As builders in the Australian market, there's one recurring theme that keeps rearing its head in our conversations, and that's the tender process. It's akin to a race to the bottom, a mad dash where numbers are thrown around like confetti, and every party involved is crossing fingers, hoping all that time they invested in the tender results in actually getting the contract. 

The reality can sometimes fall short, with tenders not proceeding through to a contract, clients just choosing the cheapest option and hours spent on a project that never comes to fruition.

For those new to the concept, the tender process traditionally involves getting multiple quotes for a project, often by an architect or a client. It's about cost comparisons and attempts to squeeze a project within a budget. We find ourselves questioning the validity of this approach, especially when the emphasis is typically on finding the lowest price rather than the best fit.

In this episode we take a look at how the tender process currently works, and why we recommend the negotiated tender process instead. 

LINKS:

Thanks to Hip Vs Hype for having us

Connect with us on Instagram:  @themindfulbuilderpod

Connect with Hamish:

Instagram:  @sanctumhomes

Website:   www.yoursanctum.com.au/

Connect with Matt: 

Instagram: @carlandconstructions

Website:  www.carlandconstructions.com/

today, um, we wanted to give a big shout out to, Liam and the team at Hip vs.

Hype because we're actually

filming

at

the Better Building Exchange in Brunswick.

And the team there have been

really

generous to let us

use their space

to

record

these podcasts.

but also for Sustainable Builders Alliance in the past

as well.

Oh Yeah, absolutely,

Yeah, for sure.

So this is

this this is

the same space that we use to do all our

live events.

So

big shout out to Alice

and Liam, the

team from hipfirst

Maddie today

the topic is tender

or

not to tender?

That is the question.

so tender, typical

process where you would the architect or designer goes to three people or

a client goes to three people and they would then, um, essentially

find the best price between the three and probably cost compare and

somewhat try getting apples for apples

like,

for like, quote,

that is not the reality of how this works

as well.

I think it's when it's with architects, they are a lot better at getting apples

for apples because it is as per plan.

When a client might just reach out, that's when it can get a little bit confusing.

And then

typically I would

say

more

than

75

percent of the time it's just who is the lowest price.

I'm going to try and put my switch in the hat on for a second because

I certainly don't want to come across it where poopooing architects

and designers for running a tender process, because I guess I get it.

I understand intellectually the reason why they would do it.

They obviously have their

clients.

best interest in mind, particularly

in this current climate

where prices have

been a bit volatile or they

have settled recently.

I do understand why someone would go to tender,

but I kind of feel

like in our current market I

think if we want to start thinking about builders as professional

outfits or professional

business

owners, then I think we need to be leaning in on builders.

For their experience,

because they're at the coalface

of

costing and I don't personally feel that the tender process really values

the builders in that in that process.

No, and I know that we've had comments on that in the past, and

I think we'll get to that in a

second,

I think

then we've got like, what I refer to as a negotiated tender, I

don't know what you'd call it,

um,

yeah, ECI,

bring the builder in early, and that is just working as a

collaboration, so you're there from the

start.

and you get a big concept plan to price it out then.

and then

you work all the way

along until

you work as part of that team to get the project to site.

think it also

feels that the builder is valued

for their time.

Yeah.

and then generally paid for their

time just installed on the project.

Yep.

Uh, and it's

something that

I started doing in probably 2018, I would say, I don't know when you did your

first.

I would say Jesse Glass Scott from G LX kind of clued me

into this whole paid thing.

And I reckon it would've been a similar time, 2019.

Maybe.

And I think the first time I did it was

about 1500 bucks.

And I thought, whoa, this is, this is how could, this is unreal.

do see

value

though,

uh,

in clients and architects

talking to builders early on.

Yes.

More than one.

I would

always

suggest

three.

It should,

be treated

like

a

tender where you find

three builders and you find who you're

gonna work with the best.

I yeah, I personally always say

to

clients is like, I'm

not for everyone.

You need to find the person you work best with and that is

It's a relationship

with it.

We're

signing this

off for

10

years.

We're part of your family.

It's a marriage.

Yeah, The prices are all going to be quite similar.

We all, the good builders use a lot of the same trades or the same products.

It can't differentiate

too

much.

