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HPH211 : How does a local building contractor approach a competitive tender? – with Mark Feldman

HPH211 : How does a local building contractor approach a competitive tender? – with Mark Feldman

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Mark Feldman of MARS Building Ltd offers an insight into how he prices up potential new jobs (including when he's invited into a tender process).

Interview with Mark Feldman

Mark Feldman runs his own construction company based in Hertfordshire. He began in the industry working as an apprentice carpenter and over the years had experience as a trainee site manager before returning to carpentry. He started his own business in the early 1990s and since then has built it up to be a limited company working on large extensions and new builds. His company, MARS Building Ltd, is the main contractor currently working on Ben's Passivhaus self build.

 

A good standard of work comes at a premium

Mark likes to make sure that he has work scheduled for at least a six month period, and while they mostly do large extensions or new builds he might also take on a smaller job if it will fit in between other planned projects. Most of their jobs are won through recommendations from previous clients but they do also get approached as a result of their website, signs and vans.

Mark concedes that they may not be the cheapest contractor but they pride themselves on providing a good standard of work and feel this is reflected in the price.

Where jobs don't come with a specification and they have to specify the job themselves from the drawings they aim to be as comprehensive and detailed as possible. Again this could account for a higher figure as other contractors might put in a lower price but be constantly adding additional works and extra items throughout the build process.

 

Items are specified by the architect but quantified by the builder

Mark has to rely on the fact that the architect and client have got the specification accurate and that those details match the drawings.

On receiving a tender package Mark would work through the drawings and specification and highlight if there is anything unusual so that he can research and get prices for those items. Then it is a case of working through and pricing the specification, then coming back to it a few days later and checking it through again.

As they haven't been involved in a Passivhaus construction before, Mark has been careful with the pricing for Ben's project and built in a bit of an allowance, not so much for risk, but to cover additional time and taping. The architect having broken everything down well means that they've been able to price for the individual items instead of having to guess at what they need to do to achieve the airtightness.

Mark does say that on other jobs, “sometimes architects can go too far with detail, and you end up pricing every little item down to the last screw almost. Everything gets a little bit added on to it, so it can make it quite a bit more expensive for the client if it’s too detailed for a specification.”

 

Tender submission prices may vary depending on existing workload

Some items on an architect's specification will have a profit allowance next to them. For others Mark will cost for labour, materials and allow for a bit of profit on top. He will also put in a cost for site management, allowing for a day or two each week which covers the time he spends in discussion with architects, looking things up on drawings, general organisation and mediating between the trades.

Prices they submit will depend slightly on the circumstances at that time and how much work they already have lined up. Their most competitive prices are likely to be when they are running close to the end of a job and don't have anything else lined up for when they finish.

Work on projects may overlap

Obviously a common question clients have is when the contractor might be available to start. Mark explains that the type of people they want to work for are those that want someone doing a decent job and as such might be prepared to wait until they are available.

There is often a transition period where jobs can overlap by a few weeks. It might mean starting on groundworks and brickwork on the next job while still finishing off their current project.

 

Communication tends to be more effective with an architect's involvement

If they are working on a project where the architect has a continued involvement, then both the contractor and client will communicate via the architect.

In other projects the client may only employ an architect to produce drawings, and will oversee the works themselves. In this situation the contractor would be dealing directly with the client.

Mark says it is probably more efficient working with the architect but either process works well.

 

A combination of factors is causing higher tender submission prices

Ben was alarmed at the prices that came back on their tender submission and had wondered what might have been the cause. Mark suggests the following reasons:

  • Labour costs have seen an increase recently
  • A shortage of bricklayers has put their prices up
  • The pound being weaker against the Euro has increased the price of imported goods
  • The cost of insulation has dramatically risen over the last year – as much as 30%
  • Timber and other items have also seen price rises.

Some of these prices have previously been absorbed by the contractor to try and win the work, but in order to maintain profit their prices are now creeping up.

 

Find out more

Visit the website of MARS Building Ltd

 

Transcript

Download a transcript of the interview with Mark Feldman.

 

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HPH207 : Opening our tender returns – with Ben and Kay Adam-Smith

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Chris Parsons from Parsons+ Whittley outlines a traditional procurement route. And Ben and Kay Adam-Smith receive their tender returns.

 

Ben and Kay Adam-Smith are building a family home to Passivhaus standard and have hired architecture firm Parsons + Whittley to design this house. In episode 205, Technical Director Dan Higginbotham explained how the tender package was put together. Now five shortlisted contractors – sourced mainly through recommendation – are quoting for the work.

 

What is a traditional procurement route?

