Implications of governance obligations being embedded within construction contractors’ tendering procedures

Abstract

© 2020 Engineers Australia.

Construction contractors’ (contractors) internal tendering procedures (ITP) face increasing governance obligations, either through corporate regulations, legislation and/or societal expectations. Increased governance can impact approval steps, and decisions made, to pursue a project from prospect identification, through tender preparation, submission and contract execution (the ‘tender timeline’). The question arises as to whether inappropriate time is spent preparing for and gaining internal approvals, at the risk of constraining time spent developing well reviewed competitive tender solutions. Drawing on semi-structured interviews with 27 high-profile major contractors and analysis of ITP documentation provided by 13 of them, this study considers the efficiency of various ITP governance models and identifies factors that influence the tender approval management levels. On average those 13 contractors utilise 4.2 approval gates; prepare approval documentation addressing 547 questions, 19 attachments; and face 12 review committees before securing 16 approvals over the tender timeline. The results provide an opportunity for clients, consultants, and researchers to gain a better understanding of major contractors’ ITP governance obligations that need to be addressed, often within very short tender periods. Contractors can use these findings as a benchmarking opportunity for their ITP governance. Many of the principles raised also apply to engineering consultancies.