What is a tender in construction?
A tender is either the formal process an owner uses to invite prices for a construction project or the priced offer a contractor submits in response. In the U.S. the same thing is usually called a bid. The term is common in the UK, Canada, and Australia. A tender bond is what U.S. contractors call a bid bond.
Tender is the word much of the world uses for what U.S. contractors call bidding. An owner "goes out to tender" by issuing drawings, specs, and conditions to contractors, who then "submit a tender" (a priced offer) by a deadline. The owner evaluates the tenders and awards the contract. U.S. federal regulations also use the verb in a related sense: FAR defines acceptance as the government assuming ownership of supplies "tendered," meaning offered for delivery.
U.S. contractors run into the word on international work, on projects with Canadian, British, or Australian owners or consultants, and on some public authority documents. It is worth knowing because the paperwork maps closely to the U.S. bid package.
How tendering works
| Tender term | Common U.S. term |
|---|---|
| Invitation to tender | Invitation to bid |
| Tender documents | Bid package |
| Tender price or tender sum | Bid amount or contract sum |
| Tender closing | Bid opening or bid day |
| Tender bond | Bid bond |
| Selective tendering | Invited or prequalified bid list |
Open tendering lets any qualified firm submit. Selective tendering limits it to a prequalified shortlist. Negotiated tenders involve one contractor, usually brought in early. Two-stage tendering picks a contractor on qualifications and preliminary pricing first, then finalizes the price as the design matures, which is similar to the U.S. construction management at risk approach.
Whatever the method, the instructions to tenderers control the details: the closing time, how tenders must be delivered, which forms must be signed, what security is required, and how long the price must stay open. Read them before pricing, not after.
A worked example
Say a U.S. electrical contractor is asked to price a data center fit-out for a European owner whose consultant issues an "invitation to tender" with a tender form, a priced bill of quantities, and a closing time of noon on a Thursday. The estimator recognizes the tender form as the bid form and the bill of quantities as a ready-made takeoff the owner wants priced line by line. The team checks the quantities against the drawings, finds the cable tray length is short by about 15 percent, and prices it as listed while noting the discrepancy in a qualification letter. The tender goes in at 11:40 a.m. with the bond and signed form attached.
Two weeks later the consultant calls with "post-tender clarifications," the equivalent of a U.S. scope review. Because the cable tray issue was flagged in writing, the contractor can price the extra length rather than eat it.
Common tendering mistakes
- Submitting late. Most tenders received after the closing time are rejected without being opened.
- Changing the owner's tender form or adding conditions it does not allow, which can make the tender non-compliant.
- Pricing a bill of quantities without checking it against the drawings.
- Assuming the lowest tender always wins. Many owners score price and quality together, similar to best value procurement.
Related terms
Tendering connects to the request for proposal, sealed bid, and bid leveling. For U.S. public work, see how to bid public construction projects and how to build a construction bid that wins.
Frequently asked questions
Is a tender the same as a bid?
In practice, yes. Tender is the more common term in the UK, Canada, Australia, and other countries. Bid is the usual U.S. term.
What is a tender bond?
A guarantee, usually from a surety or bank, that the contractor will sign the contract at its tendered price if selected. In the U.S. it is called a bid bond.
Can a tender be withdrawn?
Rules vary by owner and jurisdiction. Many tender documents say a tender cannot be withdrawn for a set period after closing. Read the instructions to tenderers.
What is a bill of quantities?
A priced list of quantities prepared by the owner's consultant so every bidder prices the same amounts. It is common in tendering outside the U.S.
