“At some point, someone’s paying for that tender.”

Tendering sounds fair on paper. Same drawings, three builders, pick the best price, move on.

But once you understand what it actually costs to price a job properly, and how tendering rewards omissions, risk loading, and variations, it starts to look less like a “market test” and more like a costly way to kick off a relationship.

In this episode, Hamish and Matt break down what a tender really is, why the classic draw, bid, build model creates isolation and blame, and why negotiated tendering (paid pre-construction with clear costing stop points) changes the incentives for everyone.

They also get into the uncomfortable bits architects and clients don’t always see: the real cost of tendering, why prices can come back wildly different, how gaps in documentation become legitimate variations, and why trust matters more than pretending you can compare builders like-for-like.

If you’ve ever wondered why a project can look “fully resolved” and still blow out, or why builders hate competitive tendering, this one will probably ruffle a few feathers.

CHAPTER MARKERS

00:00 Introduction

01:05 The Classic Tender Process And Why It Starts Badly

02:10 What “Resolved Documents” Really Means

04:19 What Gets Left Out Becomes Variations

05:12 Why Projects Go Over Budget And Who Gets Blamed

09:06 Tender Vs Negotiated Tender Depends On The Builder

11:17 Risk Loading And Why Tendering Increases Markups

13:01 Variations In Tender Jobs Vs Negotiated Jobs

16:00 Wild Price Gaps And Why Tender Numbers Can Be Useless

23:00 What A Negotiated Tender Actually Is

35:26 Trade Quotes, RFIs, And Reducing Risk Before Site

41:22 Tendering Feels Like Isolation

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Connect with Matt:

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We kinda need to define straight away what is a tender and what

is a n- is a negotiated tender.

Like, I think we need to, like, set the playing field of what's involved in a

tender, what those documents look like, and then what those documents look like

when you move through a negotiated tender.

Anyone who hasn't realised, Hamish and I don't prepare

anything for each podcast, so

Well, actually, that's a lie.

There was a text message that went back and forward with a list of topics that we

were gonna talk about, and we basically threw a dart at one of them, and one of

them was why we don't competitive tender.

Yeah, so, uh, again, recording from the Plu- Proclima Australia Studios.

Um, uh, Proclima, major supporter of our podcast.

We're up in… Actually, we've probably just got back from Brisbane by the time

this podcast h- has been released, so.

Yeah, Brisbane

was great.

Yeah, Brisbane was Brisbane was fun.

Um, uh, but, uh, big thanks to Proclima, uh, for supporting us.

Um-

But also Kaya.

Kaya.

Yeah, Kaya.

And

thanks for, uh- Yeah, please … letting us use your HQ again.

Yeah.

So it's a good question, because I, I reckon a bit of

a history lesson on tendering.

So when we both probably started, the standard way of operating was architect

sends out a set of plans to you-

Yep

… and you price it, and you're up against three or four builders.

Stupidly enough, uh, this is a big tip if you're an architect and you're still

running this process of tendering, um, just don't blindly send them to us

in our info account and go, "Can you get this back to us in four weeks?"

I still would get one once a month being like, "Hey, here's the tender package.

It's due in a month." Not even a, "Hi, Matt- Mm … we're gonna be

sending you this." Like, just don't blindly send it to, to, to a builder.

I think that's a pretty poor start.

Um, we're not that expendable.

No, and I agree with you.

Um, and, you know, if anyone, uh, I have had that on numerous occasions as

well, and I actually just don't reply.

I just delete the email.

Yeah, I,

I actually don't reply anymore.

I'm just like, if you're going, if this is the relationship that we're expecting

to have, then I'm not interested.

Yeah, I don't…

Yeah.

So we talk, so with… We'll, we'll start on tender and, and I… Look,

I'm just gonna talk through, like, my understanding and my experience with

what the tender process looks like.

So generally speaking- When things go to tender, in a lot of cases,

no builder has been, uh, consulted during those plans- Yeah … and,

and as the design has progressed.

Now, the big thing that you forgot to talk about before, you talked about documents.

I would actually say that they are resolved documents.

There's-

Well-

… en- engineering-

In the architect's eyes, they're resolved documents

Well, yeah, but, but they are, they are pretty far progressed.

Yeah.

So we- we've got, we've the, the soil report's been done,

the site has, the site, um-

Survey

… survey's been done.

We've, they've gone through a number of different design-

Like energy, yeah, energy consultant's done

All of that's, you know, they've gone through a bunch of different

sort of design considerations- Yeah

you know, to get the program, pro- uh, project, the documents where

they are now, and we've also got engineering and a civil design.

And you're right, you've also got, um- An interior

design package

… interior design package.

So everything's there- Yeah … ready to quote, which is great.

Yeah.

Because as a builder, everything's there that we can, uh, cost off.

The biggest issue is clients have fallen in love with all of that.

As a builder, if we're gonna be costing against this, for it to be

a true competitive tender and you compare apples with apples, as a

builder, we actually have to cost every single thing that we see.

Yeah.

Now, there's no opportunity there for us to talk about value management,

performance, buildability, or anything like that because if it's

gonna be a true fair tender, then we should all be quoting off the same

documents and quoting the same thing.

Yeah, because if, realistically, it's whoever's most likely the lowest price.

Yeah.

And if you, when you were tendering, it's a project home, and there's, I've allowed

for a sewer upgrade, but it's not in the specifications or anything like that,

and you don't allow it, well, I could be 8, 10 grand behind from the start.

Yep, but, but, uh, and this is the other thing, you know, if we're talking about

a sewer upgrade or, or even a, even a, um, you know, the point of attachment.

Yeah.

So your boundary trap upgrade- Yeah … which is a couple of

grand We know as builders that that's typically what happens.

Yeah.

