Why Do We Need a Contract?
Why do we need a Contract?
When you are employed as a builder – there is a perception of what the client is contacting you to build. Clients pay architects and have spoken to consultants and think they are getting something however the documents illustrate something that is not their dream. The client has a vision and expectation that might not be realistic or the builder could have underperformed. But that expectation is extremely important to manage and deliver.
How a client employs a builder depends largely on the size of the project, complexity, and risk. My experience in executing and tendering is mainly with projects from the tens of thousands to less than $50M in various contract forms in both commercial and residential sectors.
In Australia, all of these contracts MUST be based on an Australian Standard however the issue you get is with “amended contracts” that lawyers have omitted or re-written a base contract to within an inch of its former existence (a designer contract).
A contract is basically a written document outlining a mutually agreeable outcome for both parties, commonly known as a “Terms of Agreement”. My experience with contracts has been good however I have heard some horror stories from both client and builders.
My experience is if you communicate with clients through the project, you sign a contract at the start of a project just to keep everyone honest for the “just in case moment”. Then a contract gets placed in a draw and only comes out when you need to remember when you can place in a progress payment.
Everyone has bad days and sometimes due to no one’s fault things can just go bad. So if you have a dispute under the contract, You have three ways to go:
- Be an adult and be fair and work things out;
- Go to arbitration;
- Go to Civil Court (and if you are really keen and you haven’t gone bankrupt there is also the Supreme Court of Australia;
The expression about civil action “Only the Lawyer Win” comes to mind.
So if a dispute does happen and a basic contract/terms of the agreement is not in-place – it gets very messy.
The basic premise of our legal system will always lean to the entity that seems to be the victim. So if there is an expectation of final finish or outcome and the client is unhappy – then a dispute can escalate quickly into a very costly experience for all.
Now – you are a small building company with a contract with “Ma & Pa Kettle”, Our legal system reverse a simple term “King of your own Castle” – What this means, if you are seen as an expert and trading to a client the “Kettles,” our legal system protects the little guy (in theory). So if there are a dispute and logic hasn’t succeeded, the builder always wants to go to arbitration and not to civil court.
In arbitration, you deal with an expert in a particular field and the best chance to plead a case in a reasonable environment. Now if arbitration does not work and you as a builder go to civil court, you are now guilty until proven innocent. The chance of business winning in civil court against he “Kettles” is small.
Then if you are a business contracting to another business – company law kicks in and again arbitration would normally be the desired outcome. However, when you are in this situation with ABN against ABN (say a builder and a developer) the law is a little evener. Sadly – who is right and fare doesn’t matter, who has the best lawyer does.
In short – In an ABN against ABN – who has the most money normally wins.
Communication and honesty will normally keep you out of court but if you do go to the court – if you haven’t got an Ironclad “Terms of Agreement” and the person on the other side has got dollars in there pocket with the intent to use it – you’re screwed.
As I mentioned most Australian Standard contracts are pretty fare for both client and builder. The building industry organizations such as MBA and HIA have also got general contracts that are basically the Australian standard however push the parties into an arbitration situation before a civil court.
You will then have a large organization that has a designer contract produced by a legal team. This type of organization has its contracts stacked in the clients favour and basically the builder signs it or they will find another builder who will.
This is what the industry calls a designer contract and has sent many building companies to the wall. To avoid this type of client and don’t sign any designer contract without doing a full legal review first.
But as a rule – Stay away from designer contracts – always lean to Industry contracts.
If the two Party don’t have good communication prior to a contract signing,
It’s probably a good idea not to enter into a contract.
When entering into a contract – I would suggest the use of standard industry and mutually acceptable contract, make sure that both parties understand what they are signing and once the contract is signed ensure that excellent communication follows and don’t promise anything you can’t deliver.
The best contract is one you sign to keep everyone honest and place it in a draw once signed and then only bring it out of the draw when you need to get paid or you execute the completion of said contract.
What Contract Should I Use?
The quick answer is either an Industry-standard contract or and Australian stand contract, however, there are also different types of Terms of Agreement to address the size of the project and if the project has been fully designed or need a design component included.
The majority of contracts start from an Australian standard and can also be amended to suit the author. If you do come across an amended contract – it is always good to request a review of the original contract before it was amended. But when you can see a contract has been amended by a lawyer – make sure you get expert advice before entering into any such documents. Amended contracts should be treated with the same caution as a designer contract. Be aware.
When entering into an agreement to supply services a basic “terms of the agreement” should be agreed. If you get into a dispute and you do find yourself in front of a magistrate – a “terms of agreement” is the first this he or she will request. If you are considered an expert in a said field – a signed term of the agreement is the only thing that may say you in a civil suit.
So on many small services trades or suppliers – you can sometimes see an attached Terms of agreement on the back of Purchase order. After that, you have small medium-sized contracts to address multiple types of projects. There are also contract that are spilt into two types of contract or offer incentives.
The main contracts used in building can be grouped into the following:
Purchase Order –
Larger than a tax invoice however has a basic term of agreement. Normally used for smaller services or purchases.
Minor Works Contract –
Low complexity contract for a particular scope of works & no design over the short term.
Lump Sum or Hard Dollar
Mainly for a fully documented project. Normally design costs not included over a longer term or negotiated tender. Any variable prices addressed as provisional sums or PC Items.
Design & Construct Contract –
Complex contract with a design scope and a performance scope agreed normally from an approved development scope. A D&C contract would traditionally take documentation from DA to CC and then into occupation (OC).
Hard Dollar / Lump Sum Contracts
Hard dollar contracts/tenders are in theory fully documented and when a builder tender these types of building with all the docs presented – it becomes a race to the lowest price. But the documents are never fully documented and a builder will have clarifications and exclusions. So if the documents are not ever perfect, often items that have not been designed. Builders start to start using words like allocations, allowances or provisional amounts to address these unknowns. Generally speaking, the client has paid for a set of drawings that have normally acquired a construction certificate. But these CC drawings are not actual Construction Coordinated documents. So if there is any item not coordinated or not detailed correctly this opens the door for a Contracts Manager to issue variation under the contract.
So the client takes on the full design risk. Some builder makes a career of winning projects at very low margins with the knowledge that there are opportunities for variations during the construction phase. These types of builders tend not to have a lot of return business from there clients however this is a strategy widespread through the industry. This type of practice is not good for the industry.
Sometimes you will find a client may say there are only 3-4 builders tendering – then you find out during a tender that is 3 times the original number of tenders. For a builder, hard dollar tenders are normally a race to the cheapest price. So if you find out that the client hasn’t been upfront, I think I wouldn’t be too hard on the builder using a variation strategy.
Design & Construct (D&C) Contracts
As noted above – D&C Builder can price from a number of locations within the design phase but normally from after the DA has been approved, however, this can vary with clients, especially so if you have a pre-existing business relationship or you are building to a Formula or Clients briefing document.
On the other hand – a hard dollar contract would normally be engaged after the CC has been issued or even better a stamped set of drawings with the notation “ISSUED FOR CONSTRUCTION”. The better the coordination and detailing of the documents – in theory, the client has less risk.
A D&C contract could be based on a Client Brief and the documents could be nonexistent or very schematic, the builder could be contracted to manage and mitigate the full design and developed in a collaborative environment.
