The tendering stage is when a project begins to feel real to the majority of homeowners and self-builders, and this is where apprehension usually sets in.
You may have worked with budgets, sketches and ideas for your self-build or extension up to this point, then during the tendering process, builders provide firm costs based on your finalised plans.
Here I explain what's involved in this essential phase of any build project and why going out to tender matters when it comes to controlling costs effectively.
What is going to tender?
Tendering is, to put it simply, a systematic means of inviting builders to provide a quotation for your project using the same information.
You provide designs, specifications and electronic data to a number of qualified builders and request official quotes from each of them rather than depending just on verbal estimates. This makes it possible to compare ‘like for like’ and levels the playing field.
Finding the cheapest builder is not the only goal of tendering. It is a tool for risk management. It assists you in selecting a builder who has a reasonable price, a clear grasp of the project’s scope, and fewer chances for expensive disputes when the project is underway.
When should you use the tendering process?
A formal tendering process is recommended for any project with a high level of risk, complexity or cost. This covers the majority of self-build projects, house extensions and major renovations, as tendering becomes important when there are structural changes, various trades need to be scheduled or the build programme exceeds several months.
Consistency is the most important principle. Only when each builder is pricing the exact same information can several quotes make sense. The quotes you get will differ greatly and provide you with very little information if one builder is working from planning drawings, another from building regulations drawings and a third from a sketch layout.
In that case, you are evaluating how each builder understands missing details rather than the market. The end result is frequently a low initial figure that changes once building gets underway.
When you have a clear concept and want to know the cost before committing, tendering is key to getting the correct information. It also helps if you are taking out a loan or stage payment mortgage from a company like BuildStore, working within a specific budget or carefully project managing the whole project yourself.
A single quote may make sense in some circumstances. Smaller projects, such as simple repairs or minimal changes, might not need a full tender process. Similarly, negotiated tendering can be successful if you already have a connection with a builder that has completed comparable work successfully, as long as the details are still clear and documented.
Reduced price comparison is the trade-off, therefore in order to control risk, the scope and specifications need to be precisely stated.
The most common tendering mistakes
Going out to tender too soon is the most frequent error. While plans are still being developed, homeowners are frequently eager to test the market, but pricing without sufficient information rarely yields meaningful results.
Every builder will make their own assumptions if there are dimensions missing from the plans, structural details are unclear or final specifications are not defined. It is doubtful that those presumptions will line up with yours or one another’s.
False confidence is the inevitable outcome. A project may appear economical when it is not, due to an alluringly low quotation that is based on deficiencies or optimistic estimates. The missing items resurface as variations, typically at a premium and discovered during contract administration, but after work begins and actual judgements are made. This is one of the primary causes of final costs exceeding the initial contract sum.
A further oversight is giving various builders different information or providing informal answers to questions without discussing the results with everyone. Price comparison becomes unreliable as a result, and the level playing field is destroyed.
It’s also dangerous to base your decision only on the lowest number. A much lower quotation frequently indicates under-pricing, omissions or a misinterpretation of the scope. Corner-cutting, repeated claims for variations or poor relationships on the project may result from this.
Lastly, it is costly to underestimate the significance of documentation. Undefined duties, verbal agreements and ‘we’ll sort that out later’ choices frequently reappear as disputes.
More time, money and worry are typically saved during the build process when information is established prior to the tender.
The importance of having the right documents
The amount of detail you provide has a direct impact on the quality of the prices you receive. Your design should be sufficiently developed before a tender is issued so that a builder can comprehend precisely what will be built, how it is being constructed and to what specification.
Detailed design drawings that include plans, elevations and sections are essential. Instead of a preliminary planning version, these must reflect the current design.
Steelwork, foundations, lintels, floor build-ups and any specialised features like retaining walls are all crucial structural requirements.
Drawings are vital, but so are written specifications. Standards for materials, finishes and workmanship are outlined here.
