‘LIKE FOR LIKE’ QUOTES

Before you even consider who you will be inviting to tender for your project, it is important to understand that in order for you to compare competitive quotes, the contractors must be given a copy of the same drawings and specification and any other supporting documents, such as engineer’s calculations or mechanical and electrical information.

Most projects will require the contractor to carry out their own measurements and inspections. These may bring to light elements that have not been included in the specification.

At the very least you should expect the builder/contractor to visit the property to see for himself where the property and therefore the work will be carried out. If they do pick up elements that have not been detailed, ensure that these form part of the written quote.

By visiting the property the builder/contractor will be able to assess any potential logistical or other problems that may exist, such as parking restrictions, narrow roads, lack of material storage space and so on.

BREAKDOWN OF QUOTE

When inviting builders/contractors to quote, ask them to break down the quote to the elements in the specification. This is a good way to help you make cost savings either by reducing the specification or by removing some elements completely.

As you can see in the sample specification provided in Chapter 2 (see Figure 2.1), the work is broken down into various elements. Although you may meet some resistance when requesting a breakdown quote, it is clear that the work can only be quoted for properly if all of the material and labour have been measured against the drawings and specification.

The quality of information that you provide should be reflected in the information that you receive back from builders or contractors. You will need to at least provide a breakdown of the elements in the project. This information could simply identify the elements that need to be priced. The sheet could indicate what you will be responsible for providing or undertaking yourself.

If you are presented with a quote that is considerably cheaper than others, it may be that the company or person providing the quote has lower overheads or has a lower profit margin. It would sensible for you to make detailed enquiries into how the price has been put together. You must be satisfied that the project or task that has been quoted for can be completed satisfactorily within the price. If you do not feel confident in the ability of a company or person, it would be advisable to consider carefully whether to enter into a contract with them.

It is in your and the contractors’ interest to know the true cost, as you may be surprised and find that the quote has come in under your budget, which would leave you to either upgrade the specification or have other work carried out.

The elements of the specification can also form the basis for the programme of works.

Mistakes in a quote

If a builder or contractor has made a mistake in a quote that has been accepted, he may try to find ways to increase the costs. This situation has the potential to cause problems as the client would have accepted the quote in good faith. Even where a legal contract is in place, builders and contractors will try to find ways to keep the costs down if they have underpriced a job.

If a builder or contractor stands to lose too much money by keeping to their commitment, they may try to use inferior labour or materials to save money. If they are owed a considerable amount, the likelihood of them pulling out of the contract would be limited. If a genuine mistake has been made and can be substantiated, it may be beneficial to negotiate the way forward rather than forcing a builder to lose money. In this instance, you may benefit from employing a professional surveyor to oversee the negotiations.

COST-SAVING EXERCISES

When you have received the quotes from the potential builders/contractors, you can start comparing them against each other. Do not be surprised if they have not broken down the costs in the same manner, as builders’ and contractors’ quotes will vary in respect of where they decide to load their profits and overheads.

Discuss the quote

If you favour one builder/contractor over another but his quote is higher, it is worth inviting him to discuss the quote and to show him the other quotes that you have received.

It may well be that he is more expensive because his standards are higher or that he employs a foreman to oversee each project. You should find, however, that he will be happy to discuss the quote, and will more than likely trim the quote down closer to the alternative quotes that you have, or maybe match them.

It is at this point that you can start to go into detail about the specification and make the necessary changes to trim the quote down even more if required, by reducing the specification or by making other cost savings as set out in the examples below.

Some may stand by their quote and not be prepared to lower it, even if it means losing the job. This would suggest that they have estimated the job properly and that they have a good order book, which can also indicate a good reputation.

Quotes under your budget

You may well be surprised to find that the quotes have come in lower than your anticipated budget. Do not be tempted to make rash decisions at this point, as you should always have a contingency sum to cover any unforeseen problems that may occur.

It is worth trying to get the builder/contractor to trim the quote down in any case, as even a small saving may pay for an additional luxury item. However, don’t be too pushy if you don’t have to be!

Quotes over your budget

If, on the other hand, your budget costs are exceeded by, say, 15 per cent, do not be alarmed as there are many ways to make cost savings without compromising the quality of workmanship or materials. Builders will mainly use subcontractors for the specialist work and as such, they may have a high-mark up on certain elements of the work such as ceramic tiling and laminated floor finishes.

After you have eliminated these from the contract, you may be able to get alternative quotes at a later date from local contractors/suppliers. These may be as much as 30 per cent lower than that quoted in the builder’s estimate.

The only downside of removing elements from the builder’s package is that work on them then has to be coordinated with the builder’s work. This can cause problems. Alternatively, you can have this work carried out at the end of the project once the main work is complete.

This obviously means that you will be inconvenienced for a longer period, although these sorts of specialist work are completed fairly quickly and there is less likelihood of damage being caused by other trades.

Examples of cost savings

Areas in which cost savings may be made include:

• carrying out your own decoration;
• supplying your own sanitary ware;
• supplying your own carpets and soft furnishings;
• reducing the extent of external work to ensure the main works are complete;
• removing elements of work such as cornices, dado rails, ceramic tiling, mirrors, etc;
• reducing the specification, e.g. smaller skirting, less expensive ironmongery and fittings, less expensive light fittings, etc.