But if it's not on the drawings, we have every right as a

builder to not even bring it up.

Yep.

Cost what's on the plans.

Yep.

Sign a contract, knowing very well that there's gonna be a fucking variation.

Yep, and go, "That's too bad." Like you, you, you as the architect should've

realised this needed to be done.

You should've done your research into it.

And that is the reality of, like, this scenario where it's that draw, bid, build.

Yeah.

Like, there's no opportunity for us as the builder.

Uh, I mean, the other-

It's a race to the bottom, realistically

… uh, look, uh, it, it, it's worked historically.

Yeah.

You know, but there's also been a lot of builders that have gone bankrupt,

but there's also been a lot of designs that are end up in a waste basket in

the corner because it's too expensive.

And then, Matt, I'm gonna ask you this question, whose fault is it in the

architect's eyes if it's too expensive?

Oh, it's the architect will always blame the builder, and, uh, because

it's the easiest… Well, it's stupid because if you had three builders

tender and they're all the same price, I don't, I understand how you could ever

justify that it was the builder's- Yeah

fault for being too expensive.

And I know we're probably gonna ruffle a few feathers when we say this, and,

like, I'm kind of, I don't care because I, I'm really passionate about, like,

this process of it being broken because there is no opportunity for va- the,

sorry, there is opportunity for value management, 'cause what happens is you get

three prices in, they're all over budget, one builder gets picked, maybe the lowest

one, and then you spend another six, eight weeks going through value management A-

a- and the architect's charging for their time to fix the plans.

Yeah.

Like, to me, that should be like, "Well, no, no, no, no, you should have done that

originally to get that to that price.

Why are you charging…" And if I was a client, I would be like, "Hey, why am

I paying to rectify these issues which you should have already done?" And,

and I actually don't want to… I, I wanna actually jump on the

architect's, uh, side for a second.

I actually don't blame them.

No, I'm not, but I'm being-

I, I, I don't blame them- … facetious here … that, that this is, is what's

taking place or this is the normal process because that is what they're taught to

do at university and that is, you know, MO for, you know, a, a- an architecture

firm to go through this tender process.

And for the record, I understand why you test the market.

Yeah.

But in my opinion, and we'll go through this

in the

whole ne- That's the builder's job … we'll go through this in

the whole negotiator tender thing.

There is actually plenty of opportunity in the early stages of design to go

to the market to test the budget for a really low cost to everyone, to the

builders, the client and the architect.

Even if a builder, like say we do our feasibility costing and we decide

that, "You know what, we might waive that $1,500 fee because we like

that project, but we'll give you a feasibility costing," and that's it.

Everything from beyond that then becomes a chargeable, um, a chargeable exercise.

Yeah.

But test the market then.

Test the market before you fall in love with the taps.

But are you even testing the market then?

Like, to me, going to one builder, I know our process- No,

I'd say, I'd say go to two, go

to three Yeah, but, but, but, but why?

Because like ultimately, I, to me, I'm all about find the person that

you like to work with the most.

Like at the end of the day, we're all gonna be the same price

regardless, because w- we can only price what's been designed.

But if I'm going to two independent estimators to give, give me the data-

Yeah … that, that data if you went to it or if Kye upstairs went to them,

we should be getting the same answer.

Yeah.

So, you know, testing the market then is also to me a little bit silly because

we're doing that for you by going, "This is the range that two independent

estimators are coming back at. This is the range it should be built within

as per the documentation right now."

Ma- maybe I'm suggesting an alternate route as a bit of a hybrid

approach to the tender process.

May- maybe, you know, architects y- and clients if you wanna go down that let's

test the market point of view, do it at concept stage, not at, not at the

stage where everything's been resolved.

Do it up here.

No, you have to.

But that's what I'm saying, like I think you can still get an effective handle on

where the market is by going to a couple of builders and getting them to do their

feasibility opinion of cost costing at the beginning to maybe drive the

design before it gets m- more resolved.

Now obviously our process is much different to that.

I think, I think we still need to, to understand the tender

process a little bit more.

I think that, I, so my understanding is at university they're taught this is

how you do it and plus also change is hard like we've realized with anything.

Yeah.

Um, so- If you're doing this for the first time, I get it, and I also

get it if you've been burnt from an architect because w- the reality is a

negotiated tender involves a lot more of our time early on, and if you've

got a builder who is on site all the time and then can't get to the numbers,

and it's taking forever, and you can't progress the job because you've also

got a workflow that you have to f- like, run with, totally understand it.

Um, I think that it depends on the type of builder you're going to

for a negotiated tender to the type of builder you go to for a tender.

Yeah.

I think that's a really important part, that if you have a s- like, the

question I'd be asking as a client or an architect is, like, what is

your process of a negotiated tender?

And if you can't clearly explain what you do- Mm … and what, what your

services are, that's not someone that should be involved in that process.

I think that's when a tender is… If you've got someone just like, "Give me the

docs, I just wanna price it, I don't wanna know about it," yeah, go with a tender.

Hey, Matty, I've been talking to a few people recently and

they're like, "You know what?

You've been building with Pro- Proclima for years.

Like, how do we get to where you are?"

So we all started at level zero at one point, and we got there, but one of

the things that Proclima have on their website is they have a library of so many

details, from wall to roof to subfloor to window assemblies, for multiple

different windows, on how to use their product and install it correctly, and is

one of the, the best resources that you can find online to learn how to do this.

And if you're an architect and you're not sure how to draw something, they've

probably got the answer already.

And I think about, you know, 2018, 2019 when we f- f- we first started getting

into this, we had to trawl through all kinds of different documents.

We had to

make it up.

We, well, we had to make it up.

It's all there for

you.

Yeah, the answers are free now, and social media's great.

There's so many awesome videos and content out there, but the ultimate

source of truth is the Proclima website.