The construction of external walls, insulation values, windows and doors, roofing products, interior finishes, sanitaryware criteria and woodwork quality are all things that should be covered. In the absence of information, builders will rely on their own judgement, frequently based on basic or mid-range products.
You should also make clear who is responsible for what. Indicate which company is supplying the kitchen appliances, flooring, light fixtures or custom installations. Verify the requirements for preliminary tasks like scaffolding, temporary protection, waste removal, site welfare and making good.
A significant number of ambiguous items or ‘to be confirmed’ notes should be excluded. The tender is weakened and the cost risk is transferred back to you when there are excessive provisional sums or vague descriptions. Key choices should be clearly defined and restricted rather than left open-ended if they truly cannot be decided.
Clarity, not perfection, is the aim, but the more detailed the project, the more accurate the quotations will be.
How many tenders to request
The best option for most residential projects is to invite three to four builders to submit quotations. Fewer than three restricts the scope of relevant comparison and makes you appear weaker in the event that one builder withdraws, or submits a price that isn’t competitive.
Since builders are less inclined to devote their time to a bid if they believe their chances are limited, more than four frequently results in lower-quality responses.
Rather than volume, the focus should be on suitability. Choose builders that have demonstrated expertise working on projects of a comparable scope and style. For a complicated extension to an existing home, a builder that primarily builds new homes might not be the ideal choice.
Verify their ability to complete your project within the programme agreed and that their financial standing seems secure.
There should also be a system to the process. Give each builder the exact same tender package at the same time, along with a fixed return date. Give them a realistic time frame for quoting, which is usually three to four weeks for an extension or renovation and longer for a new build project.
In order for builders to fully comprehend site access, restrictions and current conditions, encourage site visits. Questions should be answered formally throughout the tender time, and all tenderers should be given access to the response if a builder has a question that impacts scope or clarification. This keeps prices consistent and ensures fairness.
Lastly, inform unsuccessful builders of the results. A professional approach promotes positive participation and aids in preserving connections for future projects.
Comparing quotes
Avoid the urge to look at the bottom line as soon as the quotes appear. There is more than just one number in a tender return. Knowing how the quantity was calculated and what lies behind it, is what really matters.
Verify first that every builder has provided a quote for the entire scope. Examine the exclusions thoroughly. Commonly left out are things like floor finishes, kitchen supplies, decoration, external work and building control fees.
Exclusions are not always an issue, but if you want to compare them properly, they must be clear and comparable across all tenders.
Next, look at PC Sums (Prime Cost) and Provisional Sums. These serve as temporary allowances for elements that were not completely specified throughout the tender process. Allowances that are too large or too frequent undermine cost certainty and allow for future increases in the contract sum.
Examine the permitted levels for bathrooms, kitchens and finishes. A lower total quotation can just be the result of fewer allowances.A markedly lower tender is a red flag! It might point to a mistake, omission or misinterpretation. Always record any significant discrepancies and ask for an explanation. Similarly, you should be wary of unclear explanations, omitted details or unwillingness to respond to enquiries.
In the end, you want a quotation that is accurate, transparent and consistent with your documentation, not just the lowest amount.
Common tendering pitfalls to look for
If the tender procedure is not handled correctly, it could easily go awry, even with excellent drawings and several competitive bids.
Scope creep during the pricing phase is one of the most frequent issues. While builders prepare their quotations, homeowners frequently continue to improve specifications or tweak the design.
Inconsistent returns and the invalidation of previous pricing assumptions might result from minor, informal changes. The answer is straightforward – freeze the design prior to releasing the tender and manage any modifications with an explanatory addendum sent to each bidder.
Lack of communication is another common problem. Ambiguity arises from verbal explanations provided during site visits that are not documented in writing. Builders will set their prices based on what they think has been agreed upon, differences will only become apparent later. Every builder should receive a copy of all instructions, clarifications and updated information.
