The Pros and Cons of Tendering for Residential Building
For any home owner the cost of renovating or building a new home is a significant purchase. Naturally you need to ensure you are getting the best price possible, however, it is also critically important that you select a builder who will deliver a high quality project.
Clients and architects regularly ask a quantity of builders to tender for any given project. However, there are a lot of factors that clients need to consider before choosing who to appoint.
1) Cost of tendering
Tendering has little appeal for builders, because it is a very time consuming and expensive process & regularly the lowest price is selected. If a builder wins on a low price and then cannot or does not deliver the expected quality, the long term cost to you as a client will be massively higher financially and emotionally, putting you and your family under significant stress for an extended period of time.
If a tender is prepared thoroughly for larger residential projects it's likely to cost the builder thousands of dollars put together. This cost is made up of work contracted out to Quantity Surveyors and setting aside several days to organise plans, contact all relevant trades, detail the scope of work and send it out for pricing. All quotes then need to be followed up and a tender document or tender pack prepared.
2) Comparing Prices
If 4 builders tender on a project and 3 have similar prices and one is significantly less, warning bells should be ringing. For one of four tenders to be much less than the others it suggests it was rushed, items were left out and/or they are not quoting to allow for all the subcontracted work to be delivered by high quality tradespeople.
3) Price vs Value
Starting a building project is like starting a long term relationship. You want to be sure you select someone that you can trust. If you choose the wrong partner to save 50K on a job, you may well find that it costs you 200K extra by the end of job or worst case that you spend all the money and do not get a good result. If you have bad building work done, the cost to repair the work second time around will be much higher than having it done correctly the first time.
4) Asset Value
Building is an investment. When you are building or renovating the cost to build should increase the value of your asset. Cutting corners is likely to see the impact on your asset either reduced or minimised. All clients have a budget and you need to choose a building partner who will respect your goals, work with you to deliver the project within the set budget and deliver the best possible quality possible within that framework.
Building work after completion is legally expected to be fit for its purpose for 6 years after the work is completed for structural elements and 2 years for non-structural elements. If you choose the wrong builder though, as demonstrated by many horror stories on TV, it can be very difficult, almost impossible to get them to help you when things go wrong. For this reason it is critical to pick qualified, experienced builders. You need to see the quality of the work, meet or speak with several former clients and know that they can be relied on to assist with any warranty work, if required, when required in the future.
A recommended alternative to Tendering
To avoid the pitfalls of tendering and choosing the wrong partner or a misleading price, there is another less known and very effective option. Do your research on the builders you are interested in; call past clients, visit past jobs, meet their team, find out their company history and check out their licences.
Select a great builder that you trust and would like to work with, one who you can be sure will deliver the result you want for your home. Set your budget with them (and your architect where appropriate) and work as a team to engineer the project costing so that you can be confident you are getting the look, quality and price that will work for you, delivered by a reputable, high quality building company.
The value for you, your family and for your home asset will be well worth the time you spend researching and engaging the right building partner for your project.