The big difference between a hard dollar tender is this:
- With a hard dollar tender – you only price what is on the drawings and don’t wear any risk associated with items missing on drawings and any buildability issues. (Anything missed will a variation later).
- A D&C builder will then take those same drawings and prices in all the build-ability issues and generally, everything missed off the documents and wears all the risk everything not excluding or clarified.
If you wish to read more about
Tender Process – Click Here
What Are the Different Contract Variables?
Hard Dollar with Variables
Hard dollar Contracts/tenders are if theory fully documented and when a builder tender these types of building with all the docs presented – It becomes a race to the lowest price. But the documents are never fully documented and a builder will have clarifications and exclusions.
The big difference between a hard dollar tender is this:
- With a hard dollar tender – you only price what is on the drawings and doesn’t where any risk associated with items missing of drawings and any buildability issues. (Anything missed will a variation later).
- A D&C builder will then take those same drawings and price in all the build-ability issues and generally, everything missed of the documents and wears all the risk everything not excluding or clarified.
Often builders will receive tenders at the varying stages of design and documentation. Hard dollar / Lump Sum contracts can still use if a project if it hasn’t been fully designed. The builder split all the known costs and address the unknown costs using a few methods including:
- Hard Dollar with Provisional Sums / PC Items
- D&C Hard Dollar – Principle Design Brief tender including all design and Building.
- Negotiated Tender – Still a Hard Dollar with all the variable costs negotiated a risk register.
- Split Hard Dollar / D&C Contract – Hybrid of both contracts.
Hard Dollar with a D&C Component Contract – As it sounds this is a contract may have a Lump sum price on the majority of the work with a smaller portion that needs a redesign or an additional stage. This can be addressed via a split Hard dollar contract with a D&C component or you can use a “Provisional sum or PC Items” to address these variable unknown costs. (Using this system means the Builder has no risk and the Client holds all the risk).
I have always struggled with the concept of a Lump sump contract having variable costs?
Only saying…
Hard Dollar Contract (including D&C Content) – A tender can basically be D&C in natural however the actual Contract is still Hard dollar. The builder will manage the design consultants, mitigate approvals, and finally build a project to a clients design brief. A good example of this type of contract is The Government GC21.
This contract addresses the scope as a minimum performance however leaving “the how?” up to the builder. The bad part of the GC21 is anything that has been notified to the tendering builder must be priced even if obscure. The contract asks the builder to take all risk associated with Latent conditions (hidden stuff) – however, this can normally be negotiated out of the contract conditions.
Negotiated Tender – This can sometimes happen as a Lump sum tender and then the builder will either then negotiate a price for additional works and absorb into a lump sum price effectively absorbing all the risk.
Another way to address the clients risk is to price a Risk Register. The client and builder then agree who is going to wear the risk. The agreed items are then included in the lump sum and the builder holds the risk on these absorbed items. Obviously, the client holds the risk of any excluded items is addressed as a variation under the contract.
Design & Construct (D&C) Contracts
As noted above – D&C Builder can price from a number of locations within the Design Phase but normally from after the DA has been approved, however, this can vary with clients, Especially so if you have a pre-existing business relationship.
Refer to The Design Phase below – Note a D&C could ask to tender from Process 1 to after 4.
So we have established a D&C builder will manage the design consultants, mitigate approvals, and finally build a project to a clients design brief. The “Principle Design Brief” is a performance document highlighting the client’s needs, or design Intent. So when you have a reasonable amount of time you then go about constructing a price considering all the variables within the clients brief and site-specific requirements.
Now, what if the client hasn’t the time for a formal D&C tender. In this situation, a client may have enlisted the services of a Quantity surveyor to produce a cost Plan.
The client can proceed a few ways but could ask for a few builders to submit a cost plan to ratify the Quantity Surveyors numbers. The cost Plan would be submitted in a set manner to compare “Apples for Apples” from builders. The builder would quote on all set costs including Preliminaries, Overheads, and margin. The consultant fee, authority fees, and trade cost would be variable. basically a “do and charge or Cost Plus” contract.
All the variable cost would have an agreed margin across all trades. (with a minimum margin capped).
Construction Management (CM) contract
- Preliminary costs – Quoted
- Overheads and insurances – Quoted
- Consultant costs – Estimated
- Authority Costs and Inspection Fees – Estimated
- Trade costs – Estimated
- Margin – % Quoted
CM Contract with Guaranteed Maximum Price (GMP)
The client may then choose to ask the builder to price a risk register and adjust the trade costs adjusted to reflect a worst-case scenario. Now if the client says I will accept that price as a maximum price if you as a builder can take on all the risk. This contract would be GMT.
- Preliminary costs – Quoted + Risk = GMP
- Overheads and insurances – Quoted + Risk = GMP
- Consultant costs – Estimated + Risk = Quoted GMP
- Authority Costs and Inspection Fees – Estimated + Risk = Quoted GMP
- Trade costs – Estimated + Risk = Quoted GMP
- Margin – Quoted
The trick to the GMP is based on the drawings at the time of tender with an agreed Client brief. If the client changes brief or adds items to the scope this would still be a variation over and above the GMP.
CM Contract with Profit Share
As per the GMP listed above, the client may then choose to ask the builder to share the risk and as an inventive, to each, both builders and clients may enter into an agreement where that share any profits and losses in the trade estimate normally at 50%. The fair way is to share both losses and wins, however most clients will only share the wins. (this is one of the reasons I am not a fan of this type of deal.
- Preliminary costs – Quoted
- Overheads and insurances – Quoted
- Consultant costs – Estimated + riskless 50% Profit Share
- Authority Costs and Inspection Fees – Estimated + risk less 50% Profit Share
- Trade costs – Estimated + risk less 50% Profit Share
- Margin – Quoted
Again the trick to the CM with the Profit share contract is based on the drawings at the time of tender with an agreed Client brief. If the client changes brief or adds items to the scope this would still be a variation over and above the Agreement.
If you wish to read more about
Tender Process – Click Here
Why do we need a Contract? – Click Here
Document Control
WHAT IS DOCUMENT CONTROL?
Every building has a design phase, a tender phase, a procurement phase and then a construction phase with the end result being a happy client and a design and building team who are proud of their work (and everyone was made a little money along the way).
This entire process relies on excellent communication, critical process met client expectations managed so everyone gets paid on time and everyone is happy. Within a building process, you rely on designers, materials supply, delivery, and freight companies. Subcontractors being on-site on time and completing there work as per the contract documents, authority processes and sign-offs, progress payments being processed, client response and payments, etc, etc, etc…
The administration of all these processes depends on a system of document control to answer some basic queries contractually of incoming and outgoing correspondence.
Query? Action? Response? Now the content will change but the basic premise – looking back on the historic events of a project we all need to track “how did we get here?”
Document control is basically the tracking of incoming and outgoing correspondence.
The WHY?
Australia is a very regulated country and we also have one of the highest rates of litigation in the world. Basically, the world has become a lot less trusting. So to trade as a designer, builder, and subcontractor it is not a can of if you will need legal help, it is when?
Now think of the client or one step onward – what about the client’s client… They may not have any building education what so ever and all they see is what is published on media.