They have every single detail that you can imagine.

And you know what?

If they don't have it, you can email them and they'll help you solve it.

Damn right.

So use Proclima, proclima.com.au if you need to reach out to them.

How much do you think costs you to cost a project properly?

Tender or negotiate tender?

Say tender.

Um- Say, say, say four to six weeks worth of work.

I'd say 15 grand.

Okay.

So let's say, I was gonna say 15 to 20 if you're just costing it once, right?

Yeah, yeah, yeah.

Okay.

You go to three builders who aren't charging money That's costing each of

those small builders who might be turning over $3 to $5 million a year, it's costing

them 15 to 20 grand for that project.

Now, if they're also costing or tendering for five other projects-

There's $100,000

there's $100,000 that that builder, A, is either going backwards for

or are charging their, they've got an uplift in their price for.

At some point, someone's paying for that tender.

Yeah, but a tender is also, as you said originally, it's what you don't include.

Well, let's- And, like, there's also exclusions in a negotiated

tender, but they're, they're spoken about very early on.

Um, and, and I can tell you also, the risk on a tender is a lot higher from

a builder's perspective than negotiated tender, 'cause I don't know this project.

And I'm gonna, I'll be very honest, if I was to run a tender, I'd be

running at a higher markup, for sure.

Like- Well, there's, there's some- … I, I'd be charging more for my, for

my service as a builder because I know that those, those documentation

pieces aren't resolved a lot of the

time.

Well, well, there's… Okay, let's just say that's not always the case,

but there's, there is a, a real risk that when we get to site, that if

you've got a builder who's only looked at that plans, those plans for six

weeks, and that is expected to start in a month or two from there, they've

only had so long to digest everything.

Now, i- in that s- I know that I've gone to tender before on

projects, and we've gone to site, and the plans are not complete.

And I'm not saying that's the architect's fault, by the way.

I'm, I'm just saying that the-

I think it is.

Like, you're, you have a due diligence to produce a full set of working

drawings and a thought through.

I'm, I'm just, I'm trying to be a little bit- It's like, it's like, it's like us

building and going, "Well, we're gonna hand over projects not complete. Oh,

that's, that's not our fault." Yeah.

Like, it, it's the same thing.

Those drawings need to be to a point, if you wanna run a tender, make

sure your documentation and you know every single detail back to front

that is bu- buildable and can work.

Because I tell you what, if it's not on the drawings or you've drawn it

wrong, you're getting a variation.

And I guess that was my point.

I think my point was leading to that unresolved documentation

contractually means, or any gaps in the, in the plans or deficiencies in

the plans, is a legitimate variation.

And I would, and I, my experience in all the projects that I've tendered in the

past and all the projects that I've got- I go through, through negotiate a tender,

there's much more variations in a tender

So h- so good, good point because I was speaking to an architect

the other day and we're talking about sort of this topic, and I…

There's a few provisional sums I wanted to add in, and he's like, "Why can't you lock

them in?" I was like, "Well, I can, but most likely there's gonna be variations."

He's like, "So?" I was like, "Yeah, I'm the one that has to have the conversation

with the variation, though." Yeah.

"I'm the one that has to go to the client, 'This is gonna cost more.'"

And he goes, "Oh, there's usually 20 to 30 variations in

a job." And I was like, "What?

I get maybe four."

Yeah.

Like-

I would, I would get between 5 to 10, and I would say a lot of the time the

variations that we're dealing with are at the very beginning when you're digging

in the ground- Oh, in the grounds, yeah

or they're client driven

variations.

Yeah, yeah.

So I, I always say to a client when they ask how much we have as a

contingency, my answer is like, "Look, if it's d- if we're involved in a

demolition and then in the ground, yeah, that's where your risk profile is."

Mm. "Post that, it's on you." Yeah.

"Like you, you decide."

Um, or the r- the, or speak to us and the architect because it's

what details aren't resolved.

Mm. That's where variation could come.

But let's just go back to the start and relationships.

Yep.

Like, if you have a tender, like I'm potentially not meeting the client.

Mm. How do I know if we're gonna get along?

Yeah.

What if we're not for each other?

Exactly.

What, what, what values do they hold?

Um, like there's so many pieces of the puzzle that when you decide to work

with someone, um, and that sounds weird because we do pick who we work for as

well, as much as the client picks us.

Mm. Like, what if we just don't click?

It's a relationship.

So I, I don't go into tenders for a lot of that reason because I actually

like my clients and I want to have a relationship with them, not, "Hey, we're

the cheapest price and we're, we've, we've missed all this so now what happens?" Mm.

"And we're cutting corners." That is a typical thing that happens in a tender.

Um, a-

And, and there's, and there's actually often, um… And again, I,

I understand this and again I, I, I would love to invite any architect on

here to, to, to talk through why they feel the tender process is better.

I'm just saying I'm not- Oh, I,

so anyone that wants to come on and have this conversation-

I'm not saying I-

reach

out

… I would love to just like really understand it and I'm, I'll go into

these completely open-minded and, and maybe you can change my decision, but

in my experience The relationships that I've got with past clients where it's

gone to a tender, and the relationship that I've got with clients where we've

gone through a negotiated tender, where we're dealing with clients for 12 to

18 months before we even get to site.

So-

It's wildly different

… but also, a lot of builders talk, not just within our little builders group,

like the wider community and we all kind of sort of semi know each other, and

then there's a number of arc- a number of builders that we know that will tender

for these swanky architectural jobs.

We know they're not making any money.

Mm. We know that they hate working on these jobs.

We know they don't have a great relationship with the architect and

clients, but it gets spun the other way.

I can tell, like w- we hear this how often?

All the time.

So when it comes to relationships, you can say, "Oh, yeah, us and this

builder have done 10 jobs together, we've got great relationship."

