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Architecture / June 14, 2018 / .

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The relationship of quality to cost is often expressed in the saying that you get what you pay for. Cost is a critical factor in most building projects and some clients will seek a low price. Low price and maximum price competition, however, often have negative impacts on quality standards and achieving best value for money overall. In the current economic climate below cost tendering has heightened the risk of contractor insolvency and it may be difficult and expensive to obtain protection from this risk. Unrealistic and inadequate budgets often lead to projects becoming finance driven where cheaper options are preferred to better or more sustainable alternatives. Certain clients may have fixed budgets which may not be exceeded in any circumstances. In such circumstances the client will expect the quantity surveyor to maintain rigorous cost control during the project in order to deliver the project within budget. Designing to achieve such cost limits might curtail the introduction of beneficial features and or variations which may result in excessive running and maintenance costs later on.

The choice of the material, and hence the cost, may be influenced by factors other than aesthetic qualities. For example fast-track construction projects may use a steel frame in preference to an in-situ or precast concrete frame in order to reduce overall programme durations. Although the concrete option may be cheaper, the shorter programme achieved by using steel may offset this initial cost advantage. Technical decisions such as these are made for each building element and these have a direct bearing on the eventual cost. Where considerable repetition can be achieved it may prove economical to prefabricate certain structural elements or to standardise various components and fittings.

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Speedy completion is often required on commercial developments. The pressure to achieve early completion intensifies when financing and interest costs associated with acquiring the site begin to mount. Clients will seek the early appointment of a contractor in these situations to enable a fast start up on site and will favour fast track design approaches where the design is developed in parallel with site construction operations. Such approaches risk allowing insufficient time to identify or consider beneficial design options, and may, on occasion, lead to abortive working and losing time. Speedy construction on site often requires accelerated working and shift or overtime payments, more intense management presence, and the use of dependable subcontractors and suppliers, all of which add to the cost of the project. Fast track approaches rule out cost certainty and the client will become aware of the eventual cost only at an advanced stage of the project.

The contractor is selected on the basis of competitive tendering on most building contracts. The price which the contractor quotes for the job is heavily influenced by both the amount and intensity of the competition expected. In an open tendering arrangement the level of the competition is at its most intense and contractors must submit highly competitive bids to have any chance of winning the contract. This usually secures a rock bottom price. With selective tendering a limited number of competent contractors are invited to tender for the job, this limited competition arrangement results in a keen price being obtained. In the case of a negotiated tender there is no explicit competition and the parties seek to agree a fair price for the work, implicit competition exists, however, as the employer can break off negotiations. If there is no competition the contractor can, in fact, name his price. The tendering arrangement is, therefore, one of the most cost significant decisions a client will make in the course of a building contract.


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