In this dynamic world where we see every day new terminology implemented by different authorized authorities in the world and we need to adapt that terminology in our daily life. So, we need to know and understand new terminology in specific fields. When we are talking about tenders or e-tender then we face lots of unfamiliar, complex, and different procedures in the tender sector. Whether you are just starting or an experienced professional, a clear understanding of tender terminology is essential for dealing with the bidding process successfully. Sometimes, maximum bidders are not able to understand some terms and they make mistakes in e-tender application forms, and in the process of different states have different processes like e-tender Haryana, e-tender UP, e-tender Kerala, E-tender Maharashtra, and sometimes people do not understand the government portal (CPPP or GeM portal). Due to a lack of information about different terms, they are unable to follow the guidelines and miss the deadlines.
This article helps you to understand the most common use terminology in tendering or e-tendering which helps you, in this complex process of tendering. Additionally, you have knowledge about each term related to tender, so no one can manipulate you or cheat you because you have knowledge about relevant terminology of tender.
Various Terminology According to Stages:
Pre-qualification stage
- Pre-qualification Questionnaires (PQQ): It’s a set of questions asked by buyers to bidders to access the bidder’s eligibility, company information, financial status, technical capability, health and safety policies, environment policies, and quality assurance before they can submit a formal bid. The pre-qualification questionnaires act as a gatekeeper in the dynamic world of e-tendering. It’s a very essential step that simplifies the process for both buyers and suppliers. It helps buyers screen potential suppliers before the full tendering process, saving time and resources for both parties.
- Request For Information (RFI): It’s a way through which potential bidders can ask all relevant questions related to tenders like as documentation, deadlines, guidelines and any specific certificate or license needed for that tender. Bidders can ask with authorized portal or with the buyers. It’s a two-way communication channel that benefits both buyers and suppliers. The purpose of RFI is to clarify suppliers about documents, improve bid quality and enhance fairness.
Bidding Stage
- Request for Proposal: When suppliers give a detailed document related to tenders in a formal way to buyers and raise their proposal or when a buyer receives a detailed proposal from different suppliers for a particular product or service. It is a comparable document which is proposed to provide all necessary information to make a well-verse decision. And the purpose for RFP is standardized bidding process, detailed project information and evaluation benchmark. RFP acts as a blueprint for potential suppliers (bidders) to understand what the buyer is looking for and how they will evaluate the proposals. It’s essentially a request for bidders to submit their best pricing for a clearly outlined set of requirements.
- Request for Quotation (RFQ): RFQ is a formal document issued by buyers to ask for price quotes from potential bidders for a well-defined product or service. It’s essentially a request for vendors to submit their best pricing for a clearly outlined set of requirements. Through RFP we basically focus on price, standardized requirements, and faster procurement process. If bidders offer buyers less price for a project, then they increase their winning chance if their other parameter also meets the requirements for the projects.
- Tender Security: A fixed amount paid by bidders to buyers to show their interest in the bid and also ensure that they will enter into a contract if their bid is accepted. And after winning they will complete the project on time.
Evaluation and Award Stage:
- Most Economically Advantageous Tender (MEAT): It’s a critical concept that goes beyond selecting the bid with the lowest price. It considers prices, quality, technical expertise, delivery schedules, life cycle costs, innovation and value proposition, experience and track record. MEAT is necessary for both buyers and suppliers, for buyers it clearly defines the evaluation criteria through which buyers can attract the bids that deliver the best value for their investment. And for suppliers allows them to craft proposals that not consider only prices but also focus on expertise, quality and overall proposition. Additionally, MEAT encourages the more complex approach to tender evaluation, ensuring that the chosen bid delivers the most economical solution for the project in the long run.
- Contract Award Notice (CAN): CAN is an official announcement by a buyer or contracting authority informing all the potential bidders about the successful bidder in a tender process. It marks the zenith of an e-tendering journey and signifies the formation of a contract between the chosen supplier and the buyer.
Purpose of CAN;
- Transparency: Publicly announces the winner, fostering transparency and accountability in the procurement process.
- Informing stakeholders: Informing all other potential bidders those are unsuccessful about the result and spreads awareness.
- Contract Details: Contract details like the name and contact details of successful bidders, brief descriptions of the awarded goods and services and estimated contract value.
CAN is essential for both Buyers and Suppliers
- For Bidders: By understanding CAN, bidders can stay updated on awarded contracts and identify potential business opportunities with the new clients.
- For General Public: It promotes accountability and transparency in the public procurements process and allows people to understand the evaluation of tendering.
Contract notice award is a closing chapter for successful e-tendering process, informing suppliers and starting the new relationship between buyers and chosen supplier. And it’s very easy to find CAN through government websites.
Most Important Terms Alphabetically:
Agile Procurement: It’s a method of conducting the procurement process that give more value to speed, flexibility and collaboration and agile procurement is most suitable in the modern world because traditional one not given more flexibility, speed and collaboration.
Benefits of Agile Procurement
- Increase speed and efficiency: Faster decision making, and smooth processing leads to quicker projects initiation and completion.
- Improved Flexibility and Adaptability: Agile procurement gives more flexibility and adaptability, and they make adjustments as per markets needs and demand for some change.