I can tell you it might not be the other way around.

Mm. It might be great because every time they're the cheapest build, but

for them, they're struggling day to day because they're being grinded to

a pulp on a tender because, oh, this person's got this and that person's

got that, and it's not uncommon when you get these tenders that that you can

have prices at like, just let's call it a $2 million job, there can be 700,000

variance between the three tenderers.

Like, how is that even relevant?

I don't know.

I mean, the, I, I also just want to go on the record as saying that I do also

know of a f- few architects who I'm friends with who do go to tender, and

they do have their preferred builder, and they have, um, ongoing really positive

relationships with that builder, who knows that every single time a project

comes across their desk, that there's gonna be two or three other builders.

Hmm.

And do you know what?

For them, that relationship

works.

No, and, and it's- Yep … business models, everyone's different.

Yep.

Um, but I, but it, but also is the relationship, are you

hearing it from both sides?

Like, I'm just questioning that.

Well, n- n- no, it's not.

You're right.

But I guess I'm just saying, 'cause I'm friends with these architects

and, you know, they're telling me that it works, and I'm like, "Cool.

Great."

But yeah, but like, that's what I'm saying.

Like, have you spoken to the builder?

Because these builders we also speak to go, "It doesn't work."

Yeah.

I gue- I guess all I'm saying is I think there's also another side to it

that we're obviously not talking to.

Yeah.

And what we're talking about today is the reasons why Matthew Carlin from Carlin

Constructions and Hamish White from Sanctum Homes don't competitive tender.

But

also let's look on a large scale on a commercial project, um, even a, a, a

government project when these tenders, and we hear e- especially in Victoria

with cost blowouts on these projects, it's because they've tendered it

and they leave off what's not told.

Yeah.

And then all of a sudden, all this extra money is having to be put

in by the government or something along those lines because it

wasn't in the tender documentation.

That, that, that translates on a lesser scale of- Yeah … value money than

commercial or residential.

I think commercial's a bit different.

I know when we've talked to Liam about that before, that the commercial

documentation is the tender documents are like 60% done or something.

Yeah, they're not 100%.

They're, they're not 100% done.

Yeah.

Which, which, which- I could, my, my pers- my percentages could be wrong.

I'm not saying that translates

into- And you're saying residential projects aren't 100% done?

I, I'm, I'm not saying anything.

All I'm saying is I think there is a difference between commercial

tenders and, and residential tenders.

But-

No, I, I'm, I'm not disagreeing.

Yep.

Um-

So m- in my opinion, just to summarize the tender thing, I, so you, you're right.

There's, there's, the relationship part I think for me is the biggest one a-

and also the financial side of it too, not knowing that I'm investing my energy

and my team's energy into something that I don't know that I'm gonna get.

And how can I possibly program on a project which I think might happen.

Whereas if clients are signing up to our pre-construction process,

I'm like, "Great, you've got this spot in 18 months' time."

And we're incentivized to get it on- Yeah … track to a budget, because if

we don't get that job, our pipeline dies.

Exactly.

You know, and we've, obviously as a builder we're, we're… You know, if

we talk about margin for a second, my margin goes up and down every

year based on my projected turnover.

But also, why do, why… This is another topic.

Like, when you had, back in the day, what's your markup or marg- or margin

or markup, everyone asks margin.

Um, but what's your margin?

Like, why does it matter?

Yep.

Like, why, why, why… I don't walk into your architect office and say,

"Hey, what are you guys charging your staff out and what's your profit

margin, net profit margin on a project?"

' Cause do you know what I could say?

Do you know what I could say to cl- uh, architects?

I go, "We're, we're going for 7%."

Yeah.

But I could hide, I could, I could then jack my carpentry

bill out and double it or triple

it.

But, but, but, well, I guess the point I was making is, 'cause it

depends on what you're talking about.

'Cause if, when I talk about 7%, I'm talking about 7% net.

Yeah, yeah,

yeah.

Or 10% net.

Yeah.

All right.

And, and the architect might go, "Oh, that's great." But if I then told him that

to get that, I need a markup by 27.5%-

Yeah

… they're like, "What?" So this is where the, where I think it's ac-

you know, ask the right question about your markup and margin.

Yeah.

What are you trying to make off a project?

What's your net?

What's

your gross?

Yeah.

What, what's your net?

What's your gro- Like, and- But why

does it even matter?

Yeah, I, I mean, I agree with you, but do you know, I, I guess I'm

just illustrating what I could say.

But I don't, I don't go back on what are you charging per hour your team.

Yeah.

Or what, what, what's your, what's your, what's your, uh, what are

you charging for your contract administration during the project?

I don't know.

I don't ask

that.

Yeah, true.

Like, so, like, it, it doesn't matter.

I, I… At the end of the day, the, what matters is the final number, and if

the client can afford it or they can't.

Mm.

Yeah.

How we get there, because ultimately I can make my margin looks… I c-

I could run off on 1% markup on the project, but I can just hide the

money everywhere else in the project.

Yeah.

So

it, it- Yeah, but I think if you are… Yeah, I think you're right.

If you are comparing numbers You can, you can, you can compare category numbers if

you wanted, or, or cost center numbers, and then you can compare the last number.

If, if the justification for asking the builder for their markup or margin

is, "Oh, we need to compare things fairly," that's fucking irrelevant.

It's, it's actually irrelevant.

Yeah.

Really, the most relevant thing is what is the bottom numbers?

And what's included and what's inc- what's inc- Exactly.

Yeah And ultimately, it should be, why do we need to have a breakdown of each trade?

It should be as per plan, 'cause you've got a full set of documentation.

Exactly.

And it should be, this is the number.

Yeah.

Yes or no.

Yeah.

