Bid documents

From CEOpedia | Management online

Bid documents are mandatory documents which must be submitted in return to an invitation to bid. They contain prescribed bid form, charts, drawings, time lines and price breakdowns. Offers which do not contain all required documents are considered as incomplete and usually rejected.

A bid document is used when requesting propositions from future providers to the project. The document must contain a characterization of services or products that are to be purchased. The bid document can have different forms because it depends on the type of services and products that are required. If the services and products offered by the supplier are suitable for a given project. The bid document may become a Request for Quotation (RFQ) or Request for Proposal (RFP). In this case, the rating of responses will be based on the price and delivery schedule. When there is not enough information to decide whether services or products meet the project requirements. Request for Information (RFI) will be issued to decide about the product or service. Based on this response the next step will progress to Request for Quotation (RFQ) because it will help to find out the cost of the products or services required. In RFQ more detail will be determined to enable the supplier to specify an correct quote for the costs and an agenda for delivery. The Bid Document itself will always differ because it depends on the risk and value that is associated with the order (Bid Document 2019).

Bid documents

Types of Bid documents:

  • Invitations to bid
  • Instructions to bidders
  • Bid forms
  • Drawings
  • Specifications
  • Requirements for bond and insurance
  • Appendices

Invitation to bid (ITB) vs Request of proposal (RFP)

Invitation to bid (also known as invitation for bid) - it is used when potential suppliers differ significantly in terms of price. Issuing an ITB allows the company to provide a detailed descriptions of the conditions necessary to work on a given project it wants to contract out. Companies can deliver invitations to bid orally or in writing. ITF contains a detailed description of the project, application requirements, deadlines, scope and duration of the project, required standards and qualifications. The advantage of the process is to improve the decision-making process. It allows to choose the best qualified contractor from the lowest-priced bid. On the other hand, bidders can prepare an offer faster by focusing on costs. The disadvantage is that the choice of contractor who offers a low price can result in quality and performance issues (Request for Proposal (RFP) 2019).

Request of proposal - is a project funding announcement posted by organization for which companies can place offers to complete the project. RFP describes the bidding process, terms and conditions for submitting offers and presenting offers. A request for proposal it requires the company to review the offer in order to check the feasibility, the health of the bidding company and ability from the bidder company to do what it has proposed. The main advantage of this process is reducing the time of encouraging suppliers and that the bidders can not enter their own suggestions because they can only do so if they get an invitation. The choice of RFP is appropriate if you are dealing with a complex purchase because it allows you to obtain more information about the product and not only about its price. The main disadvantage of this process is that too many requirements may negatively affect the creativity of bidders. The difficulty of the process affects the change of competitiveness which may make the suppliers less flexible and will set their conditions (Request for Proposal 2019).

The main difference between ITB and RFP is that the invitation to bid focuses on obtaining proposals regarding the costs of project completion. Whereas RFB places more emphasis on its own proposals for the implementation of the project or service by bidder. An IFB is used when there is no difference between the products or services that meet specifications so that the main and only difference among responsive bids is price.

Examples of Bid documents

  • Instructions to Bidders: This document outlines the rules and regulations that bidders must follow when participating in a bidding process. It also provides information on bid submission, evaluation criteria, and award of contract.
  • Bid Form: This form is completed by the bidder and contains information about the bid, such as the scope of work, cost of the project, payment terms, and delivery dates.
  • Technical Specifications: This document provides detailed information about the technical requirements for the project. It may include details about materials, design, installation, performance, and other requirements.
  • Drawings and Plans: Drawings and plans provide a visual representation of the project and are used to ensure that the project is constructed according to the specifications.
  • Price Breakdowns: Price breakdowns provide a detailed list of the costs associated with the project. This includes labor costs, materials, overhead, and other charges.
  • Performance Bond: A performance bond is a type of guarantee that the bidder will fulfill their obligations as outlined in the contract. This document outlines the terms and conditions of the bond.
  • Schedule of Values: This document outlines the estimated costs of the project and the payment schedule for the completion of each phase of the project.

Advantages of Bid documents

Bid documents provide many advantages to bidders and buyers alike:

  • They help to ensure a fair and transparent bidding process. Bid documents provide a clear and consistent set of rules for all bidders, allowing them to make an informed decision about what to bid and how to bid.
  • They also provide an easy way for buyers to compare bids from different suppliers. Bid documents provide a detailed breakdown of the cost of each item or service, enabling buyers to compare bids and choose the most cost-effective option.
  • Finally, bid documents make it easier for buyers to choose the supplier that best meets their needs. The documents provide a detailed description of the supplier’s qualifications and capabilities, allowing buyers to make an informed decision about which supplier is best suited to their project.

Limitations of Bid documents

Bid documents are an essential part of the bidding process, however, they can have some limitations. These include:

  • Lack of adequate information: Bid documents may not provide all of the details necessary for potential bidders to make a complete and accurate bid.
  • Unclear instructions: The instructions and requirements for how to prepare and submit the bid may be unclear.
  • Expense: Bidders may incur significant expenses in preparing the bid documents.
  • Time consumption: Bidders may need to invest significant time and resources in preparing the bid documents.
  • Unfair competition: The bidding process may be biased or open to manipulation.
  • Unresponsive bidders: Potential bidders may not respond to the invitation, resulting in fewer bids.
  • Errors: Errors in the documents may lead to potential bidders making incorrect bids.


Bid documents — recommended articles
Tender document — Preparation of project — Unit price contract — Request For Information — Cost reimbursement — Provisional sum — Forms of contract — Design bid build — Task order

References

Author: Hanna Cugier

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