The other issue is – managing clients’ expectations. People even in the industry have expectations of an end result or a specification. What the client thinks that they are getting and what has been detailed and built, often is not the same… managing the client’s expectation is a ticking time bomb if not managed properly.
The government and the industry have regulated as a result which has created an opportunity for legal and insurance backers. Basically, you can’t trade without their backing.
Before we get into document control I would like to discuss insurances and systems management because the background information is very important.
Basically, a builder is always looking to reduce their costs and therefore be more competitive. A builder needs mandatory insurance to protect the client, now these insurance companies underwriting the builder have certain policies associated with their risk. This rating is directly related to the builder’s management systems and quality assurance. So better the systems & QA – the insurance premiums are better.
And in some cases, if a builder has not any QA – well they are unlikely to get insurance. The rest is academic…
As a builder, the investment of a document control system is a no brainer.
TENDERING DOCUMENT CONTROL
Let’s look forward to an estimator’s end result. An estimator wants to win a tender and hand it onto the contracts team to procure the project. All our expertise, with first and second principles, benchmarking, etc. will mean absolutely nothing if you have a trade which you tender at the wrong price.
Now you have won a tender based on an assumption and now you have a hole to plug. The only way that this hole can be plugged is a procurement. That means everyone shares the pain right down the line by taking a hit in these subcontractors final contract price
Commonly known as “Putting the thumbscrews on the subbies”.
To make up lost profit – the builder has to be more mercenary with the client variations and it sets a path of a really hard project for everyone.
Hypothetical
Basic Contract Law 101 – As builders, we receive a set of tender documents that we price and supply a “bid” based on the understanding of a variety of documents at the time of the tender.
Now let’s say we win said tender and in the process of design development the documents change. Now how do you prove those changes were not a part of the original tender.
Now, this is the start of a potential “You said / We said conflict”.
OK next – what if you sent those tender documents to a subcontractor who is also tendering for another builder. Now, what if – that other builder messed up and sent out half the scope.
Now, what if you know that the subcontract is the best price and he or she didn’t download your tender set and made the assumption that the Builder A & Builder B tender package is the same.
Quite a few problems that need to be sorted – so the fundamental of good document control is the ability to track incoming and outgoing information. Filing and naming documents correctly and making sure that any upgrade documentation during the tender process is processed so all stakeholder is operating of the same tender set.
In document control, you need to be able to track
- What documents were received?
- How they were received?
- Who was the sent?
- Who received the documents?
- And when?
- Then you want to file this information where it can be easily found.
Builders will either live or die via there document control systems.
DOCUMENT CONTROL PROCEDURE
You will get a consistent pattern of my reiterating that in estimating processes – you do all the headline elements of tendering the same every time. A QA or Insurance auditor want to easily see the basic in and outgoing procedures but that also needs to see that the way you file information and name information is consistent. etc. Document control is based on a basic ritual for every project where you have a project name (&/or number) with all the subsections and standard checklists already populated. You have a template of this standard estimating file saved somewhere in systems files and you basically set up a tender file once a go-ahead has been given from your management, boss, etc.
Below is a step by step procedure for a good example of a document control with some time management tips.
Step 1 - Set up a Tender Project
Once the green light on the bid / no-bid, in theory – an RFT has already been given the once over and a basic document review has taken place earlier. The RFT file is then transferred to a tender folder and given a job name or job number. This file is normally set up in a central estimation folder in the following format.
- Client
- Consultants
- Tender documents
- Estimating
- Subcontractors
- Tender submission
- Post Tender Correspondence
- Award / Handover
Step 2 - Second Pass Document Review
Second, pass document review – This is a two-pronged process. The first point is to check that the tender set is complete and this is done by printing out the document register/transmittal and checking every document is correct and the correct amendment number.
Whilst this document review is taking place the estimator would be getting ready for supplier & subcontractors send-outs. This is basically cherry-picking all the pricing schedules, finishing schedules, etc. and highlighting the important areas within trade packages. Through this step, you will now know what trades and suppliers need to be contacted.
Depending on where the project is and how large or complex the project is, the estimator may start to formulate a list of possible subbies.
Step 3 - Subcontractors and Supplier RFQ
The tender documents are then uploaded to a document control system. There are a number of systems available in the market with very similar functions. including the following processes:
- Project creation
- Project data (Such as key milestone dates such as site visits, tender close, etc, tender rules & site-specific procedures, etc)
- Upload tender documents
- Create trades
- Create tender packages (drawings matrix)
- Create trade lists (with input from the contracts team)
- Dispatch trade packages
- Addenda & messaging
- Quote, receive and upload.
Basically, the estimator can see who has looked at the tender set. When the subcontractors have downloaded the documents, etc.
The dispatch of the packages is normally a click of a button, and ongoing addenda are very easy to process. Messaging and correspondence are tracked and then when a quote is returned you can see if the quote has included for any or all of the addenda.
I have use Tender Centre, Project Centre, Bid Contender, Aconex, Hightail, Drop Box, ICloud, BCI Australia, etc).
I can’t really say that one is better than the other as most of the software providers are constantly upgrading and trying to achieve a market edge against their competitors. All I would suggest is to review apples for apples, see what other opportunities are available, the license costs should be reviewed over a five year period as maintenance agreements can be expensive.
Step 4 - Filing of Quotes
In theory, the document control systems basically, want the subbie to upload their quotes on the document control system. This basically closes out the full loop.
The problem with suppliers is that some are not very IT savvy and they still don’t trust these systems. Plus many subbies get nervous using document control systems especially now there are so many available on the market.
What I would suggest – is to give the subcontractors the option of sending their quotes to a separate email address specifically for tenders. i.e. Tenders@####. Now if you get the time – sure the estimator can then upload their quotes up to the document control system post-tender.
Within the tender filing system in subcontractors – I would suggest you have you trades listed in either or both trade codes &/Or trade names. Most building companies have trade codes to procure a package. (6400 – Electrical Subcontractor). Basically, you save all the subbies into like trade files. This means when you open up a trade package you can quickly see how much coverage you may have on a certain trade as a quick glance.
When I send out tender requests I ask that the subbies return their emails in the following naming protocol: Subbies Name – Trade – Project.
When you receive a quote you can also manually change the name of the email and drop and drag the quote into their appropriate trade package.
I would also check that the trade package has included any required schedules plus I often read the exclusion first. If that trade is excluding something that you need to be included within their package – It is best to get right on top of the issue and send out email requests to rectify any scope issues.
Step 5 - Tender Subission
The tender submission is made up of a number of non-priced and priced criteria and is normally filed in a location and dated accordingly. I use a Year / Month /Day / (1) prefix to most of my filing. Strictly speaking, you are changing the document, however, you often have an email of the file named the same so I have used this prefix system that helps you file mass email during tender from consultants clients and subbies.
Getting back to a tender submission – the schedules are combined into a document and then send to the client and possibly followed up with a hard copy document. The submission is a document that is a price based on assumptions and documents at a place in time so all associated estimating documentation, clarifications, schedules are all filed in a similar manner as a submission revision.
All estimating systems are normally locked off as well.
Step 6 - Post Tender
Normally the client will ask questions, chop, and change and there may be a number of rounds after the initial tender submission.
