The art of avoiding the tender process
Fairness and strategy: Nick Clements’s tips on smoothing the way so everyone gets a good deal.
No one likes paying too much. But clients are rarely after the lowest price; they want to know they’re paying a fair price.
Tenders are often promoted to find out what is a fair price in the market. But they're not fair on the market since customers don't factor in the cost to tenderers. This is a hidden but real cost that ultimately drives up building costs.
It’s also worth asking whether the lowest tender is really going to offer the best value.
Shopping a job around, where the client gets many builders to price, is often worse. It lacks the discipline of the tender process. In theory a tenderer should expect fair treatment in the decision process. But shopping around has no rules. Is the client asking you to quote a job when the client has already decided to go with someone else? Are you simply a bargaining chip with their preferred supplier?
Instilling confidence in the price you quote must be the focus of your sales process. If clients are confident, you’re delivering value, price becomes a secondary issue.
The process starts with picking your customers. This may sound counterintuitive in a tough market, however, it’s important to spend your resources where you’ll get the best return. When it’s hard to find new customers, it’s tempting to take on work you wouldn’t otherwise consider. But that work must still make business-sense for you.
I always recommend charging a fee for doing any estimating, even if it’s just a nominal amount. Whether you’re preparing the estimate yourself or paying a third party to do it for you, there’s a real cost for estimating in your time and expertise, and the client should pay for this.
Using a third party can help with justifying these costs. Clients seem more willing to pay when it’s an external cost to you rather than “just” your time.
You can also use this as part of your strategy to avoid clients shopping the project around. You can assure a client that, as an independent third party, a QS gives them a fair view of the market cost for a project. This saves the client the hassle of having to talk to lots of builders, as well as having to break the bad news to those who miss out.
The ideal scenario is to get alongside the customer as they start their building journey. Become that guiding hand ensuring that they have a great outcome. Of course, that may not always be possible as they could already be working with a designer. But at least encourage the client to get an estimate of the build cost as early as possible in the design process.
The sooner a client gets the full picture about the cost of a project, the sooner they can deal with any surprises – whether that means reducing the project scope; lowering specification; finding more money; or worst case, killing the project altogether. Dealing with this early gives a better outcome for the client.
Tender tips
- Provide prompt and concise communication.
- Give your clients confidence in the package you offer.
- Demonstrate your value-add.
- Line up your references to prove your credibility and expertise.
- Build a visible track record.
- Leveraging your relationships.
- It’s not only you working on the project but your team of subtrades.
- Maintain an up-to-date website and social media accounts.
Nick Clements is the founder and managing director of YourQS Ltd, a technology enabled quantity surveying service. Nick has over 30 years of experience in the New Zealand construction sector at the leading edge of construction technology. Nick is a registered QS and Chair of NZIQS Auckland Branch.