While many clients believe that putting their project out to tender will lead to cost savings, our experience shows a different reality.
Let's explore why this approach may not deliver the value you're seeking.
It’s all about timing
An accurate price estimate requires a relatively complete set of construction drawings including engineering. Architectural fees to develop the drawings to this point can be significant and it’s a bitter pill to swallow to learn at that point that your design wish list may not be achievable within your desired budget.
The antidote to this scenario is to seek early pricing, based on the initial concept design, prior to moving ahead with developed design and drawings. Investing in an independent Quantity Surveyor to compile an elemental pricing report will provide you with an indicative cost range for budgeting purposes along with some assurance that the design falls within your budget expectations.
Alternatively, you may opt to engage a builder early in the process and have them provide an early cost estimate - read more about this approach later in this article.
Comparing apples with apples (and not ending up with lemons)
If you supply two or three builders with the exact same drawings, specifications, interior design schedule and site information, you would expect the tender process to be quite straightforward. Unfortunately, that is not the case.
Tender submissions for architectural homes are incredibly complex documents that often contain crucial differences hidden in the details. A modern home involves thousands of individual components and decisions - from structural elements to finishing details. Beware of a two-page pricing proposal – as the saying goes, ‘the devil is in the detail’.
Beyond the builder (construction) costs, there are other potentially ‘hidden costs’ that also need to be factored into the budget. Check what your architect has allowed for within their service agreement for responding to council requests for information (RFIs) during the consenting process, any additional costs for making minor amendments post-consent and fees for ongoing site observation during the build. Ensure you also budget for third-party professional fees relating to any direct supplier agreements such as landscape design, interior design, engineering (design and inspections), Geotech inspections and site monitoring.
When tendering your architectural plans, you will likely receive varying levels of detail from different builders. This disparity in detail makes direct price comparisons challenging at best, and potentially misleading at worst.
What appears as a lower price can mask significant exclusions or ‘tagged out' items that could substantially impact your final building cost. If the pricing documents do not clearly set out what is included (in reference to the plans and specifications) and what is not allowed for (tags and exclusions) then chances are something has been overlooked.
This is why, if you opt to put your plans out for tender, we advocate engaging an independent Quantity Surveyor to review submissions - their expert analysis often reveals crucial cost implications that may not be immediately apparent to the untrained eye.
The Role of a Quantity Surveyor
The expertise of a Quantity Surveyor serves three crucial purposes. Firstly, they are familiar with the obligations and duties within the tendering process and can set the terms for your tender process.
Secondly, they are in touch with market rates and can provide peace of mind that you are receiving fair market value for your investment, addressing the common concern about missing out on competitive pricing.
And lastly, they will conduct a detailed analysis of what's included in each tender submission, ensuring you fully understand exactly what you're getting.
Reduce risk and reduce cost - an alternative approach
In our experience, the most successful projects start with assembling the project team - architect, builder, engineer, and interior designer - from the outset.
Engaging early with your preferred builder, openly discussing expectations around budget, and agreeing margin rates and terms upfront, offers a simpler and more economical alternative to the tender process and sets the foundation for a successful working relationship.
This collaborative approach ensures your design evolves with consistent input regarding costs, materials, and construction methods, helping prevent the disappointment of falling in love with a design that proves impractical or unaffordable to execute.
Often, alternative materials or small modifications identified during the design phase can achieve similar aesthetic outcomes and deliver significant cost savings - opportunities that might be missed in a traditional tender process.
It’s not just about the bottom line
One of the most frequent regrets we encounter comes from homeowners who based their builder selection primarily on the bottom-line price.
Many clients, who have been through a tender process acknowledge that, once cost fluctuations and items not allowed for in the initial pricing estimate have been taken into account, the lowest tender price did not actually provide the best value after all. Added to that, many often admit that in hindsight, they would have been happy to pay slightly more overall for their home in exchange for a smoother and less stressful build journey.
So, what other factors should you consider in addition to price?
Know what you are looking for
Everyone has different priorities around what is important to them, but we suggest investing the time to ask around and do background checks on prospective builders to ensure they can deliver on what’s important to you.
Start by speaking with previous clients and local tradespeople, as they can offer valuable insights into which build companies are good to work with.
Check the quality of their workmanship by visiting completed homes or projects under construction. Industry recognised awards like Master Builders House of the Year are also indicative of a builder’s capability.
Look into how long the company has been in business, how many (similar) projects they have completed, their governance structure and the length of time their current management team has been in place.
Ask to meet the people who will be accountable for your project on a day-to-day basis. A good working relationship is critical as the journey may span a number of years (depending on the scale of the project).
Ask for your builder to provide an overview of the systems and processes they use to manage their projects – particularly in regard to scheduling of work and tracking budget.
Remember that, while the temptation to tender to multiple builders is understandable, it’s not just about the bottom line. The most successful projects typically evolve from early builder engagement, collaboration and transparent pricing discussions, not from comparing bottom-line figures that might not tell the whole story.
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