Architecture / June 26, 2018 /
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.
A project may be completed on time and within budget, but unless it achieves the specified quality or performance criteria it will be considered to be a disappointment or even an outright failure. High profile building failures such as Priory Hall only serve to strengthen the public concern expressed in the Egan Reports findings that 30% of buildings fail to meet the expectations of their owners. Such failures may be prohibitively expensive to rectify, dangerous and can ruin reputations overnight.