As you can see, there are many ways in which to make cost savings – you just need to examine your specification and prioritise accordingly.

Organising your own plant, materials and labour

There is a further method to save costs: you organise all of the plant, material and labour yourself. This can result in savings of approximately 15-20 per cent. However, if you are not experienced in this type of organising and negotiating on materials etc., the savings could be very minimal. At the same time, it can be very time-consuming to say the least.

This will require some serious decision-making and research if you are to proceed with this method, as stress levels can go through the roof when things go wrong. It is therefore not advisable for first timers.

TIMESCALE PROGRAMME OF WORKS

When inviting contractors to quote, it is important to ensure that a programme of works is included in the quote. This will show how long the builder/contractor anticipates working on your project.

When making comparisons, you should take into account the amount of time that you will be inconvenienced against the differences in the quotes. For example, one contractor may quote £35,000 for a two-storey extension that he estimates will take seven weeks, while another may quote £33,000 but estimate a timescale of ten weeks.

These are important issues, and they need serious consideration and discussion. Relations between client and contractor can quickly deteriorate when projects are not completed on or near the agreed timescale.

Issuing your own timescale

On the other hand, you could issue your own preferred timescale with the tender documents. A rule of thumb here would be to use a figure of between £3,000 and £4,000 per week as the amount of labour and material to be spent on the project. Thus if your budget is £20,000 and you decide to use the figure of £4,000, you could suggest a time-frame of five weeks.

This method is for guidance only and applies to normal domestic work such as extensions and loft conversions. However, the nature of the work and the specification will also have a bearing on the duration of any project, and when there are technically difficult operations such as underpinning, timescales become nothing more than guestimates rather than true estimates.

Once the timescale is agreed, you need to ensure that a detailed timescale programme of works is issued with the quote. This will give you the opportunity to discuss any lack of progress as the project proceeds and the reasons for any delay.

Unforeseen problems

It is worth pointing out at this stage that, while a builder or contractor may give you a timescale programme that he feels is achievable, the nature of building work is such that many unforeseen problems can occur. On small projects this can affect the programme to such a degree that it is very difficult to claw the time back.

Problems on the ground are usually costly, both in terms of money and time. This is where you need to be fully informed of what the problems are and what the likely additional costs and time will be, if any.

Example of a programme of works

Figure 5.1 shows an example of a programme of works for a two-storey extension.

As you can see from this example, it is possible to see at a glance the specific dates at which each element occurs in relation to the progress of the project as a whole. By using a split pattern within the cells it is also possible to identify the specific days which must be adhered to for certain elements of work to be carried out, such as when service providers are expected to lay on their particular supplies, i.e. water, gas, etc.

EXTRAS AND VARIATIONS

This is a very important area for discussion and is one that can cause a problem between the client and the contractor if the specification is not comprehensive.

It is an unfortunate fact that some builders/contractors are happy to quote for building works on specifications or descriptions of work that are very basic. If the builder supplies a written quote on poor information, there will not be sufficient details to separate so called ‘extras’ from what you believed to be part of the original specification.

Builders/contractors will know what is involved in the work that they are being asked to quote for, and some will make huge profits on work that clearly has to be carried out but which they subsequently invoice as an extra. Due to poor information and a client’s lack of knowledge, some builders can be very convincing in these situations.

Agree basis for charging and authorisation

It is inevitable that some extras or variations to the project will arise that need to be carried out. What you must discuss and agree on is whether this work will be carried out on an hourly or fixed priced basis. You must also endeavour to avoid extras or variations being carried out without your authorisation.

Any extras or variations must also be discussed only with the person with whom you placed the contract and not with anyone working for him, although this can sometimes be unavoidable. Write down all extras

or variations and remember that some of these variations could possibly involve cost savings.

Obtaining a quote

If you do make changes to the scope of works or specification, ensure that you obtain a quotation or estimate for the new works before agreeing for the work to proceed. Remember, once the builder/contractor has been awarded the main contract, his prices may not be as keen as when there is competition for the work.

Bear in mind, though, that if a contractor has to bring in outside assistance in addition to that which has been planned, he may have to pay above the normal going rate. However, this may sometimes be worth the additional cost if it means that the project is completed on schedule.

This could be an area open to discussion when deciding on which builder/contractor to use. You could have a mutual agreement that any additional work will be at an agreed rate, or on a pro-rata basis of a certain element which can be clearly identified.

Remember, however, the more comprehensive your specification is, the less likely it will be that your budget will be overstretched.

I cannot emphasise enough how important it is to ensure that the builder/contractor knows that you are not prepared to pay for additional work that has not been discussed.

One of the dangers of not having agreed procedures is that additional work can be claimed for which may not have actually been carried out! For example, I have heard of builders who have made huge sums of money from clients by claiming for hours of additional work for excavating for deeper foundations, a task which incurs heavy costs for the use of machinery, the removal of soil and the application of additional concrete. Clients who are not in control of their projects are susceptible to these types of scams.