QUOTATION TENDERS AND COMMERCIAL AGREEMENTS

QUOTATION TENDERS AND COMMERCIAL AGREEMENTS

 

Commercial agreements start in various ways. Often when initiating dealing with suppliers we tend send inquiries in the form of:

• Request for quotation
• Request for information
• Or even request for proposal.

Although at times the supplier may also just send unsolicited proposals or quotations.

 

 

A standard enquiry will typically show:

• The contact information of the purchaser
• A reference number to use in reply and date by which to reply
• The quantity and description of goods or services required
• The required place and date of delivery
• The buyer’s standard terms and conditions of purchase
• Terms of payment etc

Of course the aim here is for the supplier to send their proposal and quotation for the contract.

 

QUOTATIONS may be evaluated in different ways

1. On a comparative or competitive bidding basis – in which case the best value wins
2. As a basis for negotiating with a preferred supplier, in which case the supplier is asked to present a quotation as the basis for negotiation to refine contract terms
3. As a way of testing the market to see what the current market price is

Most organizations will just use a formalize process know are TENDERING.

 

In its simplest sense tendering involve suppliers bidding for a given contract and this can take a number approaches such as;

1. Open tendering– usually widely advertised and open to any potential bidder
2. Selective tendering – suppliers are shortlisted on various basis, for instance technical skills
3. Restricted open tenders – normally the advertisement for such tenders is limited to specific media

 

Let’s conclude this by taking about summarized STEPS IN PREPARING FOR TENDERING PROCESS;

1. Preparation of the proper tender and contractual document, this helps in ensuring that the bidding process is;
   1. Accurately costed
   2. Directly compared
   3. All requirements are complied with
2. Advertisement of the requirement and procedures to be followed, and timetable for expression of interest or submission of bids
3. In case of a selective tender, Sending out of pre-qualification questionnaires in response to expressions of interested.
4. Issue of invitation to tenders and tender documentation to those responding to the advertisement. Tender documents would normally include;
   1. An invitation to tender and instruction to tenderers
   2. Pricing document
   3. The specification
   4. Criteria for contract award
   5. Conditions of purchase
   6. Deadlines for submission
5. Tenders or offers will be received and evaluated
6. Post-tender clarification, verification of supplier information or negotiation where required
7. Contracts will be awarded and the award communicated to the tenderers.