- Stronger Suppliers Relationship: Collaboration fosters trust, credibility and transparency, leading to more effective partnership with the bidders.
- Overall, Agile procurement is best suited for e-procurement, and it gives more flexibility and efficiency, and they offer core principles of focus on outcomes, iterative approach, rapid decision making, and value-based selection.
BAFO (Best and Final Offer): It’s a part of request for proposal. Basically, BAFO is a strategy and it’s used when several bidders meet the initial eligibility criteria bid or close competitive and buyers have a lot of options then they propose BAFO to choose the best bidders in terms of price, terms and value proposition.
Purpose of BAFO
- Sharpened Competition: It encourages bidders to refine their initial proposal and submit their most competitive offers in terms of price, terms, and value proposition.
- Informed Decision making: After receiving the best and final offers, the buyer has a clear picture of the most advantageous option for their project, considering both price and value.
- BAFO serves as a most essential stage in tendering and for buyers, BAFO allows to obtain the most advantageous offer from the shortlisted bidders and enable buyers to make a well-informed decision. And for bidders, it’s a chance to refine their proposals and potentially improve their chance of winning the contract.
BOQ (Bill of Quantities):
- What is BOQ: This is a document that describes the detailed shopping list for the tender. It describes how many goods and services are required to complete the project.
- How it’s used: Download the BOQ from the site and fill in your price and other materials in the designated areas. If you are able to describe your financial aspects and resources for the project in the BOQ and if your modified BOQ is up to mark to clear the further process, then you have a better chance of winning the tender.
Breach of Contract: Breach of contract occurs when the buyers and bidders are not able to maintain their good relationship with each other and it refers to failure of responsibilities and commitments as mentioned in the terms and conditions of a contract.
Bills of Materials (BOM): It’s the list of all raw materials needed for completion of a project like bricks, sands, sub-assemblies and intermediate assemblies needed to manufacture a finished product. And it’s important because BOM gives you an overview of production, cost estimation and control, standardization and quality control, inventory management and improved communication.
Types of BOM
- Manufacturing BOM: It focuses on all materials used in production floor and physical materials used to start the production process all list in this manufacturing BOM.
- Single BOM: Detail lists of only finished products and their immediate components.
- Indented BOM: Indented BOM shows more details of components in a proper structural format, breaking down sub-assemblies into their individual products.
- Engineering BOM: Include all components which are related to engineering products, including parts used for design or testing of products or form. machines which are not directly related to manufacturing.
Cognitive Procurement: When we use advanced technologies in the procurement process like AI and ML and natural language processing for enhancing automated procurement activities. When we analyze data, we make predictions and support decision-making through automation.
Key features of Cognitive Procurement
- By using AL and ML Algorithms to understand and analyze historical data and predict future trends, such as future forecasting, performance check and pricing trends.
- Automate routine tasks like purchase order creation, invoicing processing and contract management by leveraging cognitive procurement.
- Using AI-powered tools to provide data-driven insights and suggestions for procurement processes or decisions like evaluation process strategies and negotiation strategies.
- Interpret unstructured data and simplify it into simple form through which anyone can understand easily.
Benefits
- Increased efficiency
- Automate routing tasks
- Manual processes
- Enhanced decision making
- Analyze market trends
Centralized procurement: When the procurement process is done by a single organization, dedicated organization or fully centralized organization, it might be company headquarters or corporate office of company.
Advantages of centralized procurement
- Better management
- Experience and dedicated team for purchasing
- Centralized management of data and information
- Reduce contract data breach or increase security
- Implementation of holistic category strategies and tactics
- Centralized procurement is more lenient towards sustainability, environment, government guidelines and corporate social responsibility.
Disadvantages of centralized procurement
- Not considered the value of local requirements or local body of organization
- Inefficiency due to big and complex process involve and hierarchy involved in centralized procurement.
- Delays in the delivery of goods and services to end users.
Decentralized Procurement: When procurement is fully decentralized, each unit makes its own purchases. For this type of procurement, a company needs to be globally present and have a big market in other countries. Because for large organizations it’s not possible to deal with all functions through single headquarters.
Advantages of Decentralized Procurement
- Supplier diversity and use of local authority
- Faster decision making
- Local requirement
- Ensure delivery on time
Disadvantages of Decentralized Procurement
- Different management system, we need to handle work
- Scattered category strategy execution leads to more time taken
- Many have access to data and information leads to security breach or cyber threads
- Risk mitigation is not fully supported
Reverse Auction: Reverse auction is an auction process where buyers post about the goods and services they need, and sellers compete to offer the lowest price. If a government authority wants some product and service, then many want to sell their product to recognized authority or government authority because they want to build good relationship with government.
Advantages of Reverse Procurement
- Increased competition among buyers and this thing is good for buyers.
- Quicker process over traditional negotiation methods
- All bids are transparent, making the process fair and open.
Disadvantages of Reserve procurement
- Everyone competes on the basis of the lowest price. So, it leads to quality concerns and sellers provide low quality products to buyers.
- It is a very competitive bidding process, which sometimes decreases your potential bidders.
