If it's an "expensive" build, what ballpark exactly are we talking? $1M? $3M? What is the variance in percentage across the quotes? Has the tender process been performed through an architect or independently by yourself. Depending upon what the project is and how much it is, to achieve a non-biased professional assessment of cost the best option will be to engage a Quantity Surveyor to provide a proper accurate costing of the project as benchmark from which you can be confident is correct and then make some decisions/comparisons. Otherwise you are playing guessing games. Unless you can see the breakdowns and how the builders have come to a number you are flying blind.

From our experience "tendering" doesn't necessarily achieve the "best" price or result, and we actually haven't put out a project for competitive pricing over about the last decade........the last time we did there was a difference of about $250K across 4 or 5 quotes, the builder with the lowest bid was engaged, and the project eventually ended up costing more than the highest quote (!!)......never again

Rather, we match each project specifically to a trusted builder who is selected and considered appropriately aligned for the particular project scope, and negotiation of the contract and the number occurs in a much more open and transparent manner, with the capacity to adjust design detail and spec if so required to balance the books so to speak. Doing it this way also nurtures a much more trusting relationship with the builder, which at the end of the day, I can tell you is probably the most critical aspect to get right on a construction project.

Hope this helps

Best of luck

Cheers PD

www.pauldistefanodesign.com

Hi Paul, Many thanks for your advice really appreciate it. I probably should have said quotes rather than tender. The quotes vary around $500K. The build is around $2M and the prices vary with builders in relation to their overhead costs and preliminaries which are costs that are not itemised. So it is difficult to get a like for like costing. It would be good if there was a template then you know your not missing anything in all quotes. So I'm assuming the quantity surveyor can do this or do they only look at what is in the quote?

The components (preliminaries/overheads etc) that you're referring to really will reflect each specific builder and their particular approach & operation. 25% is a significant variance, and it reminds me of the situation I described above previously experienced. It's almost impossible to compare apples for apples in this game as there will be pros and cons to each different individual / company. Sometimes it's worth paying more for the higher margins if the quality assurance is there. I always say that a builder will prove their value in the case of when then things go wrong, rather than getting it right. What i mean is that when it really matters, when something goes wrong in construction, you as the owner shouldn't have to deal with it, and the better builders will shoulder responsibility and sort it out with minimal "noise" or impact, and this I believe is why they can in certain circumstances more than justify higher overheads than the next guy. You may be able to get a cheaper "number" on paper, but if it's cut to the bone and there's no margin for error or "fat" in the price, then chances are if a problem happens one of two or three things will happen...either (a) corners will be cut to fix it or (b) there will be some dispute with an "extra" put to the owner or (c) worse case builder walks away and owner left to sort it out AND pay for it.....It's a rugged industry, at all ends & levels, believe me!

Quantity surveyors will give you a good understanding of what it should cost and if you have quotes under this then alarm bells should be ringing as there is just as much of an issue with a too cheap a price as there is with a too high price.......

At the end of the day these things will cost what they will cost and generally it's an accumulation of a bunch of components with a builder's margin or construction management percentage applied and then GST over the lot. For a $2M build breaking it down and back you're looking at ballpark $500K in margins and GST, so if the QS can only give you accuracy on the raw components you can then assess the margins on top from company to company and you really just have to make a judgement as to whether one is better or worse over the other using reputation, past work and instincts on character as a way of making decisions.

If you're spending 2M, then arguably a few thousand on a QS could be money well spent.

Do yo have an architect or designer involved - I assume yes for something of this scale? If so they should be able to professionally advise and assist with all this.

Good luck Cheers PD :)

Great advice from Paul in using a QS and getting help from who ever designed your project, you would have given them a budget for the build and inclusions. and as Paul said,

" reputation, past work and instincts on character as a way of making decisions.

Thanks for your comments. I have been very frustrated with my Designer as he never gets back to me with information. Each time I need an answer from him it takes over 3 months so I have decided to start working on this full time to get a move on. Its been three years trying get this built. Its ashame your in Melbourne, cheers

If you are waiting 3 months that's not a great working relationship. To build trust and re pore it is important that ground rules or expectations are laid down.

I would discuss this with the designer and if he cant come to the party so to speak then move on and get another designer thats will to meet your expectations. (sorry but 3 months is ridiculous) . You should wait no more than a couple weeks.

Good luck but remember it is your money and your build so you some times need these tough discussions.

As a Quantity Surveyor I analyse many tenders and provide tender recommendations to clients.

If you want to be thorough then I suggest hiring a qualified quantity surveyor to do the following:

1. Write up a complete scope of works checklist for the entire project and send it to all builders to tick off. This way if there is a lack of documentation and specifications then you will most likely be covered should the builder say that they have not allowed for certain specific items after the fact.

2. Make sure that all PC items are listed and that the builders have included the same m2 amounts in all their tenders so they can be compared apples for apples.

3. Make sure that all provisional sums that the builders include are necessary and that any unclear scope has been noted. The quantity surveyor should give you an indication whether the provisional amounts specified in each tender is reasonable.

4. The QS will assess the exclusions and notes in each builders tender and provide you with likely costs for these, especially if you might include these in the project later on (or if one builder has excluded an item that another builder has included).

Tender analysis is so important that the whole tender process can be undermined if it isn't done properly. You would be surprised what types of items builders miss/intentionally omit in their tenders. Alot of the difference in builder tender prices is reduced when builders are given a clear checklist of items they need to include in their tender. It's always assumed that builders tender processes shouldn't get questioned because they are builders but that's not necessarily always the case.

Good Luck

Regards

NM