Top Tips for Clients in the Current Market

You may have heard that there has never been a better time to get a good price for your building project than in this current competitive market. Indeed clients are often finding tenders returned at lower levels than they would have believed only a few months ago.

However, there are good reasons to be cautious before proceeding with your bargain building project. Contractors and their sub-contractors/ suppliers are having to submit highly competitive tenders to win their share of work. Inevitably this means when the project commences on site they are under pressure to re-coup their costs and realise a profit.

Clients should therefore attempt to ensure safeguards are in place so the tender sum they are accepting does not later turn out to be exceeded with post-contract extras or claims.

Here are some handy hints

1) Thorough surveys now may avoid expensive extras later – Obtain a comprehensive ground investigation report. Check that adequate boreholes are taken particularly under the footprint of your building or on the line of your foundations. Recognise any qualifications that may be contained in the GI Report and consider who is carrying the risk should any assumptions/ qualifications later prove to be incorrect.

2) Keep your eyes open to risks– Perhaps it is even more important in the current market to understand exactly what risks there are on your project, where they lie and the likelihood of them occurring. Consider what form of procurement best suits your needs. Whichever way you proceed you should carry an appropriate contingency sum as a safeguard.

3) Provide tight tender documents – Make sure your requirements are firm. Try and avoid provisional sums if decisions can be made and works can be adequately specified prior to tender. Sign off drawings and documents to reduce the likelihood of changes at a later date.

4) Analyse tenders carefully – Spend the time analysing tenders closely, particularly if they contain qualifications. Negotiate the removal of these qualifications or consider an alternative tender if necessary.

5) Choose the right contractor – Check company accounts and think twice before selecting contractors if you consider there is a possibility that they may go into liquidation during your project. Be wary of a tender that is significantly lower than the others - there is likely to be a reason for this. If you are aware of non-payment of suppliers, sub-contractors and people walking off sites this could be an indication of a struggling contractor, but please tread carefully as false assumptions can be very damaging to the companies concerned.

6) Insure against liquidation – Although you may find the cost of Performance Bonds rising as the financial markets are squeezed, you may wish to think twice before proceeding without such a Bond in place.

7) Know each others obligations – Before you get started make sure there is no confusion between the agreement you and your contractor have reached. Prepare contract documents and ensure they are signed by both parties.

8) Administer the contract diligently – Provide instructions, notices and certificates in a timely manner. Monitor progress closely. Interim valuations need to reflect accurately the actual works carried out. Undertake assiduous cost control, requesting substantiation for costs submitted and satisfy yourself that they are realistic.


Of course the above list is not exhaustive, but if you do approach matters in the right manner 2009/ 2010 really may prove the ideal time to build your new project.