Home / Insights / Blog / The resurgence of two-stage tendering in construction: a strategic comeback? The resurgence of two-stage tendering in construction: a strategic comeback? Two-stage procurement is making a comeback within the construction sector, but what does this mean? The complex UK construction landscape means the tendering process is no trivial task. With tighter margins, pressing deadlines and rising raw material costs, quantity surveyors want to ensure they’re getting the best prices from subcontractors – and within a set timeframe to complete a project on time. That means re-introducing two–stage tendering so they can get the best price, manage risk, and maintain collaboration and transparency at each stage of the construction procurement process. In this blog, we explain what two-stage procurement is and why it is making a comeback, its benefits for the construction sector; and how tools like Tender Management can support the tender enquiries process and drive better outcomes. Why is the two-stage tender process returning? Two-stage tendering is resurging as large contractors seek better risk management amid shrinking margins, mainly down to soaring material and labour costs – reportedly as much as 20% more since 20201. Unlike traditional one-stage tendering – where contractors simply collect and accept subcontractor pricing – this two-phase procurement stage approach allows contractors to identify additional cost efficiencies before final commitment. The two-stage tender process has gained traction in construction, where macroeconomic pressures severely impact both scheduling and profitability, providing main contractors with crucial pricing flexibility during uncertain economic conditions. What is two-stage tendering in construction? Two–stage procurement is often comprised of different teams and people: Stage 1 – Traditional The first stage of tendering is more traditional, where estimators simply go out for pricing from their supply chain. Stage 2 – Procurement Pending the estimator’s company has been awarded the contract, quantity surveyors and commercial teams get involved, where they go back to the construction supply chain to check if it is the supplier’s best and final price. What are the 13 stages of the procurement cycle? Less common in construction procurement, the 13 stages of the procurement cycle are lengthier and more common in larger organisations or in government settings, where processes are more rigorous to ensure the right partner is chosen based on the most advantageous tender, instead of just price. Benefits of two-stage tendering in construction These are some of the reasons estimating teams have shifted to two-stage tendering: Facilitates early engagement: By engaging with suppliers early in the procurement process, besides price, main contractors can clarify logistics, create detailed construction programs, and collaborate on innovative techniques to complete a project. Minimise pricing risk and improve margins: In stage 2, estimators can ensure they’re getting the best price to avoid a project going over budget due to unexpected macroeconomic factors (e.g. tariffs, war). General risks: By identifying risk at both stages, teams can avoid surprises later in the project lifecycle. Two-stage tender drawbacks Two-stage tendering can help estimating teams get the best price, but what do they need to be aware of? Going back to subcontractors more than once can enable communication later in the process, however it still takes time and resources to reach out and get prices in time. There is also the potential that by the time estimators get to the second stage, costs may not be the same as originally quoted, therefore resulting in wasted time. It takes skill and expertise to effectively manage tender enquiries, therefore responsible teams need to balance collaboration with competitive tension, especially under pressure and tight deadlines. What does the future of the ‘two-stage tender’ look like? It’s anticipated that the use of two-stage tendering will grow as price squeezing becomes more prevalent – enabled by technical advancements such as Tender Management. With the number of construction projects faintly increasing in the UK2, the number of estimators will be expected to do the same to obtain materials and pricing. Some construction stakeholders have said they feel slightly ‘positive about the industry’s direction’3, but increasing levels of risk and inflation are making contractors wary, therefore margins are being squeezed even more as costs continue to bite. As well as developing skills and being able to work to tight deadlines, changing regulations mean they will need to consider their approach to sustainability, by considering ESG practices such as sourcing eco-friendly materials, and their impact on the community and planet. Using technology can support this innovative drive towards improved sustainable sourcing methods. Solutions to support tender enquiries With the resurgence of two-stage tendering in construction procurement, our Tender Management solution provides a single source of truth for estimating teams. By creating an audit trail of pricing, documents and messaging, all parties involved in the tender enquiries process can keep up to date. Built by estimators, for estimators. Even if you send as little as a couple of tenders a month through to 20+, Tender Management is here to support your tender enquiries process. With features like X-Ray and Gap Analysis, estimating teams and quantity surveyors can be sure they’re getting the best prices from subcontractors, and keeping up with addendum tracking. Our customers use Tender Management to: Get the best prices from subcontractors Manage supply chain compliance – and access 30,000+ pre-qualified suppliers via the Once For All network Consolidate information in one place – besides compliance, buyers can onboard suppliers and send them our way for pre-qualification Streamline and keep track of information – see who has responded to which messages, when, and submitted pricing Track document addendums – no more keeping track across scattered spreadsheets and endless email chains Save time – time is money! Customers are getting more time back, by simplifying the tender enquiries process, meaning they can work on even more tenders and win work! And you can too. Save up to 74% in time with your tender enquiries! As reported by Main Contractors using Tender Management by Once For All How much time could our Tender Management solution help you save? Key Takeaways Two-stage tendering is showing a return to the construction procurement process. That means keeping on top managing suppliers and keeping to deadlines. By investing in the right solution, you could be supporting your tender enquiries process for the better in the long run. Make heavy admin processes a thing of the past, get pricing faster, keep track of addendums, and make sure you’re not missing out any items. That’s where solutions like Tender Management can help. See Tender Management in action and elevate your tender enquiries process – for the better. So, you work with tenders? Never worry about missing items for pricing or pressing deadlines again… Read more How much time could you save? Complete our short efficiency calculator to see how much time you could save with our Tender Management solution during the tender enquiries process Calculate your savings Blog Tender Management, Main Contractors, BIM
