Most people in construction have been through a tender. They’ve priced one, submitted one, or sat on the other side evaluating them. But a lot of those same people couldn’t tell you with any confidence which type of tender process they were in, what the rules were, or how their submission was actually going to be assessed.
That gap matters. The method used to select a contractor shapes how you should approach and price the work, what information you need to provide, and what your realistic chances of winning actually are. Tendering without understanding the process is like sitting an exam without seeing the marking schedule.
There are three main tendering methods used in NZ construction. Each works differently, applies in different situations, and carries different implications for everyone involved.
Open Tendering
An open tender is publicly advertised. Any contractor can respond. There is no pre-qualification step before submitting, and the field is not curated.
For public sector projects, open advertising is the default. Under the Government Procurement Rules administered by MBIE, now in their 5th edition, new construction works above $9 million must be openly advertised on GETS, the Government Electronic Tender Service. Refurbishment works have a lower threshold of $100,000, the same as goods and services. For most government agencies, going to market openly is not a choice. It is the requirement.
That does not always mean a single open round. Agencies can also procure through all-of-government panels and, in limited cases, can direct-source where an exemption applies.
In practice, open tendering often runs in two stages for complex or high-value work. The first stage is a Registration of Interest (ROI), sometimes called an Expression of Interest (EOI). It asks contractors to demonstrate their capability and experience before the full tender documents are released. This shortlists the field early, and the client retains flexibility in who they invite to the second stage. For straightforward projects, it runs as a single stage: documents go out, submissions come back, evaluation happens, contract awarded.
The main draw of open tendering for clients is competition. A wider field generally produces more competitive pricing. For contractors, the draw is access. You do not need a relationship with the client or a place on a panel to get in front of the work.
The downside for clients is volume. A major open tender can attract thirty or forty submissions, and evaluating those properly takes time and resources. For contractors, the downside is that you are pricing against a wide, unknown field, including competitors who may be buying the work or pricing without a full understanding of what is involved.
Selective Tendering
Selective tendering works from a pre-qualified list. The client identifies a shortlist of contractors before the tender documents go out, and only those contractors are invited to submit.
This method is common for complex or specialist work, projects where a proven track record is essential, and high-value contracts where the client wants to reduce the risk of dealing with unknown entities. Private sector clients and developers also use it when they are not bound by public procurement rules and prefer to work with contractors they know or have already vetted.
Pre-qualification assesses the contractor’s experience with similar work, financial standing, health and safety record, key personnel, and sometimes quality management systems. The criteria are set by the client or their QS before any approach is made.
Getting onto a selective tender list typically requires an ROI or EOI submission. These are often open even when the tender itself is closed. A client might run an ROI on GETS to build their shortlist, then run the tender privately from there.
The benefit for contractors is a smaller, more defined field. If you are invited to tender selectively, you are one of four or five, not one of forty. Your effort has a higher chance of converting. The risk is that reduced competition can sometimes lead to less aggressive pricing from the field, which clients manage by setting clear budget expectations or running a two-envelope process that separates price from methodology.
The benefit for clients is a higher quality floor. Everyone in the room has already been assessed as capable. The evaluation can focus on approach, team, and programme rather than on basic capability checks.
Negotiated Tendering
Negotiated tendering, sometimes called direct engagement, bypasses competitive bidding altogether. The client approaches a single contractor, or a very small number, and negotiates the contract terms directly.
This method applies when competitive tendering is not practical: emergency or urgent work where there is no time for a full process, projects with a proprietary element where only one contractor has the required capability, and continuation contracts where a contractor already on site is the only realistic option.
It is also used, sometimes quietly, when a client has an existing relationship with a contractor and enough confidence in their pricing to proceed without competition. This is more common in private sector work where procurement rules do not apply.
A related approach is two-stage tendering, often run as early contractor involvement (ECI). The contractor is selected early on a limited competitive basis: margin, preliminaries, and methodology. The full contract price is then negotiated as the design develops.
For government agencies, negotiated tendering requires justification and documentation. Using direct engagement without a valid reason is a breach of the Government Procurement Rules. Agencies must record their rationale and, in most cases, have it reviewed.
