Define the Tender Process

The process of selecting a preferred supplier for your project can involve a lot of work.
To minimize the time you need to select and contract preferred suppliers to your
project, we suggest that you adopt the Tender Process described in the following
sections. This process is best practice within the Project Management industry and is
used by Project Managers around the world to contract suppliers to their projects.

Tender Process

Tender Roles

Tender Documents

Tender Process
The purpose of the Tender Process is to provide a fair and robust method for appointing
preferred suppliers to the project. You undertake the Tender Process by implementing three
key processes: Issue RFI, Issue RFP and Issue Contract. The following diagram describes
each of these processes in detail.

Project Planning: Tender Process Diagram

Issue RFI
To initiate a tender process for your project, you first need to define exactly what it is that
you will outsource to external suppliers. Create a Statement of Work (SOW) to define your
outsourcing requirements in detail. Then create a Request for Information (RFI), which
describes the process by which suppliers can formally register their interest in supplying the
project. After you release the SOW and RFI to the marketplace, you should receive
responses from a number of suppliers who are interested in meeting your procurement
needs. You will then create a supplier shortlist by evaluating these responses. Next, you will
release a Request for Proposal which defines the information needed in the form of a
supplier proposal to select your preferred supplier and enter into a formal Supplier Contract.
The following sections describe these steps in more detail.

Document Statement of Work

(SOW) is the first step in

As stated above, creating a detailed Statement of Work
initiating a tender process. The SOW is a document that describes in depth the scope of
work that the supplier must undertake to meet the needs of the project. Your SOW
should define the:

Outsourcing objectives of the project team

Scope of work to be undertaken and procurement items to be produced

Responsibilities of the supplier and project team in delivering the scope of work

Terms of supply, including acceptance terms and payment terms

Document Request for Information

With a detailed understanding of your outsourcing objectives and needs, you are ready to
create a Request for Information (RFI). The RFI is released to potential suppliers to
allow them to register a formal interest in meeting the procurement needs, as defined in
the SOW. A RFI enables potential suppliers to understand the:

Steps the project team is taking to select a preferred supplier

Timeframes involved in selecting a preferred supplier

Process for registering a formal interest in supplying the project

Method for asking questions about this tender process

It also requires that suppliers provide the following information to enable the project
team to create a supplier shortlist:

An overview of their business

Their current market offerings

The level of training and support they offer

Their intended approach towards supplying the project

Any relevant pricing information

Release Tender Documents

The completed tender documents (i.e. the RFI and SOW) are then released to potential
suppliers in the marketplace. Although a range of alternative methods are available for
releasing tender documentation, you should ensure that the methods you choose are
fair and do not favor any potential supplier or group of suppliers. Typical methods of
releasing tender documents include:

Advertising the tender in local or overseas newspapers, trade magazines, journals or

websites

Contacting a specified list of suppliers and inviting them to take part in the tender

Listing the tender in specialized periodicals

Receive and Evaluate Tender Responses

Suppliers must document their formal responses to the tender and submit these responses
to the delegated member of the project team within the timeframe specified in the RFI.
When you receive these responses, the next step is to evaluate them. The project team
collates each response and enters the details into a Tender Register. You will then review
the tenders and evaluate them against a pre-defined set of criteria.

Select Tender Shortlist and Notify Suppliers

The top three to five tender responses, with the highest average scores, are identified and
collated to form a supplier shortlist. Only the short-listed suppliers will take part in the next
phase of the tender process - the RFP phase. Suppliers who are not on the shortlist are
informed that they have not been selected and that their responses will progress no further
in the tender process.

Issue RFP
The next step in the tender process is to update the SOW and issue of a Request for
Proposal (RFP) to the short-listed suppliers.

Update Statement of Work

By reviewing the supplier responses to the RFI and SOW, you may become aware of
additional requirements or alternative solutions available in the market. For example,
several suppliers may suggest a new technology or approach, which your project team had
not previously considered. You will then want to update the SOW with these new solutions
and their requirements. Note: you must be careful not to update the SOW based on
suggestions of only one supplier; favoring one supplier can compromise the tender process
by biasing the overall result.

Document Request for Proposal

Once the SOW has been updated, you will produce a Request for Proposal (RFP). The
purpose of the RFP is to gather more detailed information from each short-listed supplier (in
the form of a proposal) regarding the supplier company, offerings and approach to
supplying the project. This information will be used to determine whether or not the supplier
meets the detailed requirements set out by the SOW. The RFP is documented by the project
team and approved by the Project Manager for release to the short-listed suppliers.

Release Tender Documents

The RFP and updated SOW are then released to the short-listed suppliers to inform them of
the latest scope of work offered and the information needed to select a preferred supplier to
the project. The suppliers are given a specific timeframe within which they must submit
their proposals. When that timeframe expires, the proposals are collated and prepared for
review.

Receive and Evaluate Tender Responses

The project team reviews each proposal in detail to determine its strengths, weaknesses,
risks and issues. The merits of each proposal are scored and weighted using a pre-
determined scoring mechanism, and the results are presented to the Project Manager for
final analysis.

Select Preferred Response and Notify Suppliers

The Project Manager will usually select the tender response with the highest score as the
preferred supplier to the project. Of course, the Project Manager may select a number of
preferred suppliers, based on the extent of the scope of work and the overall quality of the
responses received.

Issue Contract
The third and final step involved in selecting a supplier for the project is the creation of the
Supplier Contract.

Document Supplier Contract

Finally, the project team will draft a new contract and present it to the supplier for approval.
The contract forms the basis of the relationship between the project team and the supplier,
as it specifies the deliverables, responsibilities, and terms and conditions for procurement.

Negotiate Supplier Contract

The project team and the supplier negotiate the contract by discussing and agreeing on
terms and conditions they believe to be fair and reasonable. Legal advice can be sought
before and during the negotiation stage, to ensure that neither party is exposed to
unforeseen risks by signing the contract.

Sign Supplier Contract

Both the project team and the supplier endorse the contract, and the responsibilities
listed within it are then invoked.

Tender Roles
Although a range of people may be involved in undertaking the tender process, the
following roles and responsibilities are key:

Procurement Is responsible for:

Manager
Creating the SOW, RFI and RFP tender documents

Obtaining approval to release the tender documents to potential

suppliers
 Collating the responses and organizing the tender evaluation process

Working with the Project Manager to select the preferred supplier

Notifying unsuccessful candidates that they will not be progressing

further

Documenting the Supplier Contract and leading supplier negotiations

Seeking legal advice and guidance when required

Keeping the Tender Register updated at all times

Project Is responsible for:
Manager
Approving the SOW, RFI and RFP tender documents prior to their
release

Monitoring the evaluation process and selecting the preferred supplier

Resolving contractual issues and authorizing the final supplier contract

Tender Documents
The following documents are created during the tender process:

Statement of Work (SOW)

Request for Information (RFI)

Request for Proposal (RFP)

Supplier Contract

Tender Register

Next Steps
By completing each of the steps above, you will have selected a preferred supplier to
the project. You can:

Use this Template to help you undertake a Tender Process within your project

View an example of a completed Tender Process, by reading this Case Study.

Proceed to the next step in the Tender Process by Issuing a Statement of Work.

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