Any contractor tendering for building contracts needs to consider a number of issues before beforehand. This article aims to discuss these issues in a brief and concise manner. The areas mentioned are written are general therefore I would recommend that the reader seeks local advice before embarking on such business venture.
The two types of tendering process
Tenders are usually carried out by way of a single or two stage process.
The single-stage tender process consists of:
- An invitation to tender.
- A tender.
- A valuation.
- The award of the contract.
Using this process can be quicker than the two stage process; however it does involve a great deal of initial work to make sure that the tender documents are all complete.
The more flexible approach to take is the two-stage tender process. Tenders are presented as a projected work package, by submitting:
- Preliminary costs.
- Profit and overheads costs.
- Projected built period.
The preferred contractor then proceeds to the second stage, where the contractor will work with the design team to come up with a final design, as well as a programme and final price just before signing the contract.
Supply as much information as possible
It is in everyone’s interest to supply as much information as possible. This will enable the contractor, from the beginning, to evaluate thoroughly the risks attached to the contract and to price them correctly. In addition the employer will get a much more reliable price.
The contractor should ensure that the tender documents include the following:
Full details of the contract to be entered into and the proposed contract amendments.
A set of full documentation that the successful contractor will be entering into. Such as appointments, warranties, performance bonds, parent company guarantees, novation agreements etc.
Features of the insurance and levels that the contractor is required to retain.
The employer should provide from the beginning any information that might put the contractor at risk in order to be presented with a reliable tender price.
In order to be at an advantage the contractor should review the tender documents thoroughly. This involves a legal review usually by outside lawyers and a technical review normally by in-house employees.
Contract Issues
Clarity of the basis on which the parties are working will ensure that there will be no misunderstanding from the outset. Invariably disputes lead to added expenditure.
Jackie Bent
www.weboski.com /jackiebent.html
Jackie is a Chartered Surveyor, Property Investor, Property Coach/Mentor, Motivational Speaker, Entrepreneur and Author of soon to be released - Secrets of the Astute Property Investor. She is the owner of several companies and is a seasoned property investor who has built up a healthy property portfolio.
