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One builder or many?

edited July 2008 in Q and A
Any thoughts on this for a smallish jobs  (say <300K house alts).
My thought for a recent job was that because the programme was very specific  and tight, get a builder involved as early as possible, one that you know and have worked with, and that the client likes. Get an estimate at the end of DD. If that is reasonable, document while seeking their input, involvement, cost advice, and commitment to the programme. If the price is right, which it should be, build it on time because they should have booked it in. The higher certainty / lower adversity way to do it. If you've got the right builder.
The other way is a competitive tender. Clients can be keen for this because it could nab them a bargain. My office finds it a great deal harder to keep builders interested through a competitive tender process, and recently we've had cases where they've all dropped out or submitted joke prices because they're busy, killing the project stone dead.
So, method one requires trust, method two is adversarial from the outset, but could save the client some dollars.
If you're in the biz, what is the point at which you would switch to competitive tender, and why?

Comments

  • edited 10:06AM
    its been the experience of late with the boom etc that for such a scope of work as described, a competitive tender is about the worst thing you can do for the client. big stuff might be different, but <300k to probably a couple million i believe that working with the builder from the outset is the best way to go, and you can screw your client over if you put it to tender (as described by peter); especially in residential. for mine, switching to competitive tender comes when its huge, when its corporate and when there is corporate-style budgeting involved.
  • edited 10:06AM
    " ..............because they're busy"? Tender it again in 6 months.
    I'm reliably told that right about now, if you are brave, it is getting towards one of the best times to do the <$300k projects. Sit on it for a few months, adjust the docs and retender it. You might even be able to negotiate extra fees dispite a lower tender price. I assume you do adjust your fee to the final contract sum?!
  • edited 10:06AM
    I know a builder who submitted a joke price simply because they were too busy and they got the job, simply because there were no other builders available.
    In such circumstances and you state that joke pricing is occuring more often for you, then my unqualified advise would be that if you have a builder you know and trust, then there is no point stringing everyone out any further. The cost is unavoidable but the dely may not be.  A builder you know and trust is a gift horse, especially if the situation regarding tendering may be worse in six months time.
  • edited July 2008
    sorry, duplicate posting for some reason, that I deleted
  • edited 10:06AM
    Thanks all,
    Mark we don't have the luxury of sitting on it for a few months, there is a fixed start date, and that was a big factor in recommending to the client to negotiate early with one builder. There is the risk that the builder lets you down either by bumping the price up at the last minute (which has happened to me), or say they are no longer available when something more attractive comes along. In which case I have other names up my sleeve, and the client knows about this risk.
    That job I alluded to before was retendered 6 months later and a pretty good price was received, Unfortunately in negotiating to lower the price with the winner, the revised tender (for less) actually came in higher as he'd "missed a few things" the first time round. By then the runner up tenderer was no longer avaiable. Yeegats..
    So my opinion at the moment is that putting a small job out to tender is like taking your client to the casino and betting their project in the hope that you might save a few K. Or something like that.
    ------------
    What about design and construct for residential? You don't hear about it much round these parts, other than for the other 98% of the housing market. That is, locking down a price with a builder at sketch design (or earlier) and holding to it. Working either under the contractor or in a JV. It is more common in the States I think. The client knows the damage well ahead of time, and the project has more certainty of getting to construction. It changes the role and responsibility of the architect of course, but that is happening all the time on larger projects (ie novation to the builder) without too much damage to the profession. I'm also noticing that more council tenders for buildings are "design and construct" so maybe it's something that architects will need to start considering more seriously. These two AIA practice notes look into it a bit more:
    soloso.aia.org/eKnowledge/Resources/PDFS/AIAP016666
    soloso.aia.org/eKnowledge/Resources/AIAP027037
    Nice how the AIA has its practice notes online...
  • edited 10:06AM
    what does everyone think about tendering on dd to get a builder then working with them to refine the price? we tried it once and it seemed to work pretty well. the AUIA is a bit dark on this as an idea but seems reasonable.
    however i do like the kerstin thompson approach, 'you want a house by me...sure this is my builder (smart & cain). hes good, weve done lots of work together and we'll give you a check price from the qs if you like' saves a shit load of time and effort on my perception.....ohh for fame and influence (and 16% fees)
  • edited 10:06AM