The ritual of the document control for client correspondence, submission revisions, and estimation software updates must all be repeated every time there is a query from a client.
The hope is that your company is the last at the table discussing contract signing.
Now the contract signing could reflect a number of revisions. All these changes and negotiations need to be tracked.
Meanwhile – as you get closer to winning the tender in the post-tender rounds. As your competitors drop off the race – their subbies that may not have submitted a price to your tender request will slowly filter through to you. (This is where your relationship can be developed for the next tender and if you had a trade that wasn’t a cluster – these additional prices filtering through could close that risk element.)
If you are really lucky – that rogue price could be the Bolter (The Best price in the market which is fully compliant). When an estimator gets close to winning a price – during the post-tender rounds there is extensive checking and cross-checking that your number is right.
Step 7 - Contracts Handover & Record Keeping
If you win a project? (Contract Handover)
The time delay can be quite a long period of time. But you now need to hand over a summary of “How We Got Here”. This is a start to finish of the tender process, addenda, changes to the scope during tender negotiation and all the headline in the contract conditions that affected estimating decision. The opportunities and the risks and also the subbies who helped win the project that should be given special consideration. The estimator normally “drops a budget” which is a trade coded document that sets the budgets for the accounts department and the financial management of the project.
If you wish to read more about
If you lose? (Record Keeping)
Sometimes losing against a competitor is the best way to analyze where you went wrong and also where your competitor is doing things smarter or cheaper than you. When you win project information gets filtered to you over the life of the project however often you get nothing to see where your price sat in the mix.
However, if you lose – you learn everything from a number of sources. Sometimes you can strategically lose a tender to find out more about a client and other builders. Strategically you can apply that knowledge against then on a bid that you are really interested in.
But either way, an estimator post-tender gets busy.
If you wish to read more about
Tender Process – Click Here
Bid / No Bid Form
Should we Tender this project?
Within the cornerstone Article – “Tender Process” which spells out a sequence of the process. The Client has sent out a “Request For Tender: (RFT), The builder has done some type of review and during this meeting. The formalize the process it is often good to place on paper why or why not you tender on the project.
This formal process is often called a Bid / No Bid form. The form is filled in and at the end of the process – spits out a number to give a realistic probability if the organization can compete. This form asks question including but not limited to the following:
- The complexity of the project?
- Have we history of completing similar works?
- Any history with the client and /or the region?
- Resources & staffing?
- Capability to service the project if won?
- Who is our competitor?
- List of risks?
- Have we got any market advantages etc?
- Are there any political advantages?
- How can We win the project?
- Are there any other tenders approaching that have a better chance of winning with our resources available?
- Etc?
The thing with this form – the number indicates a less than desirable probability to tender however what it does do – it formalizes the need for resourcing and often helps the management to walk away from tendering project where you haven’t got a chance of winning and you don’t need to spend money of a bad bet. But even though the form may spit out a bad number – often management will decide that the project is worth the bet.
Your senior management is gambling on their estimators… It is a huge compliment in your ability and a large responsibility.
If you wish to read more about
Tender Process – Click Here
Trade Packages
Tender Process Snapshot
Within the cornerstone Article – “Tender Process” which spells out a sequence of the process. The Client has sent out a “Request For Tender: (RFT), The builder has done some type of review and agreed to submit a price. An estimating folder has been set up in the filing system. In your Document review, you have figured out if the tender is a Hard dollar or a D&C type tender and the level of documentation has been evaluated. There are other types of contracts and the tendering varies accordingly, however, the vast majority of tenders are either “Hard Dollar ” or “Design & Construct” type tenders. (Some tenders are a combination of both).
A generic “Request For Quotation” (RFQ) is drafted which has all the headline information, site-specific, tender rules captured. Then the tender RFQ is modified to suit either a Hard dollar or D&C type tender.
Depending on if you have access to a “Document Control System” of a “Document transfer App” the document control will vary to suit the cards you have been dealt with, but the fundamentals are the same.
You now either create trade packages in a document matrix within a document control system (you basically tick the drawing you want to send to the trades).
The Document APP – you combine the drawings int a packages “Zip” file and send accordingly. Emails and zipped documents work up to about 10 meg of data and greater than 10 meg you start looking at document control apps as a link attached to an email request.
Now another tip, It any of these packages have documents with embedded links to industry data of photos, etc… Most of your receiving subcontracts computers would naturally have Virus Protection that ma bounce you email RFQ into a Junk or Spam folder. So when your files get larger than 10Meg – you are looking at document transfer systems as Icloud, Dropbox hightails, etc.
If you wish to read more about
Tender Process – Click Here
TYPES OF CONTRACTS AFFECTS
THE QUALITY OF THE TENDER DOCUMENTS
So the contract type normally points to the quality of the documentation. Documents for the hard dollar are normally good and D&C documents are schematic and poor.
Often in a D&C situation, there are fewer documents, so an estimator may choose to send out all architectural drawings and selected trade packages. This strategy will always instill criticism from smaller architectural trades. But in a hard dollar tender where the packages are normally defined – there is no excuse not to send out trade specific packages especially if you have access to a Document control system.
One thing that you need to understand – When you are sending out an RFQ to subbies – At that stage, you don’t really have a full understanding of the documents (at high Level you do – but the detailed – no).
So an estimator will often be safe than sorry – That is – attach the drawing in the set if you are not sure. So some trades will always complain about redundant documents to be sent at tender. But if you ring them and get onto the from foot, take a bit of ear bashing and then thank them as many times that you can during a brief conversation – things will roll on without too much disruption.
Tendering is like an endurance race with a few sprints in between. You can take your foot off the petal at all.
Hard Dollar Tenders / Documentation
In a hard dollar tender, the Client manages the design and documentation, authority fees and takes on all the design risk. The builder prices the set of documents at the tender, wins the tender on price and then if the documents develop into construction drawing drawings and there are changes or the documents are wrong in any way – then this is addressed via a variation. Hard dollar tender documentation is normally more developed having already had DA and CC approvals completed. These documents are easier to break down into tender packages and any ongoing addenda relatively easy to manage during a tender. The builder does not carry any design and construction risk, If is not on the documents – it is excluded.
Design & Construct Tenders / Documentation
The process of tender in very similar however the D&C Tenders carry the design risk and construction risk on a project that hasn’t been documented. So anything that is produced through the design development is priced as a risk element and normally covered off by benchmarking and preliminary sketches from the builder’s internal consultants. Often these documents have been submitted to for DA with no approvals, Architectural drawings, Basic concept civil drawings and a clients performance brief are what you price off.
TRADE PACKAGES STRATEGY
Your Trade packages are obviously linked to your pricing strategy – Hard dollar tenders would have one round of send outs and there may be a few addenda or information issued from the client.
The D&C tenders, on the other hand, are may have less documentation however the ongoing work through the duration of the tender is high and you would normally have at least two to three rounds of FRQ send outs however backed up by many by lots of additional information and tender instructions. Again- the documents can be very basic and need extensive Design management and estimating research to derisk the final a number for the Bid:
RFQ 1
- The bulk of the trade gets sent out in around one RFQ.
- Wet trades – You would ask for a schedule of rates and then confirm their price one structural engineering is available.
