Developers turn to multiple retendering

Projects are being retendered more than once as clients are trying to get the maximum possible benefit. (EB FILE)

Developers are retendering twice on the same project and might go up to a third time, said an industry source, who did not wish to be named, citing Doha Airport and Cleveland Clinic as examples.

"There is a trend in the market that started around mid-2009. One of the first ones was the Doha Airport, which came around twice. Right now, we are looking at the Cleveland Clinic for the second time," said a supplier who is bidding on projects.

"The tender opened but never closed the first time. That could be because the client is trying to get the maximum possible benefit. And it is their right to do so since commodity prices are not totally reflected in what contractors quote and it is the about getting the best products for the least possible prices. It could go up to possible three times and maybe wrap up by mid-2010," he said.

He added that it is an open market today where the client, the contractor and the rest of the industry are in the same loop. "The client has the right to retender and save since a difference of two to three per cent on a project will mean savings of a billion dollars on the larger projects," he said. "They can use this saving to up specifications on projects something at a later stage."

Currently commodities are dragging at the bottom but since oil prices are going up, he said, commodities will soon follow. "Clients have started fixing prices but are hedging only short and mid-term on contracts. Oil prices are indicators of how other markets will move and if that goes up, then commodities will soon follow since they are usually bought from third world countries," he said. "The traditional form of tendering and the retendering that goes out again and again is putting the client in a favourable position. This means that clients might work on a cost plus contract, which is in their favour."

On July 12, 2009, Meed reported that Mubadala Development Company had set a closing date of August 29 for technical bids, and October 21 for commercial proposals for the estimated Dh5 billion ($1.36bn) main construction contract on the Cleveland Clinic project in Abu Dhabi.

On February 3, it reported that three groups have been shortlisted by Mubadala for the contract to build the estimated Dh5bn Cleveland Clinic on Sowwah Island. The shortlisted groups are the joint venture of Greece's Aktor and the local Arabtec Construction, the local/Australian Al Habtoor Leighton Group, and the joint venture of Six Construct Abu Dhabi and South Korea's Samsung Corporation.

 

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