    Isn't DD a bit loose to tender on? You wouldn't be comparing apples with apples.
    Thompson's approach is interesting if it's true - if I insisted that a client go with a particular builder or I wouldn't work for them, aren't I taking an extra risk if said builder behaves badly or goes under. I remember the RAIA Advisory Notes insisting that we only ever recommend a builder to a client,  that the final decision be theirs.
  • edited 10:06AM
    true. but that said in order to get something through planning the thing has to practically be documented to an inch of its full tender set, add a schedule of fixtures and a bare bones spec and away you go. AND the number of conversations ive had lately with architects (as above) where the 'winning' tender bloody forgot something when they checked is incredible. if everyone is pricing the same docs and all that is missing is details maybe its ok......
  • edited 10:06AM
    ...........of course if you forgot something, the builder would take the client, and in turn, yourself to the effing cleaners.
    So how do you get the builder at DD stage to provide an 'all in' price' BTW do the advisory notes actually suggest that it is okay for Architects recommend? Maybe as long as we don't put it in writing!
  • edited 10:06AM
    A bit of advise I got the other day, included recommending a clear 'Alterations to Tender' clause in the original tender documents that emphasises the onus on any builder to read the documents properly. If they try and spring that old "I forgot" one on you, then the implication is that they agree to bear the cost of altering their own tenders after the submission date. Make sure they have dated their copies of the tender submission and so somehow "forgot" to limit their liability.
    Of course if you have left something out, then they can hardly forget something that wasn't there in the first place and so you bear that cost. This reduces how much can be relegated to the old "unforseen circumstances" bit and means you have to be really bloody sure of your documents, but hey, that's where a good check list saves you grief. It reduces flexability all round, which may or may not be a good thing, but at least it eliminates forgetful builders and ups the antee on your design skills.
    BTW Mark. I imagine that at DD stage you won't get a builder to give you any thing more than an estimate 'all in price', in which case the way to ask them is with examples of similar finished projects and schedule lists in your hands minus any identifiable phone numbers of the original builder.
  • edited 10:06AM
    I think the onus is already on the tenderer to read the documents offered properly. If there are any discrepancies or obvious omissions within the documents they are meant to report those back to the architect.
    The situation I mentioned somewhere above was with a build who, a month after he was awarded the tender, increased the price after a cost-cutting exercise. He said that he had forgotten to 'add in the glazing'. As he had retendered with the new price, the old tender was void and he would not honour it. At this point the client decided he didn't have enough trust in the builder to proceed any further. The runner-up tenderer's price was significantly higher, so an even more painful cost-cutting round would have been required and the client was by then a little tired of it all and asked to hold.
    If I have "left something out" fair enough, there may need to be a variation if the contract has been signed. But 2d drawings of a 3d structure will always leave something out, as they are just representative slices through a building. I always make clear to a client that the tender docs are as watertight and buttoned down as is reasonable for our fee without drawing and speccing every nook and cranny at 1:1. There will be errors in them, and there will be further drawings issued in instructions during the contract, detailing areas that need more detail, and taking into account unforeseen circumstances, and they may result in an adjustment to the contract sum. They should have a contingency to allow for this.
  • edited July 2008
    Absolutely re contigency for adjustments all round. I suppose I am talking not about unavoidable corrections made by the architect, at the behest of the builder (and more usually the client) but the notion that a tenderer could forget to include something major in their calculations and so resubmit and dishonour after a month as if doing it properly wasn't an onus. This suggests that something is wrong with the tenderer and I guess there would be nothing to gain in holding them to a price they can't sustain, but obviously the clause you and I refer to is designed to prevent this scenario.
    I am thinking Peter, that if the runner up tenderer's price was significantly higher, and the winning tender forgot the glazing (lucky he didn't forget the roof!), then your pup might have been very new to the game and that the significantly higher price might actually have been a realistic one. The pup might also have revised his tender because in the intervening month he'd let a few of his drinking mates know what he was going for and they all told him his price was so rock bottom he'd have no beer and hooch money for five years.
    Do you disregard the highest and lowest tender and then review the rest with your client?
     
     
  • edited 10:06AM
    I wasn't running said job so I don't know what the realistic price should have been. But I wouldn't automatically recommend rejecting the lowest tender just because it was low. It could be that all the other tenderers are pricing high.
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