Like, that's how… Yeah … because ultimately, if you want to have a apples

for apple situation of tendering, which we know doesn't happen in the real world- Mm

… well, that's, that's how it should be.

It, it's, you submit a price, it says as per plan, and th- it is $1 million.

Cool.

That's all I need to know.

Yep.

As per plan.

'Cause you, as the architect, should have your documentation

at that point pre-rounded off.

Yep.

There, there shouldn't be, "Ooh, I'm not sure how this is getting done."

Yep, yep.

And, and, and if, and if, and, and I'll- And

I'm not trying to have a crack at you architects right now- Mm

but that's ultimately, that's how that process rolls.

If, as a builder, and I'm involved in the tender, and all of a sudden I'm looking

at the window suite and I'm looking at the windows and they're like $150,000,

and I want to make my price look better- Yeah … and I, and I go, "Right, well,

I can get that for 100 grand," and I'm putting in a different window suite.

And if I then say as per plan and my price is lower, that's on me.

Yeah.

Not on anybody else but me.

Yeah.

So I guess there's more just to, just to validate the point of the

what the most important part of that tendering is the number at the end.

And what's included.

It's simple.

Exactly.

It's honestly- Yeah

it, it is, it is the easiest way to do it if you want to go down that path.

Um, and, and that's the only fair way to do it.

Hey, I'm about to go on a journey with systems and I'm working with

James from BizTech Guru, who, he was a guest on our podcast.

He was.

And I've actually done a lot of work with James in the past, and it has transformed

my business from just being this classic clusterfuck of a building company to

a systems orientated focused business.

And what he's, from understanding, it's all focused on builders.

And- Yep … we're going to be doing a live webinar with him coming up-

Yep … as part of this, and it's gonna be a big introduction to systems

and how it can improve your business.

And you know the beauty about it?

It is gonna be absolutely free.

Yeah.

So keep an eye out for the dates.

Uh, this is gonna be a really incredibly valuable workshop to not miss out on.

Yeah, so either shoot us a DM, um, check the show notes, but we'll put a link

below here to show you how to sign up.

So- Cheers … make sure you sign up

Now, negotiated tender.

Yep.

Um, define it.

So negotiated tender is, uh, in my experience, in my company, is that

the clients are coming to us for our solution for a building product, right?

Yeah Generally.

And they're signing on to our pre-construction

process, which costs money.

Yeah.

We have a really detailed pre-construction process from the moment someone calls

to the moment we sign a contract, and we're involved in all the micro steps

along the way as the design takes place.

Now, I say this to everyone when we, when we begin, I'm not a designer.

Mm-hmm.

I'm not an engineer.

What I'm here for is to comment on buildability, performance, and cost.

Yep.

That's it.

Yep.

Hun, I, I, I couldn't really agree more, and I think one thing builders

and the, the construction side industry's done well, and it's

probably frustrated a lot of people over the few years, is we've marketed

ourselves very, very well to become…

Like, the good builders are very well trusted.

Mm-hmm.

I think social media's played a really good role in good builders showcasing

what they do, their, their pitfalls, where they go right, they're wrong.

So clients naturally, w- in an industry right now where there's a lot of neg-

negativity, will, will move to that, that type of builder because they have

a level of trust that they feel- Yeah

like they've already got.

The amount of people that reach out to us and be like, "Oh, we

kind of feel we already know you."

Hmm.

Um, that's how I kind of want it to be.

That has probably, to some extent, probably frustrated, I would say, certain

portions of the industry as well because builders are, for the first time, are

educated and put on a pedestal- Mm

as well as architects, where architects have gone to university,

done their education, and for once we're comparing a builder on

the same, the same playing field.

Yeah.

As a, as a, uh, I- An e-

an equal peer

… I'm, I'm gonna use the term consultant as, as a loose, because there are

kinda legal kind of ramifications- Yeah

around that, but, like- The architect and the builder and all the other

consultants of the client are equally as important in my opinion.

Some actually have more importance at certain stages- Yeah.

It's like we're

on- Than, than everybody else.

Yeah, like we're, we're more, we- we can talk about a structure and how it's gonna

be built, um, more than an architect.

I don't know what the fuck how to design it.

I don't know the res code limitations like the back of my head.

And do you know what?

I'd rather, I'd actually rather not c- look, if someone asks me my opinion

on something and they want my opinion and my opinion only, I'm like, "Great.

Well, you know what? That beautiful timber cladding there, if we did it

out of this, it's gonna be cheaper."

Yeah.

But look, look at like, and it's also like I think builders need

to understand their role in this.

Like you can see clearly when a builder has designed their own home.

I totally

agree with you.

It is the fucking hodgepodge of everything.

Yeah.

And I think that is builders, you need to know what your role is in this.

Mm. It's not to comment on the design.

But hypothetically, as you said, we could have a timber, but we can be

like, "Hey, you've specified this.

Here are two other options that are actually more cost-effective."

Mm. "What do you think?"

Yeah.

That, that's then on the architect to make the decision and go, "Oh yeah,

we're gonna investigate it," or, "No, no, we really want that material."

That's all we can do.

Yeah.

We, we are there honestly as a bit of a sounding board as things come through.

Yeah.

And look, I, I use my relationship with Maxa Design, and I hope I haven't

ruined any relationships, you know?

Sven's pissed off.

So talking about this today, um, no, that won't happen.

You know, the amount of phone calls I have about things on multiple projects

from different people of their team saying, "Hey, what about this?"

or, "What about that?" or, "What do you think about this?

How do you want this build-up to be?" It's

called respect.

Well, I think it's respect, but it's also just- Experience … leaning

in on the, the people who have more experience in that particular thing.

But you can also have hard conversations.

Like I was in the car speaking to someone this morning about, uh, that

they're a designer, and we had a very hard conversation about pricing.

