Expert strategies for negotiating and procuring a builder in a changing construction market.
With construction prices expected to continue to rise across most major markets, the question of how to procure a builder is often the vital link in a project’s financial viability.
The Urban Developer, Australia’s largest, most engaged and fastest growing community of property and urban development professionals, hosted an expert presentation on how the industry can best negotiate and procure contractors in the current market.
Point Polaris Managing Director Andrew Hogan was invited to the speaking panel, along with Darryl Bird, Partner at Mitchell Brandtman, Jared Byass, Development Director at Lowe Group, and Lucy Simms, Development Manager at Perri Projects, to share his tips and insights
The presentation explored:
- How early should you be engaging with the builder? Is too early a risk?
- At what point do you trust an independent QS estimate versus a builder’s price?
- How do you make the most of current market conditions to get the best price?
- What is the ideal pre-contractual engagement strategy for your project?
- What is the ideal procurement method for your project?
- Should you engage a competitive tender or negotiated tender process?
- What level of design documentation is enough to get the best price?
- How will the market movements in the coming years change your approach?
Key Andrew takeaways included:
- Choose your procurement methodology that meets the project drivers, such as: ECI; how far to take design development; whether to go design and construct.
- Be careful not to bring the builder in to early under an ECI as the expectations on cost plans are set too high originally.
- Control the Quantity Surveyor directly under an ECI
- For higher-end projects bring the design development, particularly for interiors, to a higher level.
- Residential market softening coupled with higher finance costs prolongs projects and when overlayed with rising construction costs squeezes the development margins so re-sequence your development programme to get under construction as early as possible.