Big difference in one tender price

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beetroot

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I received planning permission for a 600 sq/ft extension and sent it out to tender (in a tender pack) with planning drawings and a detailed building specification (prepared by our architect, don't have working drawings). I sent it out to 4 contractors and 3 came back roughly the same price but one contractor came back 10k cheaper. It's great to get the lower price and justifies the tendering process but am also a bit wary that there is such a difference in price. I plan to have a look at his existing projects, references, PI insurance etc but is there anything else I should be checking?
Thanks.
 
beetroot said:
I received planning permission for a 600 sq/ft extension and sent it out to tender (in a tender pack) with planning drawings and a detailed building specification (prepared by our architect, don't have working drawings). I sent it out to 4 contractors and 3 came back roughly the same price but one contractor came back 10k cheaper. It's great to get the lower price and justifies the tendering process but am also a bit wary that there is such a difference in price. I plan to have a look at his existing projects, references, PI insurance etc but is there anything else I should be checking?
Thanks.
Click to expand...
i've highlighted where i think you've taken short-cuts


  • your arch should have issued detailed dwgs
  • your arch/ Qs should be liaising and assessing builders prices
you may laugh at the suggestion of Arch or QS for such a small project but their fee will be a lot less than a botched job with a builder who has under priced by 10g
 
It depends on the overall tender cost - a 10k difference where the others were at 100k may well be just really good value, 10k where all the others were at 50k isn't.

It is prudent at present to request letters of reference from the bank and accountant of whomever you are considering appointing confirming that their financial affairs are being carried out in an orderly manner and that they are up to date with their tax returns etc. If that all comes back in good shape, at least you know he was financially sound in 2011....

As regards previous work, it is important to check this to see the quality of a contractors workmanship, but quality of workmanship is no guarantee that he has not underpriced your project...

www.studioplustwo.com
 
Thanks again for taking the time to respond, the other three tenders are coming in around 65k but one came back at 55k (all ex vat). The specification was detailed but I suppose the only way to be sure is to get the detailed drawings as outlined above.
 
Whatever the quality of your documentation, if 3 out of 4 are coming in at a very similar price, I would generally consider that this is the correct price.
I would be inclined in the first instance to have your architect talk to the lowest tendering contractor and trash his price out a bit to ensure that he hasn't missed something or doesn't have arithmetical errors in his build up.

www.studioplustwo.com
 
No, not necessarily extras.

I was referring to a mistake that the contractor might have made in totting up his final amount, in the case that he has everything itemised but has not added it up correctly.
If such an error is found, it is normal to point out the error to the contractor and ask him to stand over his tender including the error. He then makes the judgement as to whether he can still carry out the project for the amount tendered, and if he walks away you move on to the next contractor on the list.
If it is a large error one hopes that he does walk away, as this is when the extras which you mention are likely to happen, as he will be attempting to claw back money everywhere he can.
On the matter of detailed drawings, depending on the complexity of the project, I would think that it is difficult to price a job based only on a specification, but it is harder still to build it. The OP should invest in a set of detailed drawings which in tandem with the specification already prepared will form a solid basis in which to sign a building contract and proceed with the works.

www.studioplustwo.com
 
While unlikely to be the case it might be worth knowing that there’s tried and trusted ways of rigging tender bids. I think the term used is “covering” or to provide “cover bids”. (Not just builders – telecommunication companies might do similar when bidding for newly released parts of the rf spectrum.)

Say there’s 4 local builders, they’ll all know each and will have worked together before – so a little informal cartel is set up, so if a tender comes in, they’ll agree whose turn it is to get it, they’ll direct the client via 3 bids which will be high and 1 bid which will be relatively low. Everyone’s happy, the builders’ get even work, and the client thinks he’s getting a good price – the downside is the builders have complete control and can set a price floor on building work.

I’d guess it probably isn’t a problem at the moment, mainly since builders are still relatively desperate for projects to work on so there should be genuine competition.
 
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