Bid definition - What it is, Meaning and Concept

Bidding is the act and the result of bidding : offering something in public tender or auction .The term comes from the Greek word licitatio .

There are two major meanings of bidding.On the one hand, the concept can refer to an auction process or auction : the sale of a good to the highest bidder.The one who makes the highest bid wins the tender.

A tender is also developed when an entity publishes a need and requests proposals to meet it.Once it receives the offers , which must comply with the requirements established in the bidding rules, the evaluate and select the most convenient one.If there is an offer that is the winner of the bid.

These tenders are usually made by state agencies .Suppose a government wants to build a road.To determine which company will be in charge of the work, open a tender.All companies interested in winning the project must indicate how much money they are willing to develop the work and other details.When the closing of the project comes tender, the government in question studies the options and chooses the one it considers most suitable.

With respect to the bidding phases, in each country there are own rules ; Even within the same country there may be differences depending on the object and the amount, for example.On the other hand, a private company can develop its own rules and then make a completely legal and transparent tender.

That said, we can define some of the most common phases of the tender:

* the specifications (or clauses) are prepared : these should describe in detail the characteristics of the infrastructure that the entity wishes to build or service that you want to provide.Generally, the specifications are divided into technical, economic and administrative conditions.For its elaboration it is necessary to know the subject thoroughly.In addition, this initial process takes a lot of time, which translates into a high cost;

* the call is published : this phase of the tender can be carried out in newspapers of general diffusion, in Internet portals that are dedicated to this specifically, by means of emails to companies registered at the corresponding headquarters or in official bulletins;

* the offers are presented : they are usually made up of a technical and an economic part.It is possible to demand from the bidders a deposit or bond, which usually does not exceed 2% of the amount of the contract.This money is returned to the non-awardees and the awardees are retained until the contract is completed.There are those who do not require the bond in this phase, but do so later, only to the awardees;

* bids are evaluated : once bids that do not meet the pre-established requirements are discarded, the others are evaluated following a criterion established in the specifications conditions.While the price is the most important of the parameters, it is not usually the only one (it is in the auction).Each parameter receives a score according to its degree of compliance with the conditions;

* adjudication : the work or the service in question is awarded to whoever made the offer with the best punctuation;

* the contract is formalized : this is signed by the organization that announces the tender and the winner, based on the specifications and the offer.

The specifications of conditions represent a series of obligations both for those who call the tender and for the rest of the participants.The bidders must comply with them and the summoner cannot change them in full tender, unless until the "adjudication" phase.For example, if the winning company does not like it, it has no right to cancel the process.On the other hand, it can do so if no one shows up or if none of the participants meet the conditions.