Minimising maintenance costs is central to high property returns. The tendering process sets the stage: by obtaining the lowest suitable property maintenance quote, and by ensuring that there are no unexpected surprises down the line.
Yet even experienced property professionals commonly get elements of the tendering process wrong, with real financial consequences. We think these are the four most common pitfalls to watch out for.
Not using a competitive, sealed-bid process
A competitive bidding process is essential to obtaining the best mix of price and quality when a contract is awarded. First, suppliers are more likely to make the effort to bid on a contract if they’re confident in the process, broadening the pool of quotes. After all, in many cases, bid submission will come at a cost to a supplier so tendering must be worth their while.
Second, it’s possible that pre-existing preferences for suppliers may creep in when evaluating bids. Keeping the process as competitive and fair as possible ensures bids are evaluated purely on merit, in turn ensuring that the property owner obtains the best value for money.
Skipping a mandatory bid form
There’s something to be said for a relaxed approach to business and the avoidance of red tape, but the tendering process is not the right time. Real estate owners should not start a maintenance tender without settling on a bid form first.
The bid form must be filled in by every bidder – and ideally be presented as a digital bid form that validates inputs on the fly. Taking the informal route will bring up a range of difficulties:
- Comparing bids will become difficult, every bidder will use their own approach and like for like comparisons will be impossible
- It leaves the bidding process open to misunderstanding. A bidder might think they are responding correctly, whereas in reality, the figures submitted do not reflect the actual requirements set out in the RfP
- Non-standardised bids increase the likelihood of time-wasting backwards and forward to clarify a bid
In contrast, a standardised bid form completed online simply speeds up the process and reduces questions around what it is that a bidder intended with their submission.
Taking an ad-hoc approach to questions
Bidders will have questions about the finer details of a project. Answering questions on an ad-hoc basis risks creating a situation where bidders operate from different sets of information. As a result, quotations are not strictly comparable. Instead, a formal Q&A approach is recommended, this must include publishing a list of questions and answers that all bidders can access.
Publishing Q&A responses ensures that bidders operate on even ground, with equal knowledge. Finally, Q&As can reduce unpleasant surprises after bid award by making it less likely that contractors come across unexpected difficulties during contract execution.
Lack of clarity around the number of active bidders
It is essential to get bids that reflect the best market rates, but quotes will inevitably vary to a large degree. A sufficient number of bidders participating in the process can help guarantee representative rates. Where property owners do not know how many bids they will receive before the deadline they risk:
- Being forced to choose amongst bids that are excessively high or rerunning a bidding process with extremely tight deadlines
- In the worst case, being left with no choice other than to accept a bid that doesn’t present good value
- Manipulation of the bidding process, as contractors may negotiate amongst themselves to offer rigged rates that do not reflect market prices
An online bidding process that utilises a platform such as Proprli avoids many of these issues as property owners can monitor the rate at which bidders sign up to the tendering process and intervene where it appears as if the number of active bidders will be insufficient.
Tendering made easy with Proprli
To be fair, getting every step of the tendering process just right can be tedious, it’s just a maintenance contract after all, and there are many other factors competing for the time of busy property professionals.
Proprli ensures your tendering process does not fall victim to the typical tendering pitfalls. It’s free to trial too. So, if you’re looking after a portfolio of properties, we recommend you give Proprli a try to see how automating the tendering process can save you time and deliver better returns for investors.