When it comes to the complicated process of tendering there are plenty of questions to be answered before you start. That’s why Terren has produced this series of articles on everything you need to know about tendering. We have already published an article on 5 things you should know before you tender as well as one answering the question of how many builders to include in a tender. In this article I thought I would provide my perspective as a builder on what goes into the tendering process.
First off – how much time do we (builders) typically spend on a tender?
The tender timeframe given by clients is typically around 4 weeks from when we receive plans. From there we would review all their documents and ask any questions or additional details we notice straight up. We then send out certain parts of the job to our sub-contractors to get their quotes. Once these are back in we begin reviewing their quotes and pulling them all together with our overheads and expenses as well as considering our capacity and timeline for delivery.
All up I would say that between myself and our estimator we will spend between 40 – 80 hours per tender!
Tendering is definitely an important part and cost of doing business, but it certainly takes up a significant amount of time. This leads me to this next point:
Some builders are charging for tenders. Why is this?
Whilst this is not a practice myself or my team have ever implemented – I can certainly understand why some builders, particularly smaller-scale operations, would do so. Charging for a tender eliminates tyre kickers and for those businesses who simply cannot put in weeks of work to only have a minor shot at winning a project –it makes sense.
Having said that – just because someone asks me to tender – doesn’t mean I will.
We will typically choose to put in the time and effort of tendering if we feel we have a decent and fair shot at winning the work.
If the client appears to be credible, honest and realistic then I will respond in kind. However, if I hear that more than 3 other builders are tendering (we always find out!) or feel that the client is not being forthright with information then I might decline to tender. Equally, whilst I don’t expect clients to disclose the names of the others quoting I will, however, always ask if I’m quoting against others of similar size and quality.
The bottom line is be honest with us and present your job in a credible manner.
Give us as much notice as possible so that we can prepare to tender. And then be specific about the date that you expect to receive your quote. Also set your expectations upfront – we recommend asking for a trade breakdown in a specific format (you can download one here) to prevent against receiving single line quotes and to have a better shot at comparing like for like.
If you are going to run a tender – you want to run it in a professional way. It seems obvious, but the reason why you want to be specific and credible is that the builders will then put more effort into your tender and as a result you will get a more realistic market price and spread.
Getting a seat at the table:
Once you are down to two builders – this is called “getting a seat at the table” – you can still negotiate. You can go back with questions and ask to enter value/cost engineering with them. In my opinion there is nothing wrong with an honest conversation like being told “I really want to work with you but I need to achieve x or y” Whilst we cannot realistically price match another builder (and builders generally don’t like it when you try to get them to) we are often willing to take another look at the quote if you feel we are far above another builder in certain areas of their trade breakdown.
At the end of the day, we want to deliver something that we are proud of and that you will love to live in. We also want to build meaningful relationships with our clients because reputation is everything and we are in it for the long haul.
If you have any more questions, feel free to drop them in the comments or email us at hello@terren.com.au