We can have that when we have that level of trust and relationship with each other.

Mm. If I had a tender person architect come to that, I'd be telling them to fuck

off- Mm … with that conversation because I know it's coming from a certain place.

Where the trust and relationship that I already had with this

person gives them, gives them the ability to be able to question me.

Yeah.

And, and it, I know it's not coming from a bad place because

we've worked with them before.

So I think, I think that negotiated tender, um, I think one, you need to

have done it before, and going, doing some course by someone to teach you

how to do it, that is a starting point.

That doesn't mean you know it.

I think it is our, our negotiated tender process is practically built up of

mistake after mistake after mistake for 10 plus years to get to where we are now.

And what I will say is if you're involved in a, quote-unquote, negotiated tender

and your only cost… and, and you're involved in all these like, you know,

design meetings and putting- Yeah

your opinion in on something and chatting with the engineer about how you want to

do something and all that kind of jazz, and then you're just quoting it at the

end Then that's not a negotiated tender.

Like, that is, honestly, you may as well go to tender.

Yeah.

So-

Because, because you still have no fucking idea of where that price is gonna land.

If you are, if you are truly serious about going through a good solid ECI

process or a pre-construction process, negoti- whatever you wanna call it, you

need to have stop points, very clear stop points along the way of costing it.

Now, the costing, in my opinion, gets tighter and tighter as the

drawings get, um, more developed.

Yeah.

At the beginning it's a range.

I know we've talked about this before.

It's a opinion of cost and it's a range.

Do you feel comfortable with a number between here and here?

Yes or no?

And

that's- It's really simple

… so yeah, first step, preliminary price feasibility.

I know architects will offer a feasibility.

Is this what you want?

Same thing.

Can you afford it?

Yes, no.

Yep.

Yes, I can afford it, we progress, and it's, we can afford

the range, not the low range.

Yeah.

Or if that, we need to adjust the range, it needs to be redesigned slightly.

Yeah.

It is yes or no, okay?

There, there is not a mm maybe.

And a client's budget might come up too.

Yeah.

Because they might not have a really clear understanding of what something costs

either, so they're c- they're, they're- And they're not meant to … they're- But

Please help architects, if you're a client listening to this, 'cause I

feel really so- sorry for architects in this instance, be totally transparent

with what you can spend- Mm … and what is the number that scares you,

and what is your tipping point.

Yeah.

Don't be like, "Ooh, I've got a few extra $100,000 up my sleeve."

Fucking tell them straight out, "This is what I can afford or not." And then

you as the architect, don't go… 'Cause I read a, I read a proposal for someone

recently to review their proposal.

They had a million dollar hard budget.

The architect in their fee said, "Oh yeah, this is up to a designer

1.5 mil." Why is it up to 1.5 mil?

They have a hard budget tipping point- Yeah … where the project does not go

ahead if it's over a million dollars.

Like to-

And it, it is tricky though, if I was to jump on architects' design- It's not their

fault either … because, because there is, there is the scope or, or, or the, or-

Scope creep

Well, you know, if the clients are saying, "This is what I need and this is my

hard budget," and they might not align.

Oh, I, I, I think that the easy way to solve that is you just have to design

to the budget, or to the brief, not to the budget, and then that, that

eliminates that problem for architects.

Yeah, yeah, but- That's- … you, but you need to be clear about that.

You need to be… If, if you, if a client, if a, a again, client and

architect, if, if you're a client and you say, "This is my brief-" Yeah

"and we have to have this."

Yeah.

" And we, this is my budget." The architect at that point should

say, "This is not gonna work."

Yeah.

And if the client chooses to move forward from there with their brief knowing

that their budget is this, it's not the architect's fault at that point.

Yeah, like why- That's the client's fault

why show them the Ferrari when they can only afford the Suzuki Swift?

But- Not to offense anyone that drives a Suzuki Swift but-

No, but I guess what, and this is where it gets tricky for an architect, and I

feel really sorry for architects doing this, because if the client's like,

"No, this is absolutely what I want," and I'm saying even after the architect

or designer said it's gonna be more, if the client is saying, "No, I want it

designed," then that's on the client.

But- No,

yes

… but if the client's like, "Well, this is our hard budget. This is

kind of what we want, but we're happy to kind of be flexible,"

then I think it's the architect's responsibility to design to the budget.

But that's, but that's the, that's the where you need to have that first

feasibility price because it sets- Exactly

it sets a boundary and it makes… It just, it re- it's a resets the playing

field to, to, for the architect too.

Um, I've spoken openly about why I think quantity surveying at that

stage is a waste of time and money.

I

agree.

Uh, but I think getting a build at a price at that point sets the example

of like, okay, this is where it is.

Hey, I'm, I'm actually in that point, at that point there trying to help the

architect and go, "Can you afford it? Yes or no?" And this is, uh, this isn't, uh,

the architect's fault, like, whatsoever.

You've asked for this, this and this.

Like, we can do- Mm. If you wanna get to this amount or if you take this,

this and this out, well, then we get down to it, and the client goes,

"Well, we don't wanna lose that."

Well, it's like, well, how do we get it to that point?

Yeah.

Um-

Spend more money.

Yeah.

Or, yeah, and that's that not the architect's fault if they're,

if they've, um, been forced to draw these things in, like…

And I guess the… I think the, the, in summary, like in my opinion, the whole

idea of this whole ECI process is to not sit there and point blame at anyone,

because you're actually working as a team.

You're all incentivized to get to the same goal.

Exactly.

You're… All right, we've got $1.5 million to spend.

We might look at a set of plans and go, "Oh, Mr Architect, I think it might

be 1.7, 1.8." We then sit down with the client, have that conversation

even before any work gets done.

