The tender process should be a respected process within the building industry that delivers a fair and equitable outcome to the participants of the process, but that’s far from reality.
Our industry has an obligation to rectify a circumstance that is out of control and wasting time and money.
When a builder is requested to provide a tender price for a project - generally from an architect - and agrees to do so, he is undertaking a significant commitment both from a time and monetary point of view, and that's before even considering the mandatory liability that is forced on a registered builder.
A tender may take some three to six weeks to assemble and may consist of the builder having plans printed and or purchasing a Bill Of Quantities (BOQ) at a significant dollar cost and/or obtaining specific quotes from trades to assemble a trade breakdown to arrive at a final cost and then apply overheads, supervision, profit, and GST.
These processes involve many businesses who give their time and effort at no cost on behalf of the builder who may or may not win the tender. However, there are sometimes ulterior agendas when it comes to tendering, as it could be a developer or an owner builder who is using the tender process to obtain a benefit when they should be paying for their own BOQ in the first instance.
To provide a clear understanding of the processes I speak of, I will relate to two factual cases that have impacted on builders and demonstrate it is not only the consumers that can lay claim to detriment within the building industry.
Assume builder A has been requested to provide a tender price for a project and has been told he would be competing against four other similar builders and the closing date for the tender is some four weeks away.
Builder A gets to work and may elect to price the project himself by asking his trades to provide a price relating to their profession. When those prices are received, builder A will then assemble the cost components, add his contribution together with the margins and a GST component on the overall cost to arrive at a final figure, which he is to submit on the stated closing time and date.
The tender is provided by Builder A on the designated closing date only to be told the other builders have not had time to provide their tender by this date and have requested more time, which has been granted.
One would expect a tender with a closing date would be just that, but no, the architect stated that would be unfair on his client as he does not have a comparative price.
Secondly, the consumer has requested a trade breakdown to compare with the forthcoming tenders and is told if he is not prepared to provide this trade breakdown, he will jeopardise his chance of a successful outcome.
So we have the situation where the architect is privy to a builder’s tender price some two weeks before the other unprofessional builders got around to providing their prices.
Builder B has been offered a tender project, again with a closing date, and is told he is competing with three other builders who are capable of delivering the project.
This builder has elected to obtain a Bill Of Quantities from a quantity surveyor at a considerable cost, which may be some thousands of dollars. However, such a process should position this builder with a competitive tender that would give him every opportunity for a successful outcome.
The tender is submitted on time, and after some two weeks the builder inquires as to the outcome. He is told the tender prices are too high and asked to provide a complete trade dollar breakdown and the names of his subcontractors so the client could target areas to reduce the cost to meet his/her budget. The architect suggests that by doing so, the builder will be in a strong position to achieve the build of the project.
Reluctantly, the builder provides the breakdown and some three weeks later he again he makes contact and is told the cost is too high to proceed and the project has been shelved.
This tender did eventually start as an owner builder project with the benefit of trade breakdowns and names of trades courtesy of the builders who thought they were pricing within the principles of the industry tender process.
The tender process is being compromised by operators in our industry who are using the process to obtain a financial benefit at an enormous cost to our industry and while most tenders are genuine and transparent there are those that will continue to exploit.
Builders enter into the tender process in good faith and rely on many of their subcontractors to arrive at a final cost, or they may elect to obtain the services of a quantity surveyor at a considerable cost, but either way the outcome comes at a considerable cost for the builder.
We suffer far too many injustices in the building industry and this is just an another impost the industry can do without. It's up to those in a position to educate and adopt a stronger position on such conduct to the benefit of the wider industry.