top of page

Conditions of Tendering, the Rules for winning work

Updated: Sep 30, 2023

Ultimately, only one party can win a tender. How we go from everyone, to just one? is a very important question. The Australian Code of Tendering Ethics sets the scene for a discussion about Conditions of Tendering.

Australian Code of Tendering Ethics Summarised

[1] Be Honest and fair.

[2] Play by the rules.

[3] recognise the burden of the cost of tendering.

[4] Bone fide tenderers only.

[5] Bone fide funded projects only.

[6] Conditions of tendering shall be the same for all.

[7] Don’t cheat.

[8] Attest to your probity.

[9.1] Tender documents shall specify the Principal’s requirements as clearly and precisely as possible.

[9.2] Sufficient time shall be allowed for all tenderers to prepare their tenders.

[10] Security of tender information is paramount.

[11] Disclose early any possible conflict of interest.

[1] Tendering at all levels in the construction industry shall be conducted honestly and in a manner that is fair to all parties involved;

All levels means, from the Principal to the Head Contract, to the Subcontractor, or suppliers of goods and services.

Fair includes;

(a) Consistent treatment for all parties.

(b) A transparent process, that is followed, or amended and communicated with additional time given, if the situation warrants it.

[2] Parties shall comply with all legislative obligations, including those required by trade practices and consumer affairs legislation;

A positive statement to do the right thing. See #7 also.

[3] The Principal shall have regard to the costs of tendering and the number of tenderers, recognising that the cost of tendering is a significant industry overhead;

If our industry operates inefficiently, ultimately all our customers pay for that. If a large number of tenderers are willing to participate, why should there be any limiting factor, that reduces those numbers? Ultimately only one party can win a tender. How we go from everyone, to just one? is a very important question.

If the best proposal for the procurement objective can be achieved more efficiently than running a single stage open tender process, then a process that migrates from low input, high attrition rate, to high input, low attrition rate, is desirable. An example is the Ministry of Education’s “Approaching the market in property procurement” where a simple 4 step process balances the scale of procurement with complexity of procurement process, to ensure value for money recognising that the cost of procurement should be relative to the scale and complexity of procurement needs and market capacity to sustainably serve those needs.

[4] Tenderers shall only tender where they intend to carry out the work;

The fact this ethic principal exists, speaks to a history of poor ethical tendering practices. Why would anyone agree to tender a project, when they have no intention to carry out the work? The answer can only be to facilitate an advantage that must require some moral, ethical or legal compromise.

A Tender deposit or bond is one tool to discourage pretenders from participating.

[5] The Principal shall call for tenders only after the Principal has arranged funding for the project and has made a firm commitment to proceed with the project;

Show me the money! This ethical principal relates very closely to #3 ‘having regard to the costs of tendering’, etc.

[6] The conditions of tendering shall be the same for each tenderer;

While it seems obvious, it is not as common as it should be, to have a formal set of conditions of tendering. NZS3910:2013 has a standard set of conditions of tendering that covers many things very well. They can be improved, but they can’t be effective, without industry accord that regular use promotes more efficient, fairer and generally better outcomes from tender processes.

[7] Parties shall not engage in practices such as collusion on tenders, inflation of prices to compensate unsuccessful Tenderers, secret commissions or any other such improper arrangements;

A statement to discourage any thought of doing the wrong thing. See #2 also.

[8] The Principal and tenderers shall be prepared to attest to their probity, if necessary by statutory declaration and other reasonable means;

Excellent tool to ensure harsh consequences can apply, to those later caught, crossing the line.

[9] Tender documents shall specify the Principal’s requirements as clearly and precisely as possible and when documents are altered, sufficient time shall be allowed for all tenderers to review and revise their tenders;

Transparency of the standard of documentation needs to be provided. Consultants sign on to document to agreed commonly understood standards of design documentation. i.e. NZCIC Design Documentation Guidelines. These contain definitions of the design standard at each phase of the design process. It is time Consultants stop pretending their documents are good enough for procurement, when they are blatantly not up the detailed design standard necessary for procurement.

Consultants need to provide a statement of ‘standard of design attained’ for any given set of design documents issued, relative to the definitions of design phase standards, contained within the NZCIC Design Documentation Guidelines.

It is also time for Principals' to reclaim their duty, to provide a common basis for quantifying the works, so that every tender is based on a common singular measure of the Principal's requirements. The overall reduction in tenderers overheads, lowers the cost of the works more than enough, to pay for a consultant prepared Schedule of Quantities, that everyone can rely upon.

Sufficient Time for tendering. If the City Council can stop the BC processing clock, when an RFI has to be issued and adequately answered, surely the same principal applies to the Tender Process? After all, NZCIC Guidelines define ‘Detail Design’ as a design capable of being used for procurement and consenting purposes, with only minor changes required. Tender documents supported by 50 supplementary NTT's does not meet that standard.

[10] The Principal shall specify what information in the tender documents is required to be treated by tenderers as confidential. However, it is acceptable to have public openings of tenders and disclosure of Tender prices;

I do not agree with any practice of public opening of tenders, because it provides confidential market feedback during the tender evaluation period. Disclosure of tender prices and feedback on levels of compliance with tender processes needs to be given to all tenderers, after a tender result is determined and announced to all parties.

I am a big fan of security of tenders, both prior to the opening of tenders, and during the tender evaluation period. When you refuse to provide market related feedback to anyone, prior to tender result announcements to all, all parties can have confidence they are being treated fairly. When it is a supplier’s market, a time when tenderers get to pick and choose which projects, clients or consultants, they will price for, choosing propriety over indiscretion is easy, because they know their investment in tender overheads will always reflect a fair result, for their efforts to genuinely win work.

[11] Any party with a conflict of interest shall immediately disclose that conflict of interest.

It’s a small town. Be brave, not shy, about declaring any possible conflict of interest. Transparency empowers others to trust you, to always do the right thing. Our standard forms of contract will serve our industry better, if they contain a ‘conflict of interest’ set of rules and forms, to encourage broad use of the principal of declaring your potential conflict of interest status. Public sector procurement has a good grip on this. The private sector needs to lift their game. Everyone wins, when we can talk openly about matters early, that could later give rise for concern, if not openly tabled from the outset.

This Blog is dedicated to Sansom, Jack and Hao, who ask questions that deserve answers.

“If you enjoy this blog, please share it with your like minded colleagues”

“Celebrating 50 years of New Zealand Building Economist 1972 to 2021”

By Matthew Ensoll


Editor New Zealand Building Economist.



bottom of page