Tender and quotation are often used interchangeably by many. A tender usually refers to an official invite by an organisation seeking goods and services for their company. Sometimes, a tender may refer to a formal offer or a bid submitted by a potential supplier against a tender invite. In the latter case, while both tender and quotation are responses from potential suppliers to a tender invitation by an organisation for a project, there is a significant difference between the two as they differ in their scope and formality. This article aims to clarify the distinction between tender & quotation, and provide a reference for people who often confuse and misuse the terms.
Essential Terminology for Bidders
Invitation to Tender
An Invitation to Tender or ITT is issued by a buyer organisation to invite potential suppliers or vendors to submit tenders for a well-defined set of requirements for a project. The primary evaluation in ITT is generally focused on price and adherence to the buyer’s needs as mentioned in it and the project’s specifications. ITT also outlines the process of submitting a bid.
Request for Proposal
A Request for Proposal (RFP) is a document issued by the buyer organisation to invite potential suppliers to submit proposals for a project. The buyer company outlines the project needs and problems, and invites vendors/contractors to propose their solutions, prices and methodologies to approach the project at hand.
Request for Quotation
A Request for Quotation (RFQ) is a document that is issued by the buyer organisation to obtain cost information from different potential suppliers for a well-defined project. The primary aim is to solicit price quotations from various suppliers for a specific set of goods and services, and compare these prices to select the most valuable offer.
Tender
A tender is an invitation by a buyer company to bid for a project requirement. More often than not, a formal offer made by a potential supplier, contractor or a vendor (including pricing, timelines, technical expertise and experiences) in response to an Invitation to Tender (ITT) or a Request for Proposal (RFP) is also referred to as a tender, which often leads to the Tender Quotation terminology-related confusion.
Quotation
Quotation, or a tender quotation, on the other hand, is a less formal response by a potential supplier to an RFQ and includes a statement of prices for goods and services for the project in question. It essentially tells the buyer how much the potential supplier will charge for offering their services as per the specific request in the RFQ. After reviewing several offers, the most competitive tender quotation is selected.
Perfect Tender Quotation
A perfect tender quotation is characterised by its completeness, clarity and value for money. It must address every requirement outlined in the ITT or RFQ. An accurate tender quotation, free of any ambiguity, is crucial for a successful bid. The tender quotation must include a transparent breakdown of all anticipated expenses. Not only should it reflect the understanding of the supplier for the client’s needs, but the tender quotation must also highlight their own expertise and relevance for the project.
Tenders & Quotation Difference
For a bidder, it’s important to understand the tenders & quotation difference for effective procurement and better decision-making. Please note that we are stating the differences keeping in mind that the term ‘Tender’ is often in terms of a ‘tender invite’ as well as a ‘bid submission’. Here’s a look –
| Characteristics | Tender | Quotation |
| Issuance | A tender is issued by a buyer organisation like a government department or bigger private players. | A quotation is the response to a tender in terms of pricing submitted by a bidder. |
| Formality | A tender usually has a set format and structure, and is formal in nature. | A quotation is less formal and its format depends on an RFQ. |
| Evaluation | A tender (bid submission) is evaluated based on technicalities, experiences and prices quoted. | A tender quotation is evaluated primarily on the pricing mentioned in the document wrt to the RFQ. |
| Scope | A tender is usually used in bigger and complex projects. | A tender quotation works well with smaller and simpler projects. |
| Documentation | A tender (bid submission) includes detailed documentation and a comprehensive proposal. | A tender quotation is a simpler proposal with less complex paperwork. |
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