This is when the architect, working on behalf of the client, produces a comprehensive specification and a highly detailed package of drawings. Potential contractors then use this information to price up the job. The more detail there is, the more realistic the pricing will be (and like for like comparisons then become possible).

 

The contractors submit only the headline figures

For this tender process the contractors have been asked for the contract sum, how soon they could start and how long they would take to carry out the work.

Chris has also asked for a detailed price specification, although he is aware that the contractors may not produce this (perhaps because they've priced it in a different way and can't easily produce the document).

However Chris says: “The sceptic in me thinks that by holding it back, if they get a telephone call from me today asking for their price specification, they get an early indication that they're in the running.”

 

A code of practice governs this process

In order to make this fair, a procedure is laid down of how to invite and receive tenders, what must be done once they are opened and how errors might be adjusted, etc.

On top of this, a company's professional reputation would be at stake should any foul play go on!

 

Everything remains confidential until the contract is awarded

The client will generally be the one to open the envelopes (again, to see that everything is above board).

All these numbers will be kept confidential until one contractor has been engaged.

Only then will the figures be released, so as to give the contractors feedback on their pricing.

 

Ben and Kay's tender returns

After waiting for the clock to strike midday, Kay opened the returns that had come in.

The budget of £400,000 was quickly blown out of the water!

 

Contractor 1 – £612,234 (39 weeks)

Contractor 2 – £885,871 (35 weeks)

Contractor 3 – £744,385 (35 weeks)

Contractor 4 – withdrew due to family illness

Contractor 5 – disqualified (submitted a day late; £664,000)

Some contractors may drop out

Despite working hard to make sure the contractors were a good fit and wanted to price the job, one still withdrew.

And another had to be disqualified after it arrived late.

Chris commented: “I'm pleased that we had a reasonable sized list, so we were not left with limited choice.”

Next steps

Look at Contractor 1's pricing in more detail and explore what savings can be made through value engineering.

 

Find out more

Visit the website of Parsons + Whittley

Follow Chris Parsons on Twitter

Watch Ben's vlog

As this podcast is somewhat behind the actual timeline, Ben is actually underway with his build!

Subscribe to our YouTube channel to receive all updates.

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HPH184 : Balancing a self build with work and family life – with Donal O’Leary

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Donal O’Leary tells us about his self-build in Ireland and shares advice for a successful project.

Interview with Donal O'Leary

We catch up with Donal O’Leary, the first House Planning Help Hub member to complete a self-build project! The decision to self-build came about by accident, as Donal and his wife were originally looking for a run-down property to renovate or rebuild. The properties they viewed didn’t quite meet their needs or budget, and suddenly the right site came along.

An unorthodox approach helped them secure their plot

Donal explains, “We didn’t really need the full site as it was. It was actually too big and therefore it was outside of our price range.” After making enquiries and seeking legal advice, they came to an agreement with a neighbouring landowner to join forces and put in a high enough offer to outbid another interested party. The site would then be split into two, for their own developments.

It took a year of planning before construction started

After acquiring and sorting out the site, the second year was the planning phase, split into obtaining formal planning permission and working with architects and quantity surveyors.

In Ireland, you have a pre-planning meeting with the local authority. This is an opportunity to run through plans and get approval to apply for formal planning permission (or find out what needs to be done differently). Donal explains you don’t have to have final drawings, but you do need to provide plans showing where the house will sit, access, and services like sewage and water.

Cost dictated the final design of the house

The site was large enough to accommodate a big house. But for Donal and family, the priority was a comfortable, clean and healthy home that would take advantage of the light and aspect, as well as modern insulation and air-tightness standards. Cost ultimately decided the final design, and the overall size was dictated by that design and how the spaces were arranged.

The budget was based on some funds left over from the sale of their previous property, plus the mortgage amount they would be able to secure. Donal adds, “The rainy-day fund and the piggy bank were all broken at this stage. So, we worked out roughly what we could afford…and worked back from that primarily.”

The planning phase included very detailed specifications

Their architect and quantity surveyor filled in most of the tender document template, detailing the build specifications. Donal and his wife provided additional information (such as doorknobs, stove handles, bathroom finishes) to complete the document.

It took five or six iterations of 20-30 page documents to figure out exactly what was needed. Donal says in hindsight it was definitely worth it, but at the time it was difficult. “You’re at the stage where you can’t even visualise what the house looks like, and you’re expected to say, ‘well, I want a Belfast sink with a tap that goes a certain way’.”

