Everything you need to know about analyzing builders’ tenders to ensure you get the best value for money on your next project.
So, you’ve gone out to tender for your latest project and received scores of proposals in return, but there’s just one problem:
At first glance, every contractor who submitted a tender looked like they could be perfect for the job at hand. Naturally, this presents a challenge when it comes to deciding which one you’re going to hire.
While it’s a nice challenge to have, it’s still not the easiest one in the world to overcome unless you pay close attention to the actual tender document itself.
Learning what to look for in that document can make all the difference when it comes to being absolutely certain that you’re entrusting the work to the absolute best contractor for the job.
I’ll teach you how to do that in this guide, but before I do, allow me to offer a quick tip that could make your life significantly easier the next time you need to tender a construction project:
Use a Bill of Quantities and Schedule of Works to Guarantee Like-for-Like Comparisons
Can you imagine how much more difficult it would be to compare several builders’ tenders if each one quoted for different materials, quantities, and labor hours?
That’s pretty much what happens if you go out to tender without providing a comprehensive Schedule of Works and Bill of Quantities.
Giving these documents to interested contractors ensures that each one is able to quote for the exact same quantities and processes. As you can imagine, this makes it much easier to compare like-for-like quotes.
It will also make your life much easier when taking the following top tips on board.
1. Check, Double-Check, and Check Again
Once you’ve received all the tenders you’re going to receive, it’s time to tackle the vital job of assessing each one.
Your first task here should always be the same:
Ensure that every last detail has been accounted for by the contractor.
This is where that aforementioned Schedule of Works really comes into its own.
You can use this to check and double-check that the tender covers every single material, every single piece of equipment, and every last minute of labor necessary to get the job done to your standards.
If something is missing, you may want to get in touch and find out why.
However, if a contractor is capable of overlooking such a vital detail before they even step foot on-site, what are the chances that they’ll also overlook something even more vital once the project starts?
That’s not to say you should absolutely rule out a contractor who neglects some important detail. Mistakes do happen, and if the rest of their bid is really that impressive, you may be willing to give them the benefit of the doubt.
On the other hand, if it’s a tie between two equally matched contractors, one of whom left something out of the tender and one who didn’t…
..Well, I certainly know which way I’d vote.
2. Compare Like-For-Like With Other Contractors and Your Original Cost Plans
Now we come to the part you’re most concerned with:
How much is this project going to cost you?
To get the absolute best possible price, it pays to compare costs not only between each submitted tender but also against your original cost plan.
Remember to analyze costs on an item-by-item basis, rather than simply looking at the total.
This is important as some contractors may quote remarkably low numbers for some items but incredibly high ones for others.
For example, it’s not uncommon for contractors to charge inflated costs for ground working yet reduced rates for everything else in the hopes of receiving the bulk of their payment right at the start of a project.
It’s not the most morally-upstanding practice, but trust me, I’ve seen it happen on more than a few occasions.
Ideally, you want payments to be spread out evenly throughout the cost of the project. You also want those prices to come in as close to your original cost plan as possible.
So, if there are major discrepancies in a tender’s per-item cost breakdown, you may want to put that tender to one side and focus on those tenders that will allow you to manage your costs much more effectively.
Why Lower-Priced Tenders Aren’t Always What They Seem
Look:
You don’t need me to tell you that there’s simply no room for ‘cheap’ in your construction project.
If a price for an individual item, or even an entire project is much lower than expected, then it’s time to remind yourself of that old cliche:
If it seems too good to be true, it probably is.
Even if you ignore the all-too-real possibility that a contractor may be sacrificing quality to deliver a job at a ‘cheaper’ rate, there’s a much more serious possibility that you need to consider.
That possibility is that your potential contractor is pulling out one of the oldest tricks in the proverbial book:
Putting in a low-cost tender to win the project, then adding in extra claims and holding you up for more money to make up the difference once a project gets underway.
Both are likely to cost you far more in the long run, so it’s always good to be very wary of unrealistically low offers.
Take these tips on board, learn what to look for when analyzing the tenders you receive, and you’ll place yourself in a much stronger position to ensure you get maximum value for money on your next project.
For more weekly advice on how to start, manage, and grow your business as a self-employed tradesperson or contractor, follow Tradesman Biz on Twitter, Facebook, or Linkedin.