Budget and pricing are often two of the biggest concerns people have when starting a building project.  This has been heightened by a lot of news about the rapid escalation of material and labour costs in the building industry.

How do you price your project?

There are a couple of different ways to price a project for construction. The most common methods used for a residential project are a competitive tender or a negotiated offer.

Competitive Tender:

Generally, a competitive tender will include pricing from three or four Builders. They are each issued a full set of documentation and have a window of time to price the project.  This does depend on the size and complexity of the project, but a tender period is usually around four weeks. To help ensure pricing is accurate, during the tender period your Architect or Designer will assist the builders.  They will answer queries, issue additional information, and organise for the builders to visit the site.

At the end of the tender period, your Architect or Designer will present you with each of the tenders.  They will discuss each option with you and give their assessment of the pricing.  But it is your decision who you will engage.

If all the pricing comes in high, you can discuss the project further with your preferred builder.  This is an opportunity to discuss buildability, scope reduction and other potential savings so that everyone is satisfied with the scope and budget before signing contracts.

At the core of the tender process is a spirit of fairness. All the tenderers should have access to the same information and be assessed equally.  The other tenderers should be informed if you or your designer has worked with one of the builders before, or if one of the builders has prior knowledge of the project.

A tender should never be used as a ‘test price’ process or a way to check on the pricing of a preferred builder. The builders involved in a tender invest a substantial amount of time pricing your project.  It is not fair to expect this to be done if you know ahead of time that you have no intention of going ahead with them. If you want to check construction costs at any stage of the project, you should engage a Quantity Surveyor to provide a detailed pricing.

If you are thinking of going through a tender process we highly recommend having the project priced by a qualified Quantity Surveyor at least once in the early stages.  This ensures that the scope and design are on track and you go to tender with a reasonable sense of what the construction price will be.

Negotiated Offer:

A negotiated offer is the process of negotiating the price with a preferred builder rather than calling for tenders. It is a more open, collaborative relationship and saves the time spent completing the tender process. The builder can be brought onto the project earlier to offer opinion on buildability and pricing.  A builder with a better understanding of the project can provide a more thorough pricing. Knowing about the project early also helps your Architect or Designer to manage the design timeline alongside the builder’s availability to start on site.

A Negotiated Offer is done in good faith that the project will go ahead with the preferred builder.  Unlike a tender, it is not a competitive process. It requires a higher level of trust and an established positive relationship with the builder to ensure the project is priced fairly. Again, you should engage a Quantity Surveyor at any stage of the project if you would like a second opinion.

Case Study:

We successfully used the process of a Negotiated Offer to price our Meow House. We had been referred to our Meow House client by one of our other very happy clients from a previous project. During our early discussions, our client decided that they would also like to bring on the builder from this previous project. We knew that we worked well with this builder, his work was of a high standard. He had been fair and transparent in his pricing in the past, so we were happy to work through a negotiated offer process with him.

The Meow House house included fully gutting and renovating an existing 1960s brick house. The footprint of the house was large but very poorly planned, as a warren of small rooms. Our new design sat within the existing footprint, without an extension.  This meant the careful treatment of the old building was critical to the success of the project.

Once the Sketch Design phase was completed, we had the outline of the design and scope of the project.  We organised a walk-through with the builder to discuss the design and the extent of repairs required.  The builder was able to review buildability and give an indicative price for repair work – giving us a baseline for our budget. Having this baseline cost showed us how much of the budget would need to be allocated to  non-negotiable  items. This wasn’t a matter of expensive finishes or design details.  This was work that the building required to bring it up to a suitable standard.

We continued to check in with the builder as the design and detailing developed.  We worked with them to price some stand-alone elements, like the joinery, ahead of the main pricing. This helped us to keep tabs on pricing and give our client a sense of where the construction price was going to end up.

There is a place for both types of pricing and we hope being aware of your options will allow you to choose the best way to proceed for your project.

We love hearing about your projects no matter what stage you’re at.

If you’ve just started out thinking about your new home have a look at our free 4-week guide – How to: Defining Your Design Brief.

Everyday life is already filled with a seemingly never-ending series of decisions. Some of these decisions are big and many you will barely notice you are making. Cornell University research estimated that the average adult makes around 35,000 decisions every day! On top of all these, the process of designing a home is packed full of even more decisions.

Decision fatigue refers to the sense of overwhelm people feel when they are required to make too many decisions. According to one study, the decisions you make during the day draw on a single reserve of mental energy. This includes all decisions, whether they are less important or particularly weighty. As people become more fatigued, decisions are harder to make. You can read more here and here.

At Maike Design, we use a clear process to that breaks decisions into manageable groups. Each of our stages focusses on finalising specific elements of the design in a carefully ordered progression.

The initial stages of our process set the foundation of the design. We respond to existing conditions of the site, neighbourhood, and original building. The overarching approach sets the conceptual intention of the design, the layout of the plan and is the baseline of the design direction for the entire project. Working through our process, the decisions become more detailed until we have a fully fleshed out design – documented and ready for construction.

By staging the process in this way, each decision sits in the context of the ones prior. While there is an overwhelming array of choices for every element of a design, ours are narrowed down to those that fit within the framework we have already put in place. Using our design knowledge and expertise, we curate these to present the best two or three options. And just like that, the choice becomes easily manageable.

Here are a few ways you can minimise overwhelm and impact of decisions fatigue through your design project:

Work with an Architect or Designer you Trust.

Take their advice on board and voice your thoughts and questions. Understand the theory and reasoning behind the design to help you to feel confident in your choices. Working as a team will result in a considered and individual design.

Consider how involved you want to be.

Before you begin the project, consider how involved you want to be and discuss this with your designer. Be sure to raise it again if at any point your preference changes. Some clients love being heavily involved. Many of our clients work with us because they trust that we will taking care of decisions while keeping them up to date with the key milestones. Delegate decisions to your designer at a level you are comfortable with.

Remember your design is for you, not for everyone else.

As tempting as it is to gather opinions from everyone you know, multiple, differing points of view can make decisions even harder to make. Find someone you trust as a sounding board – but don’t forget to discuss your ideas and priorities with your designer so they can respond to them through the design process.

Give yourself time.

When you have a review meeting with your designer, create some space around the timeslot so you can go into your meeting with a clear mind. After the meeting, put aside time to absorb the information. This should be a time when you have the capacity to consider how your design will meet your specific requirements and make your life wonderful.