Time-wise, their biggest challenge was appointing a builder

Christmas time was the deadline for receiving responses to their tender. Donal says, “I’m sure the builders were delighted to be filling out a huge tender document on Christmas Eve!” They narrowed it down from four builders to two, met both and then picked one. Availability was a very important factor, as well as previous experience and price. The tender process took a couple of months and the actual build lasted just over 12 months from start to finish.

A precise calculation helped them stick to their budget

The quantity surveyor broke the build down to a very detailed level, so they knew exactly how much it would cost. Donal says they were reasonable estimates with a bit of wriggle room to alter the spec if needed, when it came to actually buying fixtures and fittings.

There were only a few minor changes during the build stage. Donal attributes this to the time spent upfront with their architect and quantity surveyor on the spec. It gave them a baseline to go back to, which helped them manage their finances. And they had monthly budget reviews with the builder.

They tried to attend site as often as possible

The building contractor was effectively the project manager. So for Donal, the biggest challenge was not a technical one, it was just keeping on top of everything and being available. He admits it’s difficult when you have to take calls and send emails while at work, but says you just have to find a way.

Donal advises others to take any chance they get – before or after work, or at lunchtime if you’re nearby – to go to site and give an opinion so things can move on. His wife spent any spare time during the day onsite, involved in the daily decision-making. Donal recalls a few times where just being there averted a disaster, explaining, “So, if we weren’t there, they would’ve done x, but because we were there, they did y.”

Keeping their architect engaged in the entire build process was worthwhile

Laws have changed in Ireland and you have to have an Assigned Certifier; an engineer or architect signs off the various certification and documentation across each phase of the build and can be held accountable by the local authority.

Donal and his wife chose to involve their architect (who they found through word of mouth) for the whole project. So she had a vested interest not just from a design perspective, but also legally and financially. As the client, they had the reassurance of a professional overseeing the builder.

They leaned on their architect quite a lot. As Donal explains, “It’s not just somebody who draws nice designs, prints them off and you go, ‘move a wall here, move a wall there.’ It’s far more than that. It’s a design eye, it’s finishing, it’s the construction knowledge that the average client doesn’t have.” She was a good sounding board when they had to make decisions, offering suggestions and steering them in the right direction.

Sustainability had to be balanced with budget

There were times where a sustainable option wasn’t the most economical or expedient, for example they considered rainwater harvesting but the cost involved would have pushed the build over budget.

However, they tried to reduce the carbon footprint of their new build where possible:

  • Orienting the house for solar gain, with canopy-style shading to reduce overheating.
  • Avoiding the need for oil due to high-spec insulation.
  • Using an air source heat pump.
  • Leaving some of the garden as a nature area for wildlife, planting some clover there instead of grass so as to have a low maintenance meadow.

Transcript

Download a transcript of the interview with Donal O'Leary

How stupid is our obsession with lawns?

If you're planning a vast lawn for your new house, is it actually the most sustainable thing to do?

Donal recommends listening to a Freakonomics episode which ponders how natural lawns are and looks at alternatives.

And if you enjoy that, check out last year's interview with Lisa Kerslake on creating a biodiverse garden.

Please connect with me

HPH140 : What is a quantity surveyor? – with Jerry Thomas of Smith Thomas Consult

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Jerry Thomas explains what a quantity surveyor does, and when you might need to use one on your project.

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Interview with Jerry Thomas

Jerry Thomas is company director of Smith Thomas Consult, a cost consultancy practice established in 1987. He qualified with a degree in quantity surveying but explains that other people might come into the discipline from more general backgrounds and then specialise as they go through their career. A quantity surveyor (QS), either as an individual or as a practice, will be a Member of the Royal Institute of Chartered Surveyors, and carry out 20 hours per year of Continuing Professional Development to ensure that they are maintaining their professional standards.

A QS can assist with many stages throughout a self build, including: initial budget cost estimates, working up tender packages, help with costings, assistance with funding options and bank appraisals, tender evaluation, value engineering, monthly evaluations to ensure the contractor is paid regularly, and making sure that necessary paperwork is in place and the final account is agreed.

 

Don't leave it too late to appoint a QS!

Jerry explains that often people won't think to appoint a QS until they've already had their grand plans drawn up by their architect, by which time his role becomes more about providing a sanity check on costs. Appointing a QS at an earlier stage to provide an indication of budget per square metre based on the type and specification of property they are looking to build, can keep the project attainable. Otherwise they'll have to go through the painful process of diminishing the designs, reducing the specification and aspirations, and stomach additional costs associated with reworking those designs.

