10 things every contractor should know when pricing a specification of works

1 Don’t just accept every tender offered, especially if you think you’ll back-out

Every contractor has its particular fortes and its Achilles heels. Perhaps you have some good rates with scaffolders, or a team of decorators that are second to none. Perhaps you have a lack of decent lead workers, or are hopeless when it comes to complicated M&E. Whatever your strengths and weaknesses are, be honest about them, and try not to accept tenders that you’re not confident in winning. You’ll gain a reputation of being ‘expensive’ if you consistently cover-price schedules from a building surveying practice. No surveyor likes recommending a contractor to a client when they think in the back of their mind that they’ll come out in fourth or fifth place. Above all, if you’ve agreed to price a tender, price it and return it. Don’t be a drop-out; it’s a sure-fire way of getting dropped from future tender lists.

2 Block price at your peril

It’s a pain in the neck pricing individual clauses, but when building surveyors lay out their specifications in this way it is for a reason. Often that may be because one item of the works may be eventually omitted, or perhaps expanded upon in scope. Perhaps the different elements need distinct pricing because they are being paid by separate stakeholders or from different service charge schedules (common in residential or mixed use scenarios). Block pricing items can look lazy, and can lead to quarrels down the line when split-outs are required. Furthermore, it can make tendering hard to analyse, and gives an impression that sweeping assumptions have been made in haste.

3 Avoid caveats and qualifications

Contractors often think they’re covering themselves by entering a load of caveats on a tender submission, either as margin annotations or in a covering letter. But the reality is, the good surveyors read them – we certainly do at Earl Kendrick. That’s not to say there’s anything wrong with caveats, but use them sparingly. Too many and it sends out the wrong impression. A contractor that stuffs a schedule of works full of margin annotations in red pen not only makes the contract administrator’s job more difficult than necessary at tender analysis stage, but gives an impression of a contractor who doesn’t want the work, is concerned about it, and has doubts over their own abilities. Construction is a tricky business, full of risks, but contractors need to be ‘can do’ people. You’re there to shoulder that risk, so if you’re going to put in a caveat, help us out by quantifying what you’re putting a limit on, or curtailing. ‘Provisionally allowed for 20sqm’ is far more helpful to a contract administrator than ‘not offered’.

4 Distribute your profit evenly

Don’t bury your profit all in one item that you’re sure will not be omitted. It can make for some very embarrassing situations when you get to site. Even hiding all your profit in the preliminaries is not fool-proof. If a contract is terminated midway through or completed ahead of schedule you could be putting yourself out of pocket. It is far better to price every item in a spec so that it holds its own in isolation. Preliminaries should be predominantly the overheads of running the site, and you shouldn’t be seeking to make a side-profit on them in a competitively priced tender, especially if you want to win it.

5 Visit site promptly, and if you need an extension on the deadline, ask well in advance

As organised and on-the-ball as we all like to be, there are many stakeholders in a major works refurbishment project (freeholder, managing agent, investor leaseholders, other residents) and most of the time, they are pulling in the same direction to get the job on site as soon as possible. So if you can visit site promptly, please do as the project may be on a tight timescale.

6 Don’t re-write sections of the spec in your own way

It’s ok to disagree with a surveyor’s approach, and you may have a different opinion to them over how things ‘should be done’, but you may not know the back-story… The client may have asked for a certain methodology, or there may be a lack of funds that dictates that a roof has to be patch repaired rather than renewed wholesale. Furthermore, presenting yourself as a ‘clever-clogs’ and attempting to re-write bits of the spec, unless you’re under a D&B contract runs the risk of sending out the impression of being awkward. Price what is there, and then explain in a covering letter why you think it wouldn’t work, or is over-kill, and provide an ‘alternate price’ for a different methodology if you feel the need.

7 Don’t be afraid to ask, you won’t look stupid

Schedules are complicated things, especially when trying to interpret them ahead of visiting site. Sometimes a site visit is all it takes for the queries to be settled, but if you still feel unsure, or don’t understand, call up the surveyor who wrote the specification and ask. Don’t demean more junior surveyors who are still learning the ropes with your queries: emailing the director of a firm with whom you have close relationship with quips such as ‘what’s this grad on about?’ or copying in the whole world with a shirty accusation that ‘a spec doesn’t make sense’ again sends out the wrong impression. But a polite list of queries, directed to the author of the specification, will normally elicit a prompt response; and if you’ve picked up on something that everyone else has missed, you’ll probably see a tender addendum come out from the surveyor shortly with a clarification and a change to the design.

8 Deliver your tender ahead of time

These days many surveying practices accept electronic tenders. Supplying the Excel spreadsheet in an unlocked fashion can help everyone out. Above all, do not think that your prices will be forwarded about to other contractors or used to elicit a ‘race to the bottom’ on pricing. RICS firms operate under strict rules of integrity. Your tender will not be opened ahead of time, peaked-into and certainly never shared with other competitors. Ultimately it is the client who will make the call on contractor selection, but they will often go on the advice of the surveyor.

9 When the prices are in, and the surveyor has queries, help yourself by responding promptly

In the tender analysis stage, where surveyors come back to you with questions, respond promptly, and be transparent over what you have allowed for. Invariably, if you get a long list of questions back from the surveyor, it’s because you provided them with a long list of caveats or qualifications. This is why qualifying tenders is often a false economy. It all gets straightened out in the end, because surveyors like to compare contractors on a like for like basis. If one contractor has offered a cheaper or more inferior system as an equivalent product, they will be asked to re-price for the system or product originally specified. I have seen on many occasions contractors move from first place to third in these scenarios. They are only wasting their own time trying to re-write the specification to get it to suit their own ends.

10 If you miss out, ask for feedback

Some firms will not share their feedback with contractors and that’s a pity. We always do. Ask for a breakdown of each section of the tender and an anonymised table of where your prices come in against the other competitors. Often this will show where your firm is losing its edge, or where your subcontractors have let you down with their own pricing. There’s nothing wrong with coming a close second. Often this is a sign that you’re doing everything right. But don’t offer to cut your prices to that of the lowest contractor after the event; it just gives out the wrong impression and makes you look like a firm that is desperate for work. Learn from your mistakes, and sharpen your pencil for next time.

A good contracting friend of mine once said to me his mantra was “ask not what price you would like to get paid to do a certain job, but ask what price you would be happy for someone else to get the work”. He wins a lot of contracts, and is doing very well for himself. He also rarely caveats a spec, is well liked by clients and surveyors alike, and has a reputation for pricing specifications very keenly

James Paul is a Director at Earl Kendrick. We are looking for contractors operating in Central and Greater London, the South East, East Midlands and the North West England. If you would like to be included as a contractor on our approved contractor list, please send a short covering email to James@earlkendrick.com complete with your ‘all risks’ insurance cover, areas of interest, minimum and maximum project thresholds, and case studies if you have them.