Electronic Bidding in the Construction Industry
Posted by Dave Robertson on Fri, May 29, 2009 @ 12:03 PM
Has the time come for electronic bidding in the construction industry?
Central to the entire process of contracting on a construction project is the submission of bids for various aspects of the work. While there are some exceptions such as cost plus contracts, the vast majority of projects require the submission of many bids. Typically these are to a General Contractor, Construction Manager, Design Build Contractor, Trade Contractor or directly to an Owner. All of these submissions cascade up through the process to ultimately determine a single final price for the work.
The complexities of this process are well documented and an endless stream of court cases continues to define the ‘rules of the game’ for construction tendering. Clerical errors, material errors, missing information, misinterpretation of instructions and many other factors influence the validity of a bid. The consequences of invalid bids can be very expensive for both the submitting and receiving parties. An electronic process has the potential to eliminate many of the simple causes of problem bids.
Electronic bidding involves the creation of a secure Tender Form that is made available to bidders online. Bidders move through the process step by step and are not able to submit their bid unless they have addressed all the mandatory requirements. This is not to say that they can’t make an error in the actual information they enter but at a minimum the bid will be technically compliant. Issues that have been the cause of litigation such as the actual closing time for a tender are dealt with using tools like reverse countdown clocks that ensure everyone is on exactly the same clock with no room for error or interpretation.
New legislation such as Electronic Commerce (or similar) Acts and industry standards such as the Guide for the Submission on Online Bids by the Canadian Construction Association are laying the foundation for these type of transactions to be done online.