Tendering And Negotiating

We decided that we would tender the majority of the building work, the remainder would be by direct contract to trades people. This meant that we would technically be the builders and take on the significant responsibilities that go with this choice. This includes insurances, site safety, contract co-ordination, timing, project management. It is not a choice I would recommend unless you are a building professional.

We chose to tender the bulk of the work because tendering is the most effective way of getting good value for money. We would also tender out the smaller packets of work. Tendering, especially in a shaky economy, ensures competition. We tendered the work to 3 registered builders; one of which I had worked with us before and two others who came highly recommended. We also sought a quote from an unregistered ‘project manager’ – someone who was an experienced tradie who could co-ordinate work (we did this with great skepticism). All recommendations were followed up with phonecalls to past clients and visits to site. It is extremely important to check builders reputations since finding a compatable builder is critical. a builder who is not skillful or a builder that is confrontational is a nightmare on site.

The tender period we gave was 5 weeks. This is longer than neccessary for this kind of work and should have been 3 weeks but we were going to be away so that timing suited us. Two weeks before the close of tender I called all the builders to see if they had any questions and make sure they were still tendering. I did this again a week before and they were all tendering, one builder returned to the site and asked good questions about the project. I relayed all my answers to all builders. On the day that the tenders were due back only one builder got it in on time. All the other tenders were returned a week or so later. I always find this surprising, on bigger work builders are generally on time and can be disqualified for being late but so often small scale domestic builders are late. If you’re a builder my advice is – get it in on time – it looks so much more professional. Also only one builder broke down the costs in a way that I could compare them to my estimates and in a way that was requested.

The four costs came in, three were within 20% of each other with a wild card that was $100K over its nearest competitor. The costs were still too high but not so high that we felt we couldn’t work with the tenderers to look for further saving. Unfortunately the lowest tender was also the builder who wasn’t registered. We met up with him and we were very pleased when he showed us his breakdown. He had sought quotes from many trades and openly showed us their quotes, where he didn’t have quotes he showed us his estimating and these were generally in line with the estimates we had received from the cost estimator. He also reviewed the estimates we had for the work that was outside his scope. At the end of the meeting we had agreed to look at some further changes that he we thought would help bring down the costs. We also met up with the second lowest tenderer to go through his quote – in this instance we didn’t have to delve into so much detail because as a registered builder his price was guaranteed. But again we discussed the same changes so that both the lowest and second lowest tenderer would be on the same page. A week later both builders sent their revised quotes, both quotes dropped by a similar amount. This meant that the unregistered builder was the cheapest – and cheapest by a sum we felt was worth persuing despite risks. Before we commited ourselves we spoke to his past clients again with more technical questions; was he on time? Were there variations and if so why? Were you related in any way? etc… We decided to go with him, this would be much more complicated contractually but we felt comfortable with him and it would mean a closer involvement with the construction which is something I was happy with since I would learn from the process.

Construction would start in a couple of weeks. Yay!

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