Tendering in such a volatile market?

[Andehh]

We are soon (within days)going out to tender for our build project. It is 150sqm of single story extension (40sqm garage) and full renovation of a 140sqm bungalow.

 

Existing structure rendered, new structure brick cladding. 

 

One concern I have is tendering now when the price of timber, plaster, concrete etc is all over the place, but generally significantly more then it 'should' be. It will be an architect led project, budget of approx £300k with a start date hoped for ASAP 2022.

 

I am unsure on the best way of managing the risk of a 20% rise in material prices or indeed a 20% fall in material prices over the next 12 months,  without getting a quantity surveyor involved.

 

Is anyone else in a similar boat? How are other managing it? 

 

 

[nod]

You can do a fixed price on today’s prices 

and agree to stand any extreme price rises later this year 

Prices are unlikely to drop anytime soon 

If ever 

Your alternative would be to get a fixed price guarantee 

The builder would simply load this and assume large material and labour charges 

 

Or get a quote for labour only 

 

Bit shitty but how things are at the moment 

 

 

Edited June 21, 2021 by nod

[Adsibob]

Labour only is probably the only way to compare prices between competing bids, though I would ask them to include the costs of purchasing the steels, as although Steel has also been susceptible to increases these past months, those will need to be purchased early on in the project so probably the current prices, plus maybe 6% is an accurate estimate for steel. For a project this size, it will probably take at least 6-8 weeks to get through the tender process and narrow it down to just two contenders. You are then closer in time to when the project will be starting and can discuss material prices with the two builders then. We will hopefully have a supply industry that is more back to business as usual by the end of the summer.

Edited June 21, 2021 by Adsibob

[cowsgomoo]

@Andehhhow did the process go for you? We are going through the same thing right now, we sent out to tender 2 months ago and after a couple contractors pulling out we have 1 quote back (double our budget, ha)

 

 

[Andehh]

Good question! it's been really tricky.

 

We got 4 quotes, three of which were within 10% of each other...4th was within 15%...so all remarkably similar. We have narrowed it down to the middle two and are now working with them both on next steps.

 

One say it is cheaper to knock down & start again (NO VAT) other says cheaper to refurb (but pay VAT). All showed our £300k budget was needing to be closer to £500k though....which we are working through now (reductions, cost saves, cut backs, borrowing etc etc). Its been emotional to say the least. ?

 

This all for an existing 140sqm bungalow, looking to extend/rebuild to around 275sqm.

 

Rebuild buider is due back tomorrow (!!) with his proposal on how it could be better to rebuild instead of just refurb, and at that point hopefully big decisions will start to be made on how we progress.

[Dave Jones]

[Dave Jones]

42 minutes ago, Andehh said:

Good question! it's been really tricky.

 

We got 4 quotes, three of which were within 10% of each other...4th was within 15%...so all remarkably similar. We have narrowed it down to the middle two and are now working with them both on next steps.

 

One say it is cheaper to knock down & start again (NO VAT) other says cheaper to refurb (but pay VAT). All showed our £300k budget was needing to be closer to £500k though....which we are working through now (reductions, cost saves, cut backs, borrowing etc etc). Its been emotional to say the least. ?

 

This all for an existing 140sqm bungalow, looking to extend/rebuild to around 275sqm.

 

Rebuild buider is due back tomorrow (!!) with his proposal on how it could be better to rebuild instead of just refurb, and at that point hopefully big decisions will start to be made on how we progress.

 

need to be realistic and work £1.5-2.5k m2. VAT on 300k could be the tipping point to knock down and start afresh.

[cowsgomoo]

On 22/09/2021 at 11:38, Andehh said:

Good question! it's been really tricky.

 

We got 4 quotes, three of which were within 10% of each other...4th was within 15%...so all remarkably similar. We have narrowed it down to the middle two and are now working with them both on next steps.

 

One say it is cheaper to knock down & start again (NO VAT) other says cheaper to refurb (but pay VAT). All showed our £300k budget was needing to be closer to £500k though....which we are working through now (reductions, cost saves, cut backs, borrowing etc etc). Its been emotional to say the least. ?

 

This all for an existing 140sqm bungalow, looking to extend/rebuild to around 275sqm.

 

Rebuild buider is due back tomorrow (!!) with his proposal on how it could be better to rebuild instead of just refurb, and at that point hopefully big decisions will start to be made on how we progress.

I feel ya, our £200k budget + 25% contingency is looking closer to £450 +30% contingency and we don't know what to do. Oops! Ours is a roof-off loft/ old house remodel/ steel frame extension and includes a lot of glazing. We don't have a detailed enough cost breakdown to work out where/how to save, and the builders are just not having time to get back to us with the detail we need (and taking on other projects in the process). I think even just the shell contracted will be ~£300k at a wild guess but at least it will be the start, and that's what we might do, then bring individual trades in. Well done on getting so many quotes back i think that is half the battle!