In order to grow your business, it is necessary to focus on increasing sales and look for new opportunities. Participating in tenders can be an excellent way to find new opportunities to grow. There are various types of tenders available to bid for. Broadly, there are two kinds of tenders – government tenders and private tenders.
Government tenders are floated by various government departments and Public Sector Undertaking Companies (PSUs) while private tenders are released by private companies. Based on the nature of the tender, there are four different types of tenders.
Before you start bidding, it is important to understand the difference between various tenders and apply for relevant tenders most suited to you.
Types of tenders in India
As mentioned previously, tenders in India can be broadly categorised as government contracts and private sector tenders.
Based on the nature of the tenders, they can further be divided as:
Different types of tenders:
- Open tenders
- Closed tenders
- Negotiated tenders
- Single and two-staged tenders
In the following sections, we will take a detailed look into the different tender categories and some tips for applying to tenders.
As the name suggests, open tenders are open for all organisations to bid. Both, government and private companies use open tendering process to invite quotations for products or services to be secured.
The tender floating company specifies requirements, and the deadline and bidders can respond with the quotations and other perquisite details. Competition in such type of tendering process is higher as it is open to all. However, on the bright side, it gives an equal opportunity to new and emerging businesses to participate in tendering process and prove themselves.
Mostly, government and private companies opt for open tendering process for engineering and construction work.
Closed or selective tendering or limited tenders involves invitation to selected vendors. In this process, the client invites to selected suppliers to submit quotation. Usually, these suppliers have a proven track record and the client has confidence in them to carry out the job.
Once the tender is floated amongst selected vendors, suppliers need to complete the tender bidding process by submitting their quotations, job details and other required details. Client then awards the contract to the best valued supplier.
Unlike open tenders, the competition in this kind of tendering process is low. However, you need to be backed by good reputation and track record in order to receive an invitation for such tenders. The client usually extends an invitation only when they have a confidence in the supplier’s job quality and assurance on timely delivery. As a result, this process may not be suitable for companies that are planning to enter new markets, where they do not have any previous track record.
When the client invites quotation from a single company, it is called negotiated tenders. One of the key reasons for the client to invite quotation from a single vendor involves specialised job. Once the vendor submits its response towards the tender, client then negotiates quotation and terms and conditions.
Negotiated tender is usually an extension of an existing contract. For example, sometimes the client may feel that getting the work done from the same supplier can help them reduce cost or save time. Good reputation helps while getting invited for such kind of tenders.
This is an excellent opportunity for an MSME owner to grow business, as there is no competition involved in this tendering process. Hence, you should give best possible quotation and win the contract.
Single and two-staged tenders
Single staged tender involves client giving end-to-end information about the project and suppliers submit their responses at once involving project details and quotation, which does not change later. Hence, bidders need to be careful about pricing and project details. As a bidder you need to consider duration of the project and expected fluctuating cost of raw material before submitting the response.
On the other hand, two-staged tenders involve more collaborative approach. The client company selects the vendor on the basis of outline scope of work. Second stage reveals more details of the project, and the final price of the contract can then be agreed upon.
Why participate in tenders?
There are several benefits of bidding for tenders, especially if you are a MSME or emerging business. With the government introducing new initiatives to encourage MSME participation in e-tender bidding process, the returns are much varied. Some of the reasons you should consider applying for government tenders include:
- Increase revenue: Winning a tender will of course help you in growing your business and ultimately revenue.
- Learning new tactics: Bidding tenders is an experience in itself. Entering perquisite details, documentation, quoting right prices, timely deliveries, etc. are some of the important aspects of bidding. As you participate in more and more tenders and win contracts, you learn about how to bid and win.
- Long term business: Some of the tenders are long term contracts. Long term contracts assure long term business. This can help you in bringing stability to your business.
- Helps in building reputation: As you win tenders and deliver consignments on time, it helps you build your reputation. Also, it gives you an opportunity to cater to government organisations and large corporates. Having these prestigious companies in you clientele elevates your reputation.
In a nutshell:
Benefits of participating in tender bids:
- Helps to grow your business
- Assures long term business
- Helps in building reputation
- Enhances your experience as an entrepreneur
Tips to participate in tendering process
As a closing thought, let us look at some tips to enable you to participate in the tendering process with ease:
- Look for a tender that is suitable for your business
- Register your business on the government e-Procurement portal and/or the GeM portal to learn about the latest tenders
- Subscribe to a tender platform (e.g., Tenders & Quotations on Tata nexarc) to receive tender alerts and updates on relevant tenders announced, closing dates, and more
- Read the tender document requirements thoroughly before you start filling the tender response (i.e., determine the type of tender and prepare your response accordingly)
- Analyse the tender request carefully and ensure your response covers all the points mentioned in the tender request
- Consider inflation and fluctuating rates of raw materials while working on costing (especially for long term contracts)
- Ensure you are submitting all details that have been asked for, including required documents, BOQ, tender fees, certifications and licences etc.
- Commit only to what you can deliver (especially while mentioning project details and delivery timelines)