Join Australia's most dynamic and respected property investment community

Which option to choose for tendering construction work

Discussion in 'Development' started by Rooky, 25th Feb, 2016.

  1. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    60
    Location:
    Perth
    We are awaiting DA for 4 3-story townhouses in Hawthorne, Brisbane. DA should come any day now. We are in dilemma regarding which method to use to choose a builder from ones we have shortlisted.

    Can you give me your opinion based on what you have done or someone else has done ?
    Which option is better for us ? why ?


    Total construction cost is going to be appx. 1.2 to 1.3 million.

    Option 1 :
    Tender out the construction work to builders based on DA. Each builder will be free to choose whatever specification they want to use other than color scheme. Builder will have to complete preliminary drawings, working drawings, Building approval and also arrange certification/approval from other professionals like structural,civil, hydraulics,energy assessment etc.

    Option 2:
    We arrange preliminary drawings, working drawings, Building approval and also arrange certification/approval from other professionals like structural,civil, hydraulics,energy assessment etc. In this option, we will also arrange an interior designer which will come up with detailed specification to the extent of which tape, benchtop material, LED bulb models, color scheme, hardware brands and models for each item etc. Based on all this information, builders will give us the quote for construction.

    With Regards,
    Rooky
     
    Last edited: 25th Feb, 2016
  2. Connor

    Connor Well-Known Member

    Joined:
    31st Aug, 2015
    Posts:
    137
    Location:
    Melbourne
    I'm in the exact same position, just waiting on a DA but for a more simple dual occ tho.
    Im tending to favour the side of getting the builders to quote off the DA and let them deal with the different consultants. Personally I think it would be easier to deal with the one point of contact and I'd assume the builders would have their regular go to guys for the works required, so you'd expect it to run smoother.
    I'd make sure all the works are included in a fixed price contract and I'd try to include it all in the finance therefore keeping my capital free for any other unforeseen costs.
     
  3. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,078
    Location:
    Australia
    @Rooky

    Definitely option 2.

    DA is just lines of what you can build.

    Working drawings will have detailed information. Without working drawings and detailed specifications, builder will just give you a quote not fixed price contract.

    It's worthwhile waiting to get detailed drawings/specifications before you get to tender stage.

    You wouldn't want to have variations again on this project.
     
  4. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,726
    Location:
    Sydney
    @Rooky I agree with @Be Developer, 100% option 2. Option 1 just doesn't make sense to me.

    Another thing I have done and I strongly recommend you try and do is if you already have a relationship with 1 or 2 builders who you know you will be tendering to, try to get their input/feedback/recommendations from the designs you want to build. They often can point out areas in designs that will unnecessarily cost extra to build and then offer cost effective solutions to the design team. Once the designs are approved.. well its done, and that's all the builders have to work with. so best to get their input during the design stage if possible.

    Just my 2 cents.
     
  5. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    60
    Location:
    Perth
    Thanks BD and Leo.

    I am also leaning for option 2. Someone suggested to us to go for option 1 so thought to check with wider audience. I am doing tendering for first time. Previous project was fixed price contract including DA and BA as it was very standard design and i was able to compare fixed price and specification with other similar work.However, this is totally different design.
     
    Last edited: 26th Feb, 2016
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,726
    Location:
    Sydney
    @Rooky How could anyone possibly suggest you go for Option 1...? Part of option one is, "Each builder will be free to choose whatever specification they want to use other than color scheme".

    How does the builder know what specs are needed for your project and demographic and also to meet your feasibility requirements??? If they are free to choose whatever specs they want then they could include specs that are as cheap, as expensive, as inappropriate, etc for your project... It makes no sense to me whatsoever... unless I am missing something here.
     
    nap33 likes this.
  7. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    60
    Location:
    Perth
    You are right, Leo. That was the exact same question i asked too. But since i am doing tendering for first time, i thought its better to investigate deeper. However, i was advised that if we have good relationship with builder where we have worked with same builder on previous projects, then option 2 is easy as its less headache i.e. builder does organize everything for us like all engineering professionals etc. But i will still go down path of option 2.
     
  8. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    60
    Location:
    Perth
    I have done further inquiries with 2-3 builders. They have advised us that each builder have some sort of volume discount deals with their suppliers. So if we specify only certain brand and model in our specification list, then some of them may not be able to get better deal on that one and their quote will reflect that.

    So we have found a kind of mid way between option 1 and 2 but which is more geared towards option 1.

    We will engage all engineering professonals ourselves, will get our architecture to prepare all working drawings and our interior designer will also prepare all the specification items for prime costs. While tendering the construction work, we will ask builders to give us 2 quotes. One based on their preferred specification items and second based on our list. That way, we will be comparing apples to apples in one set of quote. Second set of quote will reflect the builders preferred specification.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,545
    Location:
    Sydney or NSW or Australia
    Agreed with Leo on this point. It's your project, you need to specify the standard. No point getting a bargain build in Hawthorne or gold plating in Inala.