How to compile a tender report

Following the analysis of the submitted tenders, a tender report is the document supplied to the client that sets out the tender appraisal process and recommends a contractor for award of contract. The client should be able to ascertain how the appraisal process has developed from the opening of the submissions to recommending the most suitable contractor. (Refer also to Tender price appraisal template)

Executive summary

A typical tender report will contain the following information.

An executive summary should summarise the complete tender report in brief detail. The information that should be summarised will include:

• date that tenders were issued;
• to whom the tenders were issued;
• how many tenders were received;
• which contractor submitted the lowest price;
• any observations made on the returns, e.g. clarifications, omissions;
• information on the extent and level of detailed appraisal carried out on each contractor's tender;
• following the appraisal, which contractor is recommended for award of contract;
• the revised tender figure following any adjustments made;
  the programme length;
• any matters or issues that need to be resolved prior to entering into contract.

Each of the above points will be expanded on throughout the tender report. However, the executive summary gives the client the opportunity to understand the process in a brief synopsis.

Introduction

Following the executive summary, an introduction will detail who the client is and a brief summary of the project. The tendering contractors will be listed and a description will explain how this list was formed (for example, recommendations, previous experience, or a pre-qualification process). The introduction will outline the procurement route and contract for the project, and the date the tender documentation was issued, identify any amendments issued and any extensions to the tender period.

Tender information

The next section will outline the tender data. It will give the client an insight into the tender process and will also offer an overall evaluation of the tenders received.

It will include details of:

• the date of issue for the tender documentation;
• any tender amendments issued during the tender period;
• the date the tenders were returned;
• what address the tenders were submitted to; and
• who opened the tenders.

The prices of each tender should be recorded to show the client the figures before appraisal and negotiation. A calculation providing an indication of the overall percentage spread of the tenders should be included.

At this point, note any observations in terms of compliance in the returns.

Evaluation and examination of tenders

This section will provide the bulk of the appraisal. Tenders may often be scored not only on cost, but other factors including quality, programme and performance in interview. If tenders are to be assessed on factors other than cost the tenderers should be made aware of this in the tender information, including details on how these other factors will be assessed.

When reviewing the tender costs, prepare a table for inclusion at the start of the section detailing a cost summary (if applicable) side by side for each contractor.  This should follow the format of the pricing document that would typically follow an elemental or works package format as outlined in RICS' new rules of measurement (NRM). This will provide a direct comparison and identification of where the main areas of variance are. This highlights issues for investigation in the tender submission (for example, a large elemental works package cost variance).

Following this, a more detailed examination and commentary of each element should be made. The appraisal of each cost component will typically look at the following elements:

• preliminaries;
• substructure;
• frame;
• roof;
• stairs;
• external walls and windows;
• internal walls;
• internal doors;
• finishes;
• fittings;
• sanitary fittings;
• mechanical and electrical works;
• site works;
• drainage;
• provisional sums;
• design and other fees;
• overheads and profit;
• risk allowance; and
• day work on cost percentages.

The commentary on each element will outline:

• which contractor was the most competitive;
• if there was a large variance in costs;
• any abnormal costs or rates; and
• if the elements were correctly priced by the contractor; and
• how the costs align with expectations/pre-tender estimate.

Within the examination of the elements the appraisal can also comment on any unique features to the job and if these have also been priced in accordance with the specification.

Further examinations can include reviewing the potential cost impact of increases in the contract sum due to client or contract variations. The NEC3 contract sets out a tender evaluation model that enables the client to understand the possible consequences of contract variations. The assessment is carried out using the contractors design costs, overheads, and main contractor profits, and the formula calculates the cost implication for each contractor tender assuming the project increases by a certain percentage.

This process gives the client a better understanding of the implications of change and its impact on tender returns and should be taken into consideration when recommending a contractor. However, the NEC3 evaluation of ‘on costs’ would not form part of the contract sum because it is a ‘what if’ scenario.

Having evaluated the tenders thoroughly, including an elemental or work package analysis, discrepancies in tenders, etc. the next section of the tender report should record any resulting revisions to the tender figure for each tenderer. This can be detailed in the following way:

Any adjustments to a contractors tender should be formally recorded back to the contractor for their confirmation and acknowledgement that their tender should be so adjusted (see Dealing with contractors).

Comparison with pre-tender estimate

In most instances, the quantity surveyor will have produced a pre-tender estimate for the client before tendering the works. This section will outline how the tenders, following appraisal, compare to the pre-tender estimate. A commentary detailing the percentage difference between the revised tenders and pre-tender estimate can be provided.

Following this, an explanation of why there are cost differences, if any, between the 2 documents, and an analysis of the market can be described to explain if there has been any increases or decreases in element/material costs between the date of the pre-tender estimate and the tenders that were submitted.

Conclusions and recommendations

This section will summarise the tender process and briefly detail the initial tender figures and the revised tender figures for each contractor. The consultants appraising the tenders on the client’s behalf will then put forward their recommendations based on the report. The conclusion will also outline any outstanding issues that need to be agreed with the contractor to make the client fully aware of the situation at the time the tender report is submitted.

Following the conclusions and recommendations section, an appendices will follow containing supporting documentation, such as form of tender, programmes and any other supporting information/analysis.