Conventional tender processes have evolved over the years and as a result the procurement routes have become more complex. Irrespective of the nature of goods or services being sought, the process for securing the right contractor can follow two basic forms.
Either the client already has a tender specification prepared and is ready to appoint a contractor once the works have been priced or the project has not been set – there is a budget in mind, but the scope of works is yet to be determined. Dean Houghton, talks about this in more detail.
How do you price works when the project scope has not been set?
Its not uncommon we receive requests for works but the client is uncertain how much it will cost, or what they may want included. A speculative enquiry like this is normally broken down into two parts.
The first step involves getting an understanding of the client’s goals, and budget for the project. We will normally talk this through with the client and can provide guidance on what we believe is achievable. Most of our team have sector specific expertise and will know instinctively if it is possible to complete the works within the given budget or timeframe.
These discussions are important as they provide us with the information, we need to move on to second step – estimating the work. At the construction estimation stage we will assess the site conditions and gather competitive quotes from our trusted suppliers.
This is what we would call an informal tender or negotiation and we normally base this on what is feasible within the budget allocated. We will do our best to keep costs down as much as possible by working with the client to refine the project scope.
Cost savings can easily be achieved by avoiding an unnecessary works. Over specification is a common problem for many during a formal tender process, as design can often not meet the budget, which can add approximately 15% to the cost of a project. This is why working in unison with both the design and contracting team is beneficial to all parties
What is a construction estimation?
A construction estimation should provide a rough guide in terms of costs and offer a final comparison with the budget. It provides the client with an idea of how much the project will cost and if they have the funds available to undertake the works.
A construction estimate sits somewhere between cost planning and post contract cost control. It is important that you get clarification from your contractor that they have accounted for any potential unforeseen costs.
How to factor in unforeseen costs within a construction estimation?
Never underestimate the value of research and development. Make sure to have your site fully surveyed before you begin any project to identify any potential issues that might impact works. We always do this as part of our estimating process.
Ground contamination or structural issues can not only create delays but pose a serious threat to costs rising. This is why we invest time and resource into this process as it could prevent further problems later on. It is well a well-known fact that sometimes there can be unforeseen issues, so we always build in a contingency into the budget.
Finalising the scope of works
Once the construction estimation stage is complete the client should have a refined scope of works. They should also know roughly how much the project will cost and how long it will take to complete.
Its not uncommon for the scope of works to change at this stage as requirements or budget can evolve as details of the project takes shape. Revisions may be necessary until the final scope of works can be agreed and the client is happy with the proposal.
Unsure where to start with your project?
If you are in the process of starting a refurbishment project, make sure you have a goal in mind of what you want to achieve. Consider what your ideal budget is and start from there.
Once you know what you want out of your project, get some rough estimates from contractors to verify how much it will cost to undertake the works. Negotiate until you are happy with what is being proposed. It’s important the scope of works fits with your requirements and the quotes received account for any potential unforeseen costs.
Work with a contractor that will take a collaborative approach to delivering your project. Communication is important to ensure your project is a success and you need to feel confident that they understand your requirements.
Ideally, work with the contractor you have partnered with from the offset, as they will have a full understanding of the scope and risks involved with the project.