- Some Service trades like Fire services and Electrical you may ask for a subbie to provide a D&C quote. You would also request consultant fees to possibly to ratify the subbies design component.
- Other services trades – you normally get consultants engineers to provide a fee proposal, Design sketches and also a scope of works. The scope of works is important as you can use it as a checklist for services trades pricing the trade.
- Some architectural trades may need a BOQ to price. If you have the time I would hold off on those trades however if tender duration id slim – Send out the request with the understanding that you will potentially be plagued with emails and phone calls. But the phone calls will also help you prioritize your workload.
RFQ 2
- Any addenda ;
- Any information from a Site visit or tender notifications., or responses to RFIs;
- BOQs for requested trades, wet trades & the like, etc.;
- Scopes of works interpolated from consultant fee proposals;
- Consultants design sketches (structural , civil, Mechanical, Electrical, hydraulic and fire would normally be the head line help required)
Design & construct Challenges
You are responsible to finish the design and construction.
Here are the problems – What if you have a client who has tried to save money and have done just the bare bones to get a concept through the council.
Now during the tender, the competing builders who are pricing the project start asking a lot of questions.
One thing leads to another and an addendum gets issued by the client and document control now needs to be completed checked and any changed documents require to be sent out the relevant affected subcontractor & supplier.
As a general rule – When an addendum is issued it can take a good business day to manage the transfer of information and possibly another day of phone calls.
Now that is one addendum – What is there is 5 or 10. Does anyone want to become an estimator? If you are ever going to see a document control officer lose their shit – lots of addenda will do it.
Most tenders have a mandatory site visit when you meet the person who is running the tender – normally that is a clear indication of the pending difficulties especially if the person who is running the tender process is inexperienced (Green).
The subcontractors will complain and will be reluctant to tender. So the domino effect is the amount of Billing and risk will be high. Instead of pro-active tender, you are now in a reactive sprint. All the time allocated to finding the smarts in the project will be evaporated quickly.
Now bad tender documents issued by a client – doesn’t necessarily mean all bad news – it can also mean opportunity. The strategies on the state of the document, who the consultants are can be a license to write variation money.
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Tender Process – Click Here
Subcontractor & Suppliers FRQ
LOOKING FORWARD
Choosing a “Subbie list” is one thing, But the “How” and “When” how you send out an RFQ is just as important. The end result of a “Request for Quotation” (RFQ) is a Quote which is fully compliant easy to compare Apples for Apples and easy to file.
“Second Principles – Beautiful”
So the way that you get that outcome is to use a really good secure document control system that monitors trade packages, Subbie invites lists and user-friendly for the subbie.
The software needs to have the ability to relate all the headline requirements from the bid manager to the subbie. This core information (the Headlines) is pretty consistent with every tender will normally include:
- Subbie Close Deadline
- Site Visit rules.
- How to submit the quote
- Point of Contact for Queries
- How to submit a quote
- Naming protocol – ( Company name_Discipline _Project name).
- Quote Validity
Then if there are addenda and extra information issued – this information can then be easily tracked and communicated to the subbie.
The next layer of information that an estimator want to be covered off would include:
- Key elements of the Clients Brief;
- Client Returnable schedules;
- Service trade MUST submit service schedule in the specifications
- Any site-specific variables or house rules.;
- Make sure that the subbie prices the correct tender set (and not from another builder).
- Ensure the subbie allows for plant and materials to complete their package including EWP and cranes, etc?
- Capture if the trade is Supply &/Or labour?
- Long lead times
- Just keep it simple
“The Quality of the send out is directly related to the amount of work the estimator has to do when vetting the Quotes.”
So you want to get right…
If you wish to read more about
Document Control SOFTWARE
My point of reference for Document control software has mainly been from a point that here you are – Now use this software. So In the future, I will probably write a bit of a review on the software that I have used in the past.
So I can comment on cost, nor the ongoing maintenance patience agreement costs. They all have their little quirks and that all fall down sometimes if you work them hard enough. But to most of these organizations credit – it is rare to lose documents in a crash as the systems are mostly on an external server. So even if your computer crashes, normally the documents are still unharmed.
I have used the following software but I am sure there are many others.
- Bid Contender.
- BCI Australia
- Estimate One
- Tender Centre
- Aconex
I am sure there are many others, however modern “Document Control” – The dispatch of the packages is normally a click of a button using specialist software.
Document control systems are pretty cool innovation and a massive time saver,
But they come at a cost.
The software normally runs with one-way traffic and start by the following:
- Set up project parameters
- Upload tender documents
- Set up tender packages normally some type of matrix.
- Set up trade lists
- Set up subbie lists within
- Dispatch tender packages (track ongoing addenda)
- Receive quotes and track addenda compliance
- Messages Capability
When selecting a system to subscribe to – all I would say – is to talk to the subbies who you use the most. You will find that the more comfortable the subbies are using document control systems. Life gets easier – You also need to understand that some subbies are still computer illiterate. You want these key trades to engage in your system – after all, they are the end user.
Document APPS
There are other straight document transfer APPS as well – You normally upload the documents in packages or a file system and then you can give your subbies a link to download one or all of the documents. They are pretty easy to use and you then attach the link to emails and send the packages out. This method is entirely dependant on the skill of the sender’s document control. But the flip side of these systems, many of these systems are free.
Examples of these type systems are “Dropbox, Hightail and more recently Icloud”. The trick is maintaining control of who and what the subcontractor sees. Straight emails and links have security issues and there is nothing stopping a subcontractor trying to gain a leg up with an opposition builder by simply forwarding said emails.
Phone calls prior to the subcontract list are dispatched is always the best as it engages the subcontractors into your tender and you also want the subbie to downloading your documents so you can control the outcomes.
If you wish to read more about
Document Control – Click Here
BOQ & ESTIMATING STRATEGY
How you Bill and how you Rate a project is linked to the Quality of the RFQ. You want to at least develop a scope of works (SOW) on most for certain high-risk trades and then the lower risk trade you can adopt a bare-bones approach and rely on the second principle quotes and associated quantities in the quotes.
(I would only do this on basic architectural trades that are easy to check the quantities at a push).
The Billing and scoping are ideal to be done a few weeks prior to Subbies close just to give those trades that need a lot of love the time to use your BOQ. You may choose to hold off sending out the documents for selected trades that you know will ask for a BOQ.
BUT – if you think there is any doubt that you want to get the time to get the Bill out to market – just send the drawings out. Yes, you will get heaps of emails and phone calls, but is better safe than sorry. Again Phone calls to these subbies will relieve the pain and the distractions.
So you have choices and every tender is different and your workload and time management will be a factor of the strategy. So either sends the BOQ supplies out as a second run or sends in one big hit.
There are also certain trades that won’t tender without a BOQ this can vary regionally and what time of year it is. So these trades you would consider a priority when knocking up a BOQ:
- Preliminary Costs like site fencing and scaffolding
- Civil trades & earthworks
- Masonry packages including retaining walls
- Formwork
- Reinforcement supply and fix.