Another issue is time pressure. Too short time for pricing promotes gut feelings and large provisional sums. Under pressure, builders are more inclined to ignore details that could result in claims later on or contain risk allowances that inflate prices. Accuracy is increased by offering a reasonable tender period.
Another preventable error is not verifying credentials. Proper due diligence is not replaced by a competitive tender. Before scheduling a visit, confirm insurance, current references and experience with related work.
Finally, the integrity of the process is compromised if the scope is drastically changed after appointing a builder. In order to preserve transparency, it could be necessary to request the latest rates if significant changes occur.
The foundation for a more seamless build process is built by a methodical approach during the tender stage.
Who should put together the tender document?
Although it is feasible to draw up a tender package yourself, most homeowners find that expert advice is beneficial. The quotations you are provided are more credible if the information is structured and clear.
The drawings are often created by an architect or architectural technician, who may also write a specification. Before the design is put out to tender, they can resolve issues, coordinate structural information and make sure it is properly developed.
A lot of practices additionally oversee the actual tender process, sending out documentation, answering questions and examining returns.
An extra degree of control is added by a quantity surveyor (QS). To lower the risk of budget shock, a QS might create an ECA (Early Cost Advice) to assess affordability prior to quotation requests. I carry out these all over the UK from as little as £295 as I don’t need a site visit, just the design information.
In addition, a QS can create a structured document such as a Bill of Quantities (BQ), examine tender returns, spot irregularities, and offer advice on value for money as opposed to just headline price. This impartial cost analysis can be quite helpful for more complicated renovations or larger self-builds.
I prepare lots of BQs from £995, produced in Excel and also in PDF. It is an essential document to acquire more tender returns from builders. If you send out a BQ, with all the accompanying tender information to five builders you should receive at least four tender returns.
If you send without a BQ you may only have one or two tender returns. The BQ is a control document so you can also compare all of the tender returns on a ‘like for like’ basis. It can then be used in the contract as an agreed ‘contract sum’ and can also be used for valuation purposes.
When the builder asks after four weeks for a payment of say £18,000 you can use the BQ in its Excel format to check what the builder has actually done to date, which may equal £11,734, therefore it will assist in paying the builder the correct amount and not over or underpaying them. If you overpay and they become insolvent then you’re paying twice, as you’ll need to engage a new builder to pick up the works.
The more work you can do at the pre-construction stage the easier the journey will be through the build. Fees will differ according to project size and location. A few thousand pounds to a small percentage of the contract value might be spent on tendering and cost analysis services for a typical extension or renovation.
Even if this is an initial cost, it is small in comparison to the financial risk of a six-figure building contract. At this point, expert advice is meant to control costs rather than increase them.
What happens once the tenders are considered?
The process doesn’t end when the tenders are returned and examined. Clarification is the next step. This is you or your quantity surveyor’s chance to thoroughly examine each submission and ask formal questions. Written confirmation is required for any variances, exclusions, provisional sums and programme queries.
Clarification meetings with one or two selected builders are typical. These are more than just cost negotiations. They are used to discuss site logistics, verify programmes, assess comprehension of the project, and evaluate communication during the build. At this point, a builder’s demeanour and level of professionalism frequently reveal how the project will develop on site.
The builder should submit a new tender if changes are agreed upon, such as adjusting provisional sums or rectifying omissions. This guarantees that a clear and mutually understood scope is reflected in the final contract bid.
The agreement needs to be formalised in a written building contract e.g. The Joint Contracts Tribunal (JCT) before work commences. This spells out the contract sum, payment process, start and end dates, variation methods and dispute resolution procedures.
A standard form of contract is better than an informal letter of intent or email exchange for most domestic projects. Work should not start until the contract has been signed and the insurance is verified.
Both parties benefit from clarity and a professional framework when the tender process is concluded in an orderly manner. For more advice on your next project, why not also take a look at how much you will need to ensure is included for other professional fees. And, to make the most out of the money you have available, find out how to value engineer your build budget.