So, And I

think

when you're

at, when you're

operating in the

same space, too

so say if you

me

and mark from MBH all went for the same project I would argue that within KUI,

you know

prices would all be the same.

but we all operate

a bit differently

You know

Mark,

the Yoda of building, you know, he's

quite

methodical and quite measured in his approach to things.

You and I are quite.

Yeah.

you're a bit younger.

A

bit.

Well, that's sorry, Mark.

That's not age Mark.

He's not that much younger than me.

He's old.

I'm not that much

younger than you.

No, but do you know what I mean?

I'm using that as an

example.

Like I feel like it's all

about getting that

personal connection with that builder.

So hey, getting that

relationship is really important.

Now,

I know our

current process and I think yours and, you know, let's use Mark as an example.

we've spoken about that on a previous podcast about Hull Reconstruction.

Yep.

Our process

now is

quite similar where we'll do,

I would say,

like a reasonably high level estimate, where we'll do a

little bit of work for a lower

fee.

And it's at that point where

I

feel that

clients and

architects should get two or three builders in.

Just to pressure test the design and budget, not just from what I'm

saying, but maybe what you're saying and what someone else is saying.

And from that point, you've actually had an opportunity to chat with the builders,

get their

take on the project and any limitations or any advice or and

changes or anything like that.

And then you can all move forward confidently knowing that

you're all kind of going in the

right direction.

I do have a problem at At that when you're interviewing three builders

asking what the price is though,

because I've been

called out

twice recently where, on one project said, Hey, it's going to cost you 1.

3 million for this

build.

And they're like, that's a bit more than what we wanted to

spend I'm like, that's okay.

I'm just telling you what I think is going to cost.

Because that's what you've asked me the question and then what

I'd later found out is that

two other builders have said, Oh,

750 to

800. But

then they're like, Oh, why are

you so much

more expensive?

And I'm like, Hey, I

haven't put a number

against it.

I'm just telling you what I

think.

I miss out on

the job, the other

two builders

get a

look

in.

They then

do their running the numbers, and

you know what they ended up at the

exact same number at what I

said,

but I was the upfront and honest one, the other

two just didn't

know what they

didn't know,

And

then all of a

sudden I miss out on

the project, so now you

have

this issue is like, do,

the, and I've spoken about this and

it sounds bad.

you play the game and low ball it

to get in?

and then deal with

the consequence later, or do you run the honest

approach and potentially miss out on projects

Because at the

moment, I would love

another project starting and one of those

projects went to site at the number I, said it was going to start at

actually,

I would have been under.

Yeah, i, totally

hear what you're saying.

I mean, and I think at the end of the day, you and I both would

approach honesty first, like

and that's what I go back to is like, I

can sleep at night.

Yeah,

exactly.

Look,

I'm not trying to, you know, sugar coat anything or try and make us look all

rosy and nice, but I personally feel

that honesty

straight up front That is the

way to go.

And if someone

is low

balling to get in and telling you what you want to hear, what

kind of relationship?

I just think, and that's when I have the

complete

trust in

architects and they should be able

to

decipher through that.

They should be able to go, why are you so much lower?

Yeah, yeah, That's a good point.

And that

I, I, so I would say like

we,

put on,

we

we, we've You've got to get better

at building architects

off because we,

both believe that sometimes the way we talk

comes across as if we

don't, But

I,

that's where I really rely

on the

really good architects to be like, Hey, why are these

two so

different

to compare to Matt

is Matt too

expensive

or are

these guys

low

balling

it?

We need to do some

more of them like investigating.

I would say that 95% percent of architects and designers that we deal

with have honest conversations with

clients.

I'd say 100%.

The bonds we bring

into what we work with.

We've already got that.

we've able to,

I think we're both very good at finding whether we're going to align or not.

Agree.

I was having a conversation with someone this morning on the way

here though of an experience that they're having at the moment.

Now, I understand at the moment work is a bit thin across every facet

of construction from design all the way through to construction.

And

a friend of mine said, the architect said to him, I'll maybe hold off telling

the client your opinion on cost Right.

Now, because I don't think that their budget is going to allow what I've drawn.

Okay.

And it kind of almost

makes me feel that that's not the right way forward.

