Paper = pounds The real cost of tendering

There are many people who are prepared to argue that the only way to organise a tender is to cut down a small forest of trees, employ a small army of motor cycle couriers and waste time producing and checking a multitude of paper. However, I’m sure there is a larger proportion of people who can see that this way of working is outdated, inefficient and wasteful.

Logic indicates that carrying out tender exercises using reams of paper adds cost and time to the process. How many of us consider the cost of working in this “traditional” manner, or are the costs all hidden in the overhead? Have you ever considered what it costs you (or your clients) in paper, postage and couriers to tender in this way?

Just taking the process of producing and issuing the tender documents, it’s quite surprising how quickly the costs mount up.

There are other issues: the costs of the second example below, for instance, ignores those of the tenderers, who will reproduce further copies of the documents for subcontractors, again accruing copying and postage charges.

If we continue to avoid change we run the increasing risk of criticism from clients looking to reduce the cost of procurement

The costs of the return cycle of the documents with the subsequent additional copying that always ensues have also been excluded. This means the total cost of producing and exchanging the documents on these “small” projects is two to three times the figures quoted below.

The costs in the third example below were only for the initial tender exercise and excluded copying and postage costs for the period between tender and contract, which in this type of project can be several months. The true cost of the exercise is likely to double.

A better reflection of the total cost of making use of hard copy to transfer information may be seen in construction management schemes where the costs of all trade package tendering is incorporated in the preliminary charges from the construction manager (see example 4).

It is clear that there are financial benefits for all parties if they work electronically, not to mention the additional benefits of greater efficiency and better analysis allowed by the electronic round tripping of information between the parties. With the drive towards sustainability and waste reduction, how can we ignore the benefits of working electronically?

With the drive towards sustainability and waste reduction, how can we ignore the benefits of working electronically?

Hard copy tendering persists because everyone can read and handle pieces of paper and they believe that when they seal an envelope it stays sealed until the intended recipient opens it. To make e-tendering ubiquitous we need the same ease of use of the information and the same confidence in the security of the transport medium. This means we must have secure third party systems that are designed and run specifically for the tendering process.

If we continue to avoid change we run the increasing risk of criticism from clients looking to reduce the cost of procurement.

Peter Sell is a partner at Davis Langdon and head of an RICS IT group looking into e-tendering