If the client's saying, "Yep, maybe we can stretch to that," do a feasibility.

You might land 1.5 to 1.8.

Great, carry on.

So everybody's involved in the decision making.

Everyone has agency to move the project forward at any one time,

to put the handbrake on it or not to put the handbrake on it.

So it's not getting all the way to the end where, you know, 'cause- A $1.5

million budget feasibility can very easily get to $2 million by the end of-

Yeah

if, if, if it's not been caught along the way.

So, so it's monopoly money at that point.

But I'm just thinking here, I've just written a number of jobs that we've done

feasibilities or they've never gone ahead.

Two of them were because the client, the actually the architect, I know in

both instances, 'cause I was involved before they even put pen to paper,

told them what the client wanted was way out of their reach, and what they

wanted, the clients were hesitant.

Uh, no, not hesitant.

They were so, um, forceful, forcing the architects to design these

things, and they're both a million dollars over the, what the budget was.

They died.

Like, they couldn't afford what they wanted.

Um, the, the other options were presented, whatever.

Another one just sold their house and they just decided out of nowhere to sell it,

so that sort of was, uh, out of nowhere.

One was a very, very, very inexperienced architect, I reckon it was their first

house, um, that just didn't have the processes to- Mm … be able to have

the hard conversations, and that's not, that's just a learning thing.

Um, that's not their fault.

It, it is their fault, but that's like, you kinda don't know what you don't know.

And there was one instance where- It's

just a failing forward thing.

Yeah.

That's, yeah.

That's, we've all made mistakes.

Another one was architect designed nearly double what they can

afford, but the client also didn't go do their due diligence on

knowing what they could afford.

Yep.

So it was kind of like a, a bit of…

And, and in all, in, in fairness to that architect, the price we came in wa- at,

was what the price is what the architect said that, that it was gonna cost.

Yeah.

Okay.

So, so I look at it and go, "Well, yeah, there's a number of failings

there on those, on…" Like it… You should never just blame one people.

It takes multiple- I, I actually think- Like two, two to three to go

I think

in all of those scenarios it's just about communication.

Yeah.

Well, what have you said before?

100%

of problems- 100… It's all communication.

I mean- Yeah.

Yeah.

So I think, I think that the second part of a, a negotiate tender is doing

a detailed pricing off a fair few documents of preliminary engineering.

Yeah.

A good set of drawings.

Um, not-

Sche- schematic engineering, I call it.

Yeah, yeah, yeah, yeah.

So not, not, not to a point where you have every detailed thing

in the build, like a pretty good set of interior docs that we can-

Yeah … price off, which is what we do.

And then we- I

would, I would even argue for us anyway, we don't need interiors.

We just need placeholders- Um … for joinery, and we need an

understanding of what the finishes

are.

Oh, see I want interiors, uh, because that's where price

can just absolutely blow out.

Is it a veneer or is it a laminate?

Is it two pack?

Yeah, but that's what I'm saying.

Is it a stone?

You can, you can just get a, you can get that written down.

Go price for veneer.

Yeah,

yeah.

Like, I, I don't, I don't, in my opinion, and again- Yeah The beauty about this

conversation is how Matt does it and how I do it are still slightly different.

But we don't need, we don't need interiors, 'cause I think that's a

chunk of money that the client shouldn't have to spend at that detail costing.

So at that point, when I do mine, I'm getting about 30 different trade quotes.

30. We're- Yeah,

yeah, yeah, yeah … we're still getting trade quotes as well, but w- and we're

going to our joiner and saying, "Hey, allow for X, Y, and Z based off the-

Yeah, yeah. Okay … level of finish."

Yeah, okay.

So we're giving them some guidance, but it's not getting drawn.

Then between that and the final, you're kinda doing a, some value management.

Yep.

Um, and you, you're refining some details, and the interior

designer's refining their things.

Then you get your final.

That is, we, we could build off this tomorrow.

Mm-hmm.

Um, I could build off the sec- the first price, but ultimately there's still a

lot of unresolved issues, and you'd say there's a higher risk of variations.

Um, but the final price always, like, we are fully… We've done

the RFIs, we reviewed the drawings, we've found errors, we picked up on

as many problems as we possibly can.

And that is not to pick the architect apart.

That is purely just to try and r- get our documentation as final.

Mm-hmm.

And we go back to a tender.

I did a project the other day, and the architect's, probably

the best plans I've seen.

There was 100 RFIs, questions that we had on the project-

Yep

… um, that all would make, at some point, a decision on the pricing.

Yep.

Um, so the plans are f- So we,

we, on, on our, on our t- on our preliminary estimate-

Yeah

document, we call them items for consideration.

So, so yeah.

So I just call them RFIs- Yeah … 'cause it's just short for me to easy to say it.

But that, that then gets tidied up, so we have a set that we can actually

price off that we, we are reducing the risk on the, the client going forward.

Mm-hmm.

Because ultimately we're there to represent the client from a builder- Yeah

perspec- per- uh, perspective.

So then you get your final price, then you might do a bit of tweaking here and there.

Yep.

Um, and then you're onto your contracts, blah, blah, blah, blah.

So-

And do you know what?

So that whole process, what you'd say 12 to 18 months, that

you're building a relationship.

Yeah.

I always say, I always say, generally from the moment they reach out to

us, if there's no council, town planning, those sort of things, you're

looking at around at least 12 months.

Yep.

If you've got town planning, um, u- allow upward of s- 18 months, but we know

councils suck and town planners at council level is, is called a bullshit job.

Um, so-

But I guess the point I'm making is you've had 12 months to build

a relationship with the client.

Oh, yeah.

But usually before that because you're also a little bit before it because

you kind of got to know them a bit.

But I guess- Yeah, yeah.

No … w- I guess what I'm saying is like- You've got trust … you've,

you've got… But not only that.