Ideally Jerry would be appointed when there is a simple, sketch design that shows: floor plan, typical elevation, roof type and pitch, fenestration levels, construction type and cladding material. From this Jerry would work out a base cost figure of £X per square metre, and use this as a starting point with subsequent variations to e.g. window types, heating system, roof covering choices etc, adding or subtracting from that base cost, to give a reasonably good idea of what the eventual cost is likely to be.

 

The level of involvement that you need a QS for will vary according to the scale of your project

Jerry would always recommend appointing a QS for a building project, but the level of involvement required wouldn't always be the same. For a £20,000-£50,000 extension for example, 2-3 hours work (costing around £250) would provide a quick sanity check giving a very high level order of magnitude that what has been proposed is feasible.  For building a multi-million pound house you'd be more likely to need a full suite of services ranging from initial budget advice right the way through to the final accounts stage.

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A QS will use experience and a wide variety of resources to work out costs

Quantity surveyors pay for access to the Royal Institute of Chartered Surveyors (RICS) nationwide database of costs, the Building Cost Information Service (BCIS). It provides average costs by building type, inflation indices, build cost indices and tender price indices. They would use this as a high level check towards the initial cost estimate.

They will then use in-house projects as a benchmark to show how similar projects have compared, and with the differences that the architect and client are proposing, what impact they would make to the costs.

Annual cost books list the costs of every major component that's needed in a building, eg cost per square metre for brickwork, stonework, timber etc.

And then you will be relying on their general experience. A good QS will be keeping an eye on market trends and the building press to keep up to date and even ahead of the cost books.

Lower Swell Photo

 

Online calculating tools may not capture everything needed to provide a full project cost

Jerry wouldn't recommend that a self-builder rely on online cost calculating tools to work out accurate costings. While he can see they have a value on very small projects, he emphasises that there is a huge danger that you could miss out on many of the peripherals that go to build up a full project cost. Rather than just looking purely at the building costs, you need to consider the many factors associated with drainage connections and connections of services for example.

 

A QS can help the client get the best value from the tender stage

For a self build, Jerry would always recommend going down a traditional route of procuring work which has a bill of quantities and specification clearly set out. An alternative would be to issue a contractor with a set of drawings and performance requirement for the specification, and allow them to come back with a proposal. This runs the risk of a contractor submitting a low tender price in order to get the foot in the door, who then might be trying to recoup those costs throughout the build, either by cutting corners or saying that some items hadn't been included so will cost extra.

The skill of a QS lies in ensuring there is sufficient documentation to rigourously check the tenders, comparing like for like, and understanding what might be causing variations in pricing, to establish what is actually going to be best value for the client.

“So whether with a schedule of works or a bill of quantities we can actually do that analysis at tender stage which prevents problems maybe post-contract when the works are on site with a contractor who is trying to recover a bad position.”

Schedule of Works

 

Always have a contract in place with your contractor

You should always have something in place before the commencement of the work, even if it's a letter forming the rudimentary basis of a contract which just confirms the start and finish dates. Ideally it would also include what the sum is that you're paying, and that the sum is based on which named architectural drawings and specification. The Joint Contracts Tribunal (JCT) have a range of contracts available for this purpose.

 

Planning, planning, planning!

Jerry's final tips are to ensure that all the designs are finalised, costs sorted, and tenders agreed with the contractor and incoming services have been arranged before work commences.

Ensuring that you have a full, considered, joined-up package of information, cost, programme and contract before you start, even if that means deferring the project for 6 months while you get everything together, will mean that you are less likely to have unexpected variations, problems and costs later on.

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Transcript

Download a transcript of the interview with Jerry Thomas

 

Find out more

Visit the website of Smith Thomas Consult

 

The Hub update

Our latest update sees Ben return to Long Barrow Passivhaus, having a chat to Alex Baines and a look around the building. Some things have changed – one window has increased height size which they were able to almost take out a layer of the ICF to make the space for.

Our latest module in The Hub is on “Building your team”. Who do you need to hire? Everyone always says they want to be involved from the beginning of the project, so how is that even possible? We look at the different individual roles and how you might bring a team together.

For more details of how to become a member, check out Houseplanninghelp.com/join.

 

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Finding Land

If you want to build a house then the first thing you need to do is find land. Suitable parcels might be few and far between. And when you do find one, you could face fierce competition. Not only from other self builders, but also developers with deep pockets and bags of knowhow. Our free course will lead you through how you find your dream plot.

Get instant free access to this course

ECO DESIGN 101

So your heart is set on building an eco home but you don’t know where to start. Well, that’s why we’ve developed a 10-part e-course to help you understand some of the important decisions you are going to have to make. Can you have a comfortable, healthy home with low running costs . . . that’s also good for the planet?

Join our free course now