Terren’s new home designs come with a verified build price from S&K Group. However, they are also the only limited edition architectural home designs on the market that are able to be tendered just 3 weeks after you have paid your deposit. This means that if you want to get out of the ground ASAP, and you are planning to tender, you need to be ready to start the process as soon as your architectural designed home plans are ready.
To help with this tendering process we have written a collection of articles that lay out what you need to know before you tender. This is the second of that collection and you can read the previous article here.
Today we explore: the ideal number of builders you should include in your tender.
As with many things in the building process, there is no hard and fast rule. You do however want to strike a balance between asking too many builders and too few in order to achieve your desired outcome of a fair market rate and a builder with a good working relationship to move forward with.
If you only ask 2 builders to tender, you are less likely to have a good spread that gives a fair idea of market pricing. On the other end of the spectrum, if you ask too many builders to tender (5+) then they might assess their chances as low based on the number of parties involved and either pull out or potentially submit an undercooked or over the top price which is not reflective at all of the market conditions. Some may even exclude or omit aspects of the project to keep their price competitive. The risk on this is that if you do happen to choose one of these builders to move forward with you could get stung during construction for items not included in the contract price.
(In case you are considering simply not telling the builders how many others are tendering –be warned – builders always find out! There are only so many sub-contractors and suppliers that service each area and when a builder starts to hear murmurs from a supplier that “has already quoted on this job for 5 other builders” this will not look favourable for you.)
That’s why we believe that the magic number is essentially to start off with FOUR tendering builders.
The likelihood, if you ask four to tender, is that one will drop out for a variety of reasons and essentially what you really want is three quotes in order to give you a comparable spread.
Rod Seidner explained that “as a builder, if I’m tendering on something that has more than 4 builders I will not tender. I do not expect clients to tell me who else is tendering but I do expect them to be honest about how many others are tendering and if the other builders are of a similar size and quality to me. I ask this because I want to make sure that the other builders are comparable.”
When in doubt keep in mind that at the end of the day the goal of the tendering process is to be able to consider 3-4, well-vetted builders to provide a good level of competitiveness, the value of trades in the market and leave you with several prices to consider.
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