Two-Stage Selective Tendering changes the usual order of assigning Project Teams, and is used frequently in both ‘Design and Build’  projects and ‘Design/ Bid/ Build’ arrangements. In Two-Stage Selective Tendering, the Contractor is involved early in the design process. This differs from the usual traditional process of ‘design-bid-build’ where the design is generally prepared by the Employer’s consultant, made available for bidding to the contracting community, and finally built by the winning Contractor.

The significant difference with the Two-Staged Selective Tendering is that the Project Team (combining Employer, Designer and the Contractor) is created at the onset of a project to allow the Contractor to contribute to the design process.  The perceived benefits of this approach include:

• A better estimate of the cost of the design
• A clearer confirmation of the practicality of building the design
• A more realistic determination of Project parameters such as budgets and schedules.

The First Stage is to select the main contractor for the project, and the Second Stage focuses on selecting subcontractors and suppliers.

In the First Stage of Two-Stage Selective Tendering, the Contractor can be selected using various criteria such as profit, overhead, and other distinguishing cost items based on the level of design available in the First Stage. In addition, elements other than costs may also be assessed such as commitment to quality, experience, management, and resources. These criteria will require a scale rating system in order to fairly evaluate prospective contractors.

Once the Contractor is selected and the procurement progresses to the Second Stage, the focus then shifts from the Contractor to the selection of the subcontracts and suppliers. The final design and cost are then established through a collaborative team effort and the construction phase is initiated with the Employer’s approval.

There are a few disadvantages to Two-Stage Selective Tendering, including:

• A lengthy ‘first stage’ might lead to extended procurement.
• Numerous negotiations between parties might become adversarial in the ‘second stage’.
• Possible price escalation.

These concerns over time and expense from contractors and sub-contractors during the tendering process can be mitigated by the use of pre-construction service agreements covering the intervening period before the Contractor and Employer enter into the main construction contract. These agreements can be used to identify the tasks to be performed along with the associated timeframes.

The Two-Stage Selective Tendering model could be beneficial on large, long-term, complex projects. For these projects, the collaborative process at the early stages can produce more reliable time schedules and estimates as well as the identification and resolution of issues before they become serious problems.

By having the Contractor and/or subcontractors involved early on in the design process, and if executed properly, the typical pitfalls and finger-pointing of the Design/ Bid/ Build scenario may potentially be avoided.

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