In, I, I think in my scenario, I'm friends with them.

So here's a question for you.

If I was to go to clients at that point that we get on site, who do you

trust more, the architect or builder?

I feel that the most clients would say we actually trust, trust the builder more

I, I'm not gonna disagree.

However, I think if it's a successful- It should be, it should be the

same … pre-construction process, then everyone should be high-fiving.

I can tell you at the end of the project Who they potentially trust the most

Uh, yeah, yeah, but I think it, the, the relationship, and if we're talking

about before about, like, when's people's involvements is the heaviest, obviously

during construction it's with the builder.

And- So the relationship's changing a little bit … and you

also see them a lot.

Yeah.

I, I actually don't think, if I'm sort of to answer this question on the fly,

I would hope that a successful project is that everybody at the end is all

there doing the handover together.

I,

I, no, that's what

we do.

Because, because everyone's fucking pumped to see this project come to life.

Yeah.

And also you gotta remember i- in the architect's events here, we are in front

of them 30 times face to face, 'cause we're on site, where the architect-

They're building a home … might be six to eight- Yeah, yeah … eight times.

Yeah.

Like, like that, that you're doing a lot of- Yeah … uh, online meetings.

We're literally- Yeah

with them on site.

Yeah,

yeah.

Um, and, and, and they see something physical like that,

that also probably plays into it.

Like there's an emotional aspect that you probably can't- But

yeah, I agree.

And but, but I'd like to think that a suc- as I said, successful

ACI or pre-construction process should be that everybody's

still fucking friends at the end

of it.

Oh, a- a- and you know what?

That's the perfect thing because of a negotiate tender, 'cause we

keep k- coming back to the same architects we get to work with.

Uh, there's a, there's a mutual respect there.

Um, we can have very hard conversations when we need to.

Um, we understand that they're just not an architect or they're

just not a, um, a builder.

Like we know, kind of know each other's families and what ha- happens outside.

Like there's, there's a, a level of respect to each other.

Um- Mm-hmm … and that's the way it should be.

It, it's, uh, we speak, like we speak about it's a, it's just teams.

Like think of any successful sporting team, whether that's

like over time like the- Yeah

Golden State Warriors in the NBA, um, Chicago Bulls back in the day, or you

look at the All Blacks, um, in the rugby.

Like successful teams are like built on, on great culture and- Yeah,

and trust

… and trust.

And, and I finally actually was watching something today.

I've got this is s- s- I'm gonna probably butcher this.

It was Simon Sinek and he's talking about the, the Navy SEALs.

Um, and he was saying that do you… Like if you had a graph and you could pick

someone who was amazing at their job and the best that they can be, or they are

trustworthy, if you have on a scale that you pick someone that is, uh, amazing at

the job but no trust, no one likes that.

They're just the worst type of person- Mm … out there.

But every- we have a metric, he was saying we have a metric to, for KPIs for that

type of person- Yeah … because they're always performing from a work perspective.

But, but statistically, most people would rather p- pick someone

who is probably not as good, but they have a high level of trust.

Yeah.

And I think that is, that is the really important, it's a really- I

think the, the, the thing behind that backstory is when

they're choosing leaders.

Yeah, yeah.

That's exactly, yeah.

Yeah.

When they, when they ch- yeah.

'Cause so if, if you haven't heard of Simon Sinek, fucking legend.

Yeah, yeah.

You need to go and listen to his podcast.

Um, A Touch of Optimism?

Undenied, yeah.

Little Touch of Optimism.

Um, really amazing-

I don't, I'm not, and I'm not into those sort of like motivational speakers- I am.

I like some of the stuff … but that was like, yeah, that makes so much sense.

Yeah.

Because I would rather someone that I trust, because I think that's the

ultimate thing is, like, I would say in a tender there's zero trust going into it.

Everyone's on eggshells until you kind of work it out.

From a negotiated tender, it, it, it, it- Do you know what

I- … builds really quickly

… you know, there's, and I, and I'm probably gonna butcher trying to explain this.

Do you know what I feel or what I imagine when people say tender?

I feel like there is a whole bunch of people locked in a room, and they've

all got the same information, but they're not fucking talking to anybody.

Yeah.

And then they're isolated and they're- Guarded … trying,

they're guarded, they're trying to figure stuff out themselves.

There's no communication with why or, or could we do this, or should we do that?

I just get this feeling of like isolation in a tender.

Now, I would love to be challenged by what we've talked about today.

Yeah, no,

I agree.

And- So if anyone, architect wants to come on or builder-

And, and I'd love to- … reach out … like, I, like I'm, I'm

a pretty open-minded person.

I hope people kind of get that.

I know what works for my business, but it would be good to understand, because

we've been incredibly biased now to the negotiated tender side of things.

So it would be good to understand, I guess, the logic or the

motivation behind a tender.

And I, I do, I do understand from a, a builder, a client's perspective or a, um,

architect's, like how do they know they're getting the right price?

Well, maybe, maybe that's a good conversation.

Maybe it's a, if, if you're a homeowner and you want to go to tender,

why do you want to go to tender?

If you're an architect and you want to go to tender, why

do you want to go to tender?

If you're a builder and you're happy to go to tender, how are you happy?

Why are you happy to go to tender?

Like, it'd be good to kind of, I guess, get the big- Yeah … the big picture

of it- Yeah … to really understand it.

Um, I think we've spoken about that pretty well.

Yep.

Um,

yeah.

Hope we haven't pissed too many people off.

Wouldn't be the

first time.

I mean, you don't, you don't care, though.

I don't give two fucks.

Um, yeah, so thank you very much for tuning in today, guys.

Um, have a good day.

That's how you finish it.

What a, what a way to end the podcast.

Done.

See

you.