While this approach has clear and well-known benefits, it can be expensive for all concerned, encourages claims if the successful contractor has underpriced the project (which can easily occur if there was inadequate time to enable the contractor to evaluate risks) and fails to incentivise value engineering between the parties.

To address these issues, two-stage tendering is becoming more accepted in the Middle East (particularly in a design and build context) and is viewed as a real alternative to traditional procurement. 

Procurement Structure

As a first step to implementing a two-stage process, the employer would typically approach several contractors, on a competitive tender basis, with basic information regarding the project (i.e. an outline design) and request an indicative price (including details of each contractor's profit, overhead and preliminaries) for the works as well as the contractor's proposal for executing the project.