And again, I'm not saying that this is

something that architects do at all.

So please, you know, don't assume

that that's what I'm saying, I think that there are still people from both sides,

builders and architects who want to just

try and get a project into their funnel and hope that on the

other side, the clients find more

money.

When we're asking for more money, these people are building with 1.

5 million dollars and I always feel guilty being like,

Can you get an extra 200, thousand dollars?

Like, yeah, that's not a small amount of

money.

No, it's not.

It's not.

It's not.

But I feel that's where, honesty, straight up.

And if it means that you and I miss out on a project, And it does go to site for 1.

7 when we said it's going to be 1.

7 and they want us around 1.

5, then that's okay.

I feel that that's

okay.

Yeah,

I totally agree.

I'm actually gonna poop who on build is here.

because I think what happens is at a moment is there's a lot of education

out there for builders that you can go find very quickly how to

run this pre construction process.

And so you do a two day course and all of a sudden you know, an expert in

it.

But what we've always spoken about is you don't know what you don't

know.

Now

I

think that that has also ruined it for builders

because they've done

this course and hey,

we're going to charge, but we don't know a

process.

to actually make this work.

And it comes back to

hurt us where I've spoken to some

architects

who have been

So

burnt by

the process, and I totally

wouldn't.

be the

same in their position.

Uh, they don't want

to do this

anymore

because they're like, Oh,

we've,

engaged this builder and another one, and they didn't

get back to us, and the

price they gave

was

half a million under budget

and

it just went to shit.

and then

I'm like, yeah, totally

respect that you don't want to go down that

process, but don't put the rest of us who actually

have really solid foundational processes

in that

basket.

Yep.

I, agree.

And I

think there's probably a podcast episode in

how we feel that, uh, you know, should be running it.

And look,

I'm all

for

builders.

getting paid for their time in pre construction 100%, but I think that there

needs to be value in the information that they're bringing to the table.

You've

got to be willing to give

your information.

So that's what you're there to do.

So

you can't be guarded of all your

knowledge.

You're there to consult and give

the information.

I'm

going to say

something that if you're consulting, you should also have a private

indemnity insurance to protect your, because

you are

essentially

you're consulting.

You have it.

You have to have

it,

um, because

you're providing advice

on the building.

So you, you want to

indemnify

yourself.

Yeah.

I

need to

protect myself, like we're, the

buildings we're working on aren't

simple

and there are

things

that we've, we,

might get wrong.

So.

it's a small amount a year

to cover ourselves.

At least I know that I

can sleep.

I was just thinking as we were having a chat right now, there's two builders,

you know, talking from one side of the table, like, I know I know we've

talked about this before when we had Scott on, but I actually think that would be

a great opportunity, you know, in, in a.

really respectful way to bring in a couple of architects to hear

their side of the story and get

their thoughts on how we can run it

better.

I 100 percent think that the tender process is

broken.

the space that we operate in.

and I 100

percent

feel as more and more builders

start to value their time and bring valuable information

to the pre construction.

process that if architects want to go to tender, And it's going to get

really, really expensive for owners.

Because

three builders are probably going to want to charge anywhere between

five to ten thousand dollars

each

to get a price.

you had a comment the other day

where you, where I think someone said that, uh, why are

you charging for your time?

Now I'll put it this way.

As

If I let's flick it on architects.

and again, we've had, we've got

ones we work with a totally okay

with

us charging for our time.

And we do not make

money off this process,

I would say that if

the

project doesn't go to site, maybe

lose out on 20, 30 grand of our time.

Yeah.

it Would be a

very close to estimate.

We've we've run some numbers and we feel that it costs us anywhere

between 20 to 30k to cost a project.

and

your, at the end of the day charging maximum you might be able

to get out of is 10 000 across

a one

and a

half

year consulting period.

Yeah.

So we're, we're about that 12 000 to 13,

000. at the higher end and it goes down to 9, 000 but yes, but the

value that clients get from that.

And I know it's me sitting on the builder side saying this,

but as soon as the

relationships become transactional, there's an expectation from both sides

that there's deliverables Totally.

and we're quite

clear with what

those deliverables are.

And we're becoming more and more

clear

about what the expectations are in that precom process.