For contractors, negotiated work typically carries better margins and lower tendering cost. The trade-off is less certainty: the work is not guaranteed until the negotiation concludes, and there is no competitive tension to confirm whether your price is actually at market rate.
How Tenders Are Evaluated in NZ
This is where a lot of contractors get caught out. They assume the lowest price wins. In most NZ construction tenders, it does not, at least not automatically.
Public sector clients evaluate tenders for public value, taking into account factors like environmental impact and social or infrastructure need, not just the cheapest price. Many private clients take a similar approach, though a fair amount of residential and smaller commercial work is still awarded on lowest conforming price.
Where non-price attributes are used, they vary by project but commonly include:
- Relevant experience with work of similar type, scale, and complexity.
- Methodology covering how the contractor plans to deliver the work, manage the programme, and handle risk.
- Key personnel: who is actually doing the work, their qualifications, and their track record.
- Health and safety: systems, culture, and recent performance.
- Programme: whether the proposed timeline is credible and how float and risk are managed.
How price and those attributes are combined depends on the evaluation model. The Construction Procurement Guidelines set out four:
- Lowest Price Conforming awards the contract to the cheapest tender that meets the minimum requirements.
- Weighted Attribute scores price alongside the non-price attributes using predetermined weightings.
- Price Quality Method converts non-price scores into a dollar value (the supplier quality premium), which is then deducted from the tendered price. NZTA and councils use it widely.
- Quality Based selects the best-scoring supplier first and negotiates price afterwards.
The tender documents will tell you which model applies. That should change how you put your submission together.
On government projects, there is now an additional mandatory criterion: economic benefit to New Zealand. Since December 2025, Rule 8 of the 5th edition replaced the old broader outcomes rules. On construction contracts above $9 million, agencies must seek economic benefits to New Zealand and give them a minimum 10% weighting in the evaluation. If you are still answering these questions from a template written under the old rules, it is worth a fresh look.
Abnormally low bids can also be rejected. Where the tender documents reserve that right (and most do), the client can ask a contractor whose price is well below the field to justify how they will deliver at that price. If they cannot, the bid can be set aside. This protects clients from contractors who buy the work and then manage their way out of it through variations.
A panel usually conducts the evaluation, typically including the client’s QS, a technical representative, and, on public projects, sometimes an independent probity advisor to ensure the process is defensible.
What This Means When You Are Pricing
If you are pricing a tender without knowing which method is being used or how you will be evaluated, you are guessing. That is a poor use of the time and cost that goes into a submission.
Before you commit to pricing, find the evaluation model, the criteria, and the weightings. This information is almost always in the tender documents. If the non-price weighting is 40%, your methodology statement is not a box-ticking exercise. It is 40% of your score.
On open tenders, know your field. Are you competing against large national contractors with significant buying power? If so, what is your competitive angle: speed, local knowledge, specialist capability, flexibility? Pricing without a clear angle on an open tender is one of the most common ways to spend significant time for no return.
On selective tenders, being invited does not mean the work is yours. It means you have passed the basic capability test. The evaluation from here is often close, and the non-price attributes become more important, not less. The client already trusts that everyone on the list can do the work. Now they are deciding who they want to do it.
On negotiated work, price with the same rigour you would apply to a competitive tender. The absence of competition does not mean the client is not comparing your number against their own estimate or market rates they have tested elsewhere. Coming in well above what they expected does not end in a contract. It ends in a difficult conversation, and sometimes in the client deciding to go to market after all.
The Practical Takeaway
The tendering method determines the rules. Understanding those rules before you start pricing changes how you allocate your effort, where you focus your submission, and how you assess your realistic chance of winning.
Read the tender documents before you commit. Find the evaluation model, the criteria, and the weightings. Check the programme for site visit and clarification deadlines. And if the tender documents do not tell you who else has been invited on a selective tender, it is entirely reasonable to ask.
Most contractors treat tendering as a cost of doing business. The ones who win consistently treat it as a skill.