- Concrete supply
- Concrete Pour and place,
- Plasterboard
- Most Finishing trades
- Plumbing Fittings & Fixtures
- Bathroom Accessories
- Wall cladding and roofing
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Estimating Strategy – Click Here
Phone CALL STRATEGY
The bare bones approach – the idea is not to Bill every trade – rather be ready to bill everything in a “Push”. the entire strategy hinges on the subbies engaging into your tender. Either way phone calls are the key to keep your subbies informed and if you listen more – you will learn. iPhones and technology are changing and if you what to also give those a personal touch but “kill may bird with one stone” – try this… It is a barebone with a personal touch…
Most mobile phones have an App where you can record your voice.
Record a generic message and then send a message via direct email.
Try to use “thank you in the first and last sentence of the message.
Either way phone calls are the key to keep your subbies informed. The Lead Estimator running the project should always ring the critical services trades(especially on D&C services).
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Phone Calls – Click Here
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Tender Process – Click Here
Subbie Lists
THE MATH
- If you refer to the Australian Method Of measurement you would note there is a list in the order of 60 trades and when you break down some selected trades in materials supply and then Labour. So this number can easily bell out to 80 trades. There are big and small projects so let’s say there is an average of 50 trades per project.
- The ideal situation is to achieve a cluster of 3 prices to each trade package. (it is harder than you think)
- Now to get a cluster of three prices lets to say we need to get 5 compliant quotes. (even harder)
- Let us say we have a 50% of these trades that tender (for various reasons).
- So we have 50 trades with about ten RFQ per trade and yes 500 subbies to keep track of.
Document ControL system Subbie List
Document control is usually by a proprietary document control system or it is via a number of free APPs that can share links to tender. Either method you need a subcontractor list. As I have indicated above – a subbie list can easily be over 500 names of subbies and suppliers.
Then on the D&C project, you will also have a list of consultants. Keeping up with addenda and tender notes during the tender process can become overwhelming unless your disciplines and systems aren’t rock-solid. The grind of document this part of tender in a stretch even for the most hardened estimator.
Most of the document control systems have the capability to import subcontractors lists. They can create groups where you can assign trades to a particular skill set or even a region. Once you have got the database set up the system, you also have the capability to create “preferred subcontractors lists” so if you have a negotiated tender you can quickly set up projects and sent out tender packages with ease. The systems normally have a contact name for each company as a standard feature so when you send out drawings and addenda the interface is normally personalized and automatic.
These systems do not come cheap and are normally not cheap – so do your research. Large companies have a larger outlay and by default have a large amount of tendering so in this situation a proprietary document control system is a standard and affordable overhead.
Even though you have this database within the document control software – I always suggest you do a backup and create an Excel list of every project.
APP links Subbie List
As I mentioned above the proprietary document control system does not come cheap. On the other hand, document transfer apps are normally Free. Some have really good feature and even if you do need to purchase apps, the outlay is very small.
But if you are a smaller organization or you have a complicated file system to manage – a document transfer app is the way to go. And many of these apps are very easy to use have a reasonable degree of security and with a little bit of thought, you can manage large and small projects. If you have the addenda tender process this can be challenging however if your strategy is partnered with phone calls and good communication.
You rely on and emails and your record keeping is via a subbie list that is manually adjusted and updated. When you send out the RFQ it is in the form of an email with a link. You can send multiple amounts of contacts using the BCC function in outlook however there is an inherent risk that one day you will many an error in your discipline and send out a list that all the competitors could see. This one error could destroy years or relationship building. So do your research.
Your lines of communication MUST be private. If you are tired and you click the wrong button the resultant backlash can be devastating to your tender and future tenders.
SUPPLY LIST STRATEGY
Here is a list of strategies to consider when tendering:
- As an estimator, you want to find a cluster of Subcontractor pricing. A cluster is a group of prices that Are preferably within 10% of each other.
- Then you also want to contact your competitor’s subcontractors so you can understand the market.
- You obviously want to keep you gun subbies away from your competitors.
- You also need to engage your own Contracts team to provide any smarts and about the project.
- Face to face with key subbies that you believe will give you an advantage.
- Your first driver is to get a least one quote in every trade.
- The second driver – is to get (3) quotes in a cluster.
- A phone calls to constantly poll how your subbies are tracking. Everyone needs to feel appreciated and you are asking these subbies to take a gamble on you.
- The “Barebones tender method” relies on your relationships to be able to pull at least one tender per trade. But without a cluster of trades, you carry a lot of risk and stress.
SUPPLY LIST AND YOUR CONTRACTS TEAM
To engage your contracts team is somewhat of a double-edged sword. You can learn little insights into there thought patterns (good & bad). But also extract information useful to the project. You will soon note that the supervisor will harp on about which subbie they what to use and design management issues. Design management issues like we should have designed detail in a different way or programmed some processes differently.
Now all these things are relevant in the correct forum but if you haven’t got a lot of time in a tender this conversation can be like quicksand. As a general rule, all estimator s should get out to the site, even better get your hands dirty.
So trying to keep your contract team happy with the subbie you get to tender – Often your contracts team will have very definite ideas about subcontractors but you still need to strive for the primary goal – a cluster of prices. It is often hard to keep your contracts teams opinions herd and do your job. But when it does – make a big deal about it whilst you can as more than often you cant. You must find a number that is the market. Apologies later when you have won the project and the site team has a job.
Supervisors often forget that we are a business overseeing and managing other businesses to build stuff. Staff on site are often are a heap of Alfa males that are only interested in their world on-site. Generally, they want to use their mate or a subcontractor that is easy for them to manage. This is perfectly reasonable however there is a financial aspect to every project and sometimes you have to procure a trade that needs more managing on-site or less reliable (a known quantity maybe).
Whatever is the reason – having a boys club mentality and using the same subbies is great in the short term but will be the kiss of death to the estimator trying to get other subbies to quote. Eventually, this boys club attitude will kill any business in a competitive environment.
I only have one rule in regards to subbies tendering – Those who tender to get the last swing at the job. If you get a situation where a subcontract knows that will get a second chance to tender if the bid is successful and won’t invest time in tendering – well this is the cardinal sin of any construction company.
In isolated areas – this guideline/rule can be hard, however, if a subbie thinks they have a monopoly in the project well it will eventually hurt everyone missing out on the tender against an out of town subbie that is willing to work and travel. regionally I always get a mix of local and out of town subbies – just to keep the competitive juice burning.
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Tender Process – Click Here
Estimating Strategy
Estimating Principles
First Principles
Which is rating up the materials, plant, machinery and labour using a summation method. These factor rates are based on Years of experience and very accurate historic records.
Second Principles
Is packaging the documents into trade packages and contacting a number of subcontractors and request a quotation. The idea result would be to get three or more prices that are relatively close together (A "Cluster" of prices).
Bench marking
The price that has been formulated form actual historic record from construction. You use these rates to price "like" buildings.
The classic estimator will always want to scope or bill every trade. Most estimators also want to bill every trade as it is truly the only way you can be confident that you have got all the scope of works. When teams of people get involved in a bid I always feel a little nervous as you are never sure if the communication from one person handling one trade passes on the correct information to another team member.
But you have to trust in everyone training and get the job done in the allocated time. So let’s say you have received an RFT and you really want to tender and don’t have the resources to do so. The call goes out and we have to find away.