Now for us to give

someone a ballpark

right now with our current process.

It

costs 800.

Yeah, okay.

And I feel it's at that point

there, where there should be three builders, all giving their opinion on

cost, and they all should

be charging in between 500 to

800 to give that opinion on

cost.

And then it's

about

the architect and the clients deciding who's going to be part of the

team.

I feel

that that's a really fair way of doing it.

don't disagree.

I think you need to, there's tools out there that you

can use.

You can look at past projects.

You can Grab your own data to come up with that.

Um, I think it's really important that, If you have

someone and you're paying

them, you've got them engaged.

You can hold them to deadlines.

you can hold, you can hold, them accountable.

If you're not paying

anyone, how can you hold them

accountable?

Because they've got

other things

that they're

getting paid to

do, which becomes more important.

I would also

argue, how can you then trust

the data they're

giving you?

Yeah.

Like if, if, if you're just getting spat out.

an estimate with, you know, a whole bunch of different line items that

they've probably just drawn from past experience and, you know, have

they done the takeoffs correctly?

Have they done this correctly?

Have they brought their trades into it?

Like

I

know

that our process involves site visits for all our trades.

So

my trades are invested, you know, they know that

we're part of the solution to get this project to site and that they're

the only one looking at that project.

So they're

invested.

They know that their time is not wasted.

So there's two issues I have with

the

tender.

If it's not

on the plans and the

architect misses it,

which

they're going to

miss things, that's normal.

Like I,

they can't get

everything right.

We're human, right?

Yeah.

Yeah.

Yeah.

So

I'm not

putting

it in my

estimate because that's not what is as per plan.

That's not what is quoted.

You will

get a variation

on site

and most likely it's going to hold up your project.

There's also two, we will

probably find a more efficient way of building something

that's going to save you money.

I would

say that during, just having a builder on board,

will get your money

back with

a click of a finger once you have any discussion with an engineer,

And then also when we talk

about performance so they ask an optimization.

So,

within

that conversation, like, we

had one recently where we designed all the steel

beams out of

the project.

There's 30 grand

savings we've

just saved you a ton of money.

which in a tender process, would have just been flicked out,

stamped, hey, here's the engineering design to that, build to that.

Do you think that there is more opportunity for builders operating

in the high performance space to add more value to that tender process?

I'm

gonna

respectfully

say no,

but

can

you see where I'm coming from

though?

Yeah,

no, I totally agree

because the tool of like, say for example, PHP Yeah, you can

be used as a costing tool, but you need

to know how to use it.

Exactly So if you're

using

it for the first time,

no, definitely not.

You need

to have someone like

Cameron

who knows how to use it to have those conversations with you.

Yeah, I think you

have

to have

done maybe one

certified

passive

House first to be able to understand

that and the detail that needs to go into it.

So once you understand how it can be

constructed, Then you can understand the back

end

how that all works.

And I just did the

Passive House training for designers and I'm going to be straight out, it

was a complete waste of time.

Because I'd already felt

that I had

that knowledge through working with Cameron so many times and we've built four

of them, that I felt that Hey, we kind of weren't learning anything new where

what we're there to do is not run the

PHPP numbers.

Yeah.

We're there

to run,

hey, if we're going to increase this amount of insulation to this,

what's the cost against that?

Yeah, We're not there to tell them what to include.

, but

I feel

like

there's, you know, just say wall build ups or double glazed versus

triple glazed like right there, there could be 10 or 15 grand, like

right there.

I've

got one at

the

moment

and it's, we're in Brunswick

now It's literally around the corner where

the heating 0.

2,

if we went triple glazed and they might be chasing passive house certification

So they're going to go, we need to get

that, triple

glaze, where I'm like, do we need to

go certified

to get you no extra value in money for that

extra cost

or

alternatively, okay, well let's put double glazing in and that's a net result of

10 saving.

Yep.

Can we build

up

those numbers somewhere else?

Yep.

Totally.

Can we, insulate

the service cavity is that going to get,

yeah,

so

this is

where I was kind

of

saying, like, I feel.

like in performance construction world,

managing thermal bridges, managing out steel, like insulating cavities or

not, 90 mils vs 140 frames, internal barriers vs no internal barriers.

Like there