Construction Contracts and Tenders in the UK: Facts, Figures

Construction Contracts

Each year, public sector contracts account for nearly 40% of construction work available. These commissions total in value of over 33 billion. To claim a portion of the construction budget, businesses must secure tenders. The tender process is the method businesses are required to follow to make their bid on construction contracts. Tender opportunities vary based upon the needs of the public and private sectors.

Sectors where construction tenders are plentiful include schools, hospitals, social housing and roads. The housing sector alone accounted for over 1.7bn in construction across all departments. Tenders are typically related to construction machinery, construction equipment, roof works, special trade construction works, repairs of building installations, maintenance service of building installations, architectural contracts and other related services.

Local Authorities & Construction Contracts

Local authorities have budgeted expenditures in the UK for 2010-2011 year at 121.9 billion. Fourteen percent of this budget is expected to be spent on housing, and 38% of the budget is expected to be spent on education. Currently, the UK local authorities have several construction contracts underway and several more planned. Many of these contracts consist of:

• Department of Children, Schools and Families projects

• Department of Transport projects

• Community and Local Government projects

• Department of Health projects

• Ministry of Justice projects

• Department of Culture, Media and Sports projects

• Department of Environment, Food and Rural Affairs projects

• Others

The budget percentages are not indicative of the remaining contracts in construction for 2010-2011. A large portion of the construction contracts will be allocated towards construction projects related to health. The Department of Transport and Department of Children, Schools and Families also account for a significant portion of the budget. Over 17 million will be spent in the Department of Health, and over 26 million in the Department of Transport is remaining on the budget for this year. Over 8 million in contracts are remaining and will be allocated towards construction related to education. 

  

Construction Tendering Process

The construction tendering process is similar to obtaining tenders in other industries. Most businesses simply locate a tender provider, select a tender and bid for the business. Since the government supplies 25% of local employment, many construction tenders are public contracts. Hence, many businesses rely on government tenders as a vital source of income. The private sector may also provide tenders through tender opportunity providers more info. Tenders are provided online, by phone or by email. Depending upon the mode of retrieval, tender searches vary. Elaborate websites have been developed to make tender searching easier and more convenient. When tenders are displayed in real time, businesses that identify them quickly have a competitive advantage.

Selecting an appropriate tender provider is almost as important as bidding for the opportunity. Many tender providers offer construction businesses more opportunities than others. The more opportunities available to businesses, the more likely the business will land a viable contract. Ensure that the tender provider offers tenders from both the public and private sector. This will guarantee that your construction company finds the best opportunities.

Through tender websites, businesses may search for tenders by industry, region or other advanced methods. During registration, some websites will gather information about the business to deliver relevant tender opportunities via email. When the company finds a relevant tender, a representative of the company will prepare a PQQ or ITT. These documents contain questions that businesses must adequately answer regarding the opportunity. The questions must be answered thoroughly to demonstrate your business's competitive advantage over other businesses bidding for the same construction contracts.

Some companies that apply frequently for construction contracts may be tempted to copy and paste answers into the fields provided. While this saves the company time, often the information is not relevant to the question asked. If the information is not relevant, this will make the company appear less informed about the opportunity. The evaluator will then select the next applicant that provided a detailed description of how the project will be completed. The business with the lowest bid that meets the project's needs will win the contract. When the bid is won, the construction company is expected to meet the criteria outlined in the bid, including the bid price. Those who do not may be penalized.