Now on hard dollar tenders – it is pretty easy to find an external QS to share a Bill amongst your competitors. From here you are basically in a dog fight race to the cheapest price.
But when it comes to a Design and Construct tender – It is normally a waste of time getting a share BOQ as to many items will require re-billing once design in house consultants issue design sketches for pricing The next issue – as some of the D&C trades need a scope of work or a BOQ to provide a price.
Tender Strategy
If you review the table below – You will note that all trade would have a Request For Quotation (RFQ) sent and at and once the quotes come back (hopefully in a cluster) you would start to see if you would get trade coverage.
This is normally in the last week before tender close which is obviously not ideal.
How would you know this – The answer is simply by placing a number of phone calls to get a feel for optimism or share panic. The phone calls to the trades that have ” optional” in the BOQ column would also give you a feel where you stand running into the final week of tender close. Some trades have the capability of doing there own BOQs, others do not. Again making phone calls would close off that question.
Description
Quantities
First Principles
2nd Principles
Bench Marking
Consultants
SOW
NA
Y
Y
Authority Fees
SOW
NA
Y
Y
Demolition
Optional
Rates
Y
Y
Civil Earthworks
BOQ
Rates
Y
Y
Detailed Excavation
BOQ
Rates
Y
Y
Formwork
Optional
Rates
Y
Y
Concrete Supply
BOQ
Rates
Y
Y
Reinforcement Supply
BOQ
Rates
Y
Y
Reinforcement Fix
BOQ
Rates
Y
Y
Concrete Pump
BOQ
Rates
Y
Y
Post Tension
Optional
Rates
Y
Y
Precast
Optional
Rates
Y
Y
Tilt panel
Optional
Rates
Y
Y
Structural Steel
Optional
Rates
Y
Y
Framing
Optional
Rates
Y
Y
Roofing
Optional
Rates
Y
Y
Roof Hatches
Na
tbc
Y
Y
Roof Safety System
Optional
Rates
Y
Y
Roof Walkways
BOQ
Rates
Y
Y
Roof Platform
BOQ
Rates
Y
Y
Masonry
BOQ
Rates
Y
Y
Render
BOQ
Rates
Y
Y
External Linings
BOQ
Y
Y
Y
Windows & Doors
Optional
Rates
Y
Y
Roller shutters
Optional
Rates
Y
Y
Metalwork
BOQ
Y
Y
Y
Partitions & Ceilings
Optional
Rates
Y
Y
Doors
Optional
Y
Y
Y
Operable Walls
Optional
Rates
Y
Y
Carpentry & Woodwork
BOQ
Y
Y
Y
Waterproofing & Tiling
Optional
Y
Y
Y
Wall & Floor Finishes
Optional
Rates
Y
Y
Painting
Optional
Rates
Y
Y
Internal Fittings & Fitments
BOQ
Rates
Y
Y
Services Trades
SOW
Schedules
Y
Y
Kerb & Gutter
BOQ
Rates
Y
Y
Asphalt & Pavements
BOQ
Y
Y
Y
Line Marking, Bollards & Wheel Stops
BOQ
Rates
Y
Y
Traffic Management Systems
Optional
Rates
Y
Y
Directional Signage & general Signage
BOQ
Rates
Y
Y
External Furniture & Play equipment
BOQ
Rates
Y
Y
Fencing, Gates, and Barriers
BOQ
Rates
Y
Y
Irrigation system & Drainage
Optional
Rates
Y
Y
Landscaping
Optional
Rates
Y
Y
External Furniture & Equipment
Optional
Rates
Y
Y
Council Land (Works Outside Boundary) Infrustrauction
BOQ
Y
Y
Y
Roadworks (RMS)
BOQ
Y
Y
Y
Preliminaries & ORs
BOQ
Rates
Na
Y
Tender Strategy
The idea of this bare-bones approach is the hands-on approach mainly associated with D&C type tenders.
To summarise this approach – You are pricing all trade via Second principles and plugging the holes with either a BOQ or first principles estimating.
Step 1
RFQ and Bench Marking on all trades
RFQ to every trade and supplier. (your goal is to receive three prices closely clustered together).
Services trade normally has a specification with an SOW and schedules – Request that they are returned filled in.
Wet Trades – Often you will want rates based off quantities (Pick a number to get things rolling)
Step 2
Phone Call
Most architectural trades can normally do their own bills and most times you can pick up any issues any Subbie comparison stage. But there are some trades that need to be help reading drawings. You want to isolate those trades. Now If you are not going to get ant prices without a BOQ – well the rest is academic (start billing).
Step 3
BOQ and 2nd Principles plugs
Most architectural Trades can normally do their own bills and most times you can pick up any issues any subbie comparison stage. But there are some trades that need to be help reading drawings. You want to isolate those trades. Now If you are not going to get ant prices without a BOQ – The rest is academic, no quotes – start Billing. Obviously, some outsourcing could be on the cards,
Step 4
Last Resort
Estimators always are looking for the best science, but sometimes it is simply hard to get subbies to price for one reason or another. Benchmarking from past projects is obviously the last option. Websites and then absolute last option would be building materials cost guides like Rawlinson & Cordells (these publications are a guide only). I would normally prefer to buy some time by placing and allowance for missing trade coverage as a provisional sum.
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Tender Process – Click Here
Cost Plan & BOQ Formats
Pricing Process
The basic pricing process of any business is that you walk through three steps to a point that you can have actual data at the completion of the project. Then by basic math – you can interpolate those costs $X/m2 over the footprint of the building. Now if you can take out all the variables of a project and bring one project back to apples for apples – this cost can be applied to m2 rate for future tenders as either feasibility – This rate/m2 is called “Benchmarking”.
On architectural trades that are very similar benchmarking is a powerful and quick method to either check overall costs or if you are in a bind, you can refer back to older projects and plugin an estimated cost and simply escalate the cost based on published CP data.
QUANTITIES
Quantity or surveyors work out quantities
ESTIMATING Principles
Estimator applies rates to the quantities and group costs into Trade Packages.
Procurement
Project Managers and Contract Administrators procure the packages.
A “Cost Planner” uses this built data (Benchmarking) and industry rates often in their role to smash out quick numbers across building “elements” – floors, walls, roof, internals, etc. in approximately 15 to 20 key elements of the building. I really good estimate can break down these “elements” into percentages of the building cost too great accuracy. But this is still the purest form of estimating and is called “Elemental Cost Planning”.
In most cases, cost plans are used in feasibility or huge D&C projects where documents are simply not available – so these people need to extrapolate data from any manner of form to get to a number.
COST PLAN FORMAT
The list below illustrates the headlines fan Elemental Cost plan.
- Consultant Fees
2. Authority fees, (% of Construction Costs)
3. Demolition ($/m2)
4. Earthwork & Site Stabilization ($/m2)
5. Structures (skeleton) ($/m2)
6. Internal Walls ($/m2)
6. External walls ($/m2)
7. Roof ($/m2)
9. Finishing Trades ($/m2)
10.Internal Fittings & Fitments
11.Services trades ($/m2)
12.External Works ($/m2)
13.Provisional Sums ( Rate based of science)
14.Preliminaries (% of Construction Costs)
15.Overheads (5 % of Construction Costs)
16.Margin (% of Construction Costs)
So a good example of a building element with a cost plan would be external walls. Looking from outside to in – the rate for the masonry on the outside skin, then structural framing, insulation, internal lining and painting as one rate, any windows or door would be an “extra over cost”.
