contingency.

In two-stage tendering, a main contractor or a specialist contractor is appointed very early in the project process. This can mean the final designs and other tender information are not yet completed. This leaves the opportunity to take advantage of the knowledge and advice of specialist contractors who may advise on the design and plans. This allows work to commence before the full design is finished, ensuring a head start on the works planned. Main contractors in this situation work as advisors, assisting in the design of the building and putting together rough estimates for costs, as a basis for the confirmed costs laid on in stage two.

The following second stage, in this instance, would be based around pricing. Initial prices may now change with factors highlighted by the specialist in the first stage. Working on the pricing framework put together in stage one, more confident and secure prices are laid out here.

Once this is confirmed, work may begin. But by separating this process thus, more detail and better budgets can be put into place.

The main positive of the two-stage tendering process is that, although it has a chance to raise the tender prices, it also ensures fewer price variations and fewer claims. This creates long-term security and savings.

Usually, there is little to no competition going into stage two. Those appointed in stage one are likely to be held on for stage two. This extra time also fosters better partner relationships between those on the project who have been involved since stage one and a familiarity with the project and any related information.

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