Architecture / June 25, 2018 /
Many construction projects involve the design and construction of a building which is tailored to meet the clients specific requirements. No two construction projects are identical - there is no such thing as the average building project. The cost of the building will depend on its particular characteristics and these are largely determined by the architect. The design options are almost limitless and the resulting costs can be difficult to forecast reliably in many cases. On the other hand, certain types of buildings such as schools have well established cost histories and are usually subject to a cost limit.
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.