On a BOQ – these building elements are broken down into great detail and normally follow a procurement pattern which is also linked to trade cost codes.
The way in which you procure the trade package will be reflected within the BOQ.
MEASUREMENT RULES
The Australian Standard Method (Green Book) is a very disciplined document that spells out a way that all things should be measured and by default – the way construction should be procured. Over the years the building has become more a management exercise where we are less hands-on builders but more managers of a process. So components have been broken up into trade packages and some packages have been absorbed and other packages have been broken into smaller components to reduce risk to the builder. So again the recipe in which one builder approaches a project may be different to other builders. The system is the same to give you a fighting chance not to miss building items under the stress of a bid. Bill the same way every time and you are less likely to miss something.
Most external BOQs (produced by consultant quantity surveyor ) normally have a note stating that the measurement rules are based on an “Abbreviated format of the Australian Method Of Measurement”. This reference to this Australian Standard is a constant base throughout all of Australia, however, it has site-specific and regional twists. The standard is not mandatory it is a guideline.
So even if you are producing a BOQ – follow the basic elemental format.
BOQ or Builders Bill Format
I have presented the list below the same way as the elemental list above to illustrate the way I approach a systematic way of billing. In a builders bill, you would most likely not have these first layer headings however the list below would be consistent with a larger tender. Any specialized trade packages computer flooring, wallpaper, etc can be inserted into the bill within the trade elements (groups).
So the elemental list can expand out to over 50 to 80 trade headings depending on the type of project, inclusions, etc.
- Design consultants including architect, structural engineers, civil engineers,
- Town planner
- Services engineers – electrical, mechanical, fire, hydraulic, etc
- Structural & civil engineers
- Stormwater management plan
- BCA and /or fire engineer,
- Part J consultant, PCA
- Environmental scientist, contaminant report, hazmat & asbestos report
- Geotechnics report
- Reports – flora & fauna, flood & traffic.
- Water design fee
- Sewer and water fees
- Building over sewer fees
- Operational works
- Footpath bonds
- Building zones
- Road closures
- Flesh water acts
- Inspection fees
- Fire department inspection fees & sign off.
- Fire brigade call out risk
- Hydrant & FHR flow test
- Pressure tests
- Hazardous material design
- Road services design fees
- Demolition
- Contamination
- Site clear
- Bulk excavation
- Site stabilization
- Civil hydraulics
- OSD, pits, tanks, and bio basins
- Piling
- Detailed excavation
- Formwork
- Concrete
- Reinforcement
- Post tension
- Precast/tilt panel
- Structural steel
- Framing
- Roofing
- Roof hatches
- Roof safety system
- Roof walkways
- Roof platforms
- Masonry
- Render
- External linings
- Windows & doors
- Roller shutters
- External screens, hoods, sails & shade clothe
- Metalwork
- Partition
- Ceilings
- Doors
- Operable walls
- Carpentry & woodwork
- Tanking & waterproofing
- Tiling
- Carpet & vinyl
- Epoxy
- Painting subcontractor
- Joinery
- Toilet partitions & benches
- Bathroom accessories
- Mirrors & glazing
- Plumbing fittings and fixtures
- Commercial kitchen & laundries
- Appliances & White Goods
- Work stations
- Loose Furniture & FFE
- Plumbing / Hydraulics
- Syphonic
- Rainwater harvest
- Fire hose reels and hydrants
- Fire service – Wet fire (sprinklers & suppression)
- Fire services – Dry fire
- Fire extinguishers and blankets
- Fire tanks, booster pumps and assembles
- Electrical HV / Substations
- Electrical service
- Security services
- Mechanical services
- Building management system
- Vertical transport
- Kerb & gutter
- Asphalt & pavements
- Line marking, bollards & wheel stops
- Traffic management systems
- Directional signage & general signage
- External furniture & play equipment
- Fencing, gates, and barriers
- Irrigation system & drainage
- Landscaping
- External furniture & equipment (FFE)
- Council land (Works outside the boundary)
- Road works (RMS)
- Provisional Sums
- Prime Cost Items
Management team
- Site staff
- Temporary fencing & hoarding
- Site accommodation
- Materials handling including cranage
- Scaffolding
- All other indirect costs
- Systems management recovery
- Document control recovery
- Long services levies
- Professional indemnity insurance
- Public liability insurance
- Overhead recoverable
- Bank guarantees
- Design risk
- Construction risk
- Margin
It should be noted that this list above is just headings which could also have subheads and another layer below. The body of the packages could be as little of 10 Lines or in the hundreds. So a standard BOQ is a small to the large novel.
RFT PRICING SCHEDULES Format
The modern-day client normally is well educated or have some project manager experienced in the process to run tenders and many of the shopping and bulk warehouse chains are basically building to a building guideline or building brief. Either way – you will often have a client that wishes to have all their projects presented in a similar way so they can compare builders apples for apples. If the client schedules are similar to the building companies’ standard format then that is normally not so much as an issue but is a client wishes to reinvent the industry standard of measurement – I would suggest a few paths of travel.
For government clients – suck it up and figure away, as if you don’t fill in the schedules the way they wish. Then you can get marked down in the tender appraisal in post-tender.
For private clients fill in the tender the best way possible to suit your own tender format and simply place a note in tender schedules as either “Included or refer to clarifications).
Produce your tender in the normal format and then create an excel spreadsheet that can assign costs to the client’s pricing schedules accordingly. Near enough is normally good enough if the allocation is a real indication of the cost that the client has focused on. Remember the client wants to see that you have captured a price in the schedules.
If you wish to read more about
Tender Process – Click Here
Phone calls
Ensure the Subbie IS engaged
1. I can give you a scenario in most tenders where I hear – ” I didn’t submit a tender because ….” or even worst “I didn’t know you guys were tendering” the reasons for email not hitting their targets include:
- Subcontractors and suppliers have varying degrees of computer know how.
- Addenda can be missed if the subbie doesn’t read the income emails.
- Plus a subbie may download another builder documents and assumes that both builders have the same package.
- With document control, they don’t realize that an addendum has been issued.
- A subbie may be going on leave and you need a quote before that person heads off.
- The person on your tender list has left the company.
- Etc, Etc.
2. I suggest you have two to three rounds of phone calls at the following times during a tender:
- Preferably prior to the documents being issued (but at least your key subbies)
- Every Addenda (yes I mean every addendum)
- Before site visit
- a couple of days prior to tender close
- And after tender closes to chase any rouge trades that didn’t submit or running late.
Development and maintaining subcontractor and supplier relations is part of the role – you must be able to communicate and extract information quickly.
Tip 1 – If you somehow to work in the word “Thank you” into the first sentence and last sentence of every phone call. A little honest humility goes a long way.
Tip 2 – Try to combine a number conversation into one phone call (write down your queries and keep to script) – Very Efficient.
Tip 3 – For Addenda – Use a recording of your voice and send a recording to the subbies as a group email. It saves lots of time. But still, ring the key trades.
If you wish to read more about
Tender Process – Click Here