Architecture / June 17, 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.
The location of the project will influence its cost. High value sites attract high value developments and it is inappropriate to locate low value projects on valuable sites. Local development plans will constrain what can be built on such sites in any case. In general, urban locations are more expensive than their rural equivalents due to higher local wages, costs associated with access constraints, limited space for staff accommodation facilities and material storage, and the additional security measures required.