Quotation implies a fixed price offer given to the customer as a response to the tender notice. It has a legal binding, which when accepted by the customer, cannot be changed. It is not exactly same as tender, which is a response to an invitation to tender, submitted by the prospective supplier.
An invitation to tender is an open request for proposal advertised by an organisation in the local newspaper, to invite potential and interested suppliers to submit their bid for supplying goods or services. It is issued for a number of contracts, like construction contract, supplying machinery, deliver some software, etc. The entire process of inviting tender, submitting the tender and filling quotation is a part of tendering process.
In this article excerpt, we will explain the substantial differences between quotation and tender, have a look.
Content: Quotation Vs Tender
|Basis for Comparison||Quotation||Tender|
|Meaning||Quotation is a document of setting out the estimated cost, for supplying goods or services or procuring something.||Tender refers to a process of soliciting suppliers, to bid on the goods or services needed by the buyer.|
|Response to||Request for Quotation||Request for Tender|
|Components||Price||Price and Quality|
Definition of Quotation
The quotation may be understood as a formal document of promise, given by the prospective supplier, to supply the stated goods or services needed by the buyer at the stated price under specific conditions. It comprises of terms of sale, payment and warranty, which includes the price decided to charge for the product or service, date, time and place of delivery, validity period of quotation.
Quotation helps the buyer in knowing the cost of goods or services, before making a purchase. In order to obtain the quotations (i.e. price for the required material), generally, tenders are floated by the government enterprises.
Definition of Tender
Tender is nothing but a response to an invitation to offer to provide product or services at quoted prices and specified quality, but subject to specific conditions.
An invitation to tender is floated by the government undertaking, financial institution or a big corporation for different projects, when they want to purchase goods on a large scale, hire services or acquire/construct something but they are not able to deliver it on their own. For this purpose, third party suppliers are invited to bid and submit tenders.
The tender document is sent to prospective suppliers, to solicit information, to select the supplier on the basis of price, delivery terms and availability. The sellers who are interested in the request for proposal can respond to the request, within the deadline specified, by submitting their best offer in sealed covers, with the appropriate authority.
Tender is like a competition for a contract, where various prospective suppliers are requested to submit tenders, containing the price and quality of the material required.
Key Differences Between Quotation and Tender
The differences between quotation and tender are discussed in the points given below:
- The quotation is a fixed price offer, which once accepted by the customer, cannot be modified or changed. On the other extreme, the tender is a response to the invitation to tender, which is used to find out the best value for money, from the prospective suppliers.
- Both quotation and tenders are offers. A quotation is a response to Request for Quotation (RFQ), whereas tender is used in response to Request for Tender (RFT).
- The only major element of the quotation is the price which explains the cost of the contract, submitted by the supplier. As against, the tender has two main elements, price and quality, wherein price determines the best price offered by the supplier, which is compared with the other suppliers and quality determines the suppliers potential to deliver the goods specified.
- The scope of tender is wider in comparison to tender, as the quotation is a part of the tender, which contains prices for material to be supplied.
The government agencies or the corporations opt the tenders or quotations, that meets their needs, in the best manner and provide value for money. In order to maintain transparency, fairness and openness in operations of the government, tenders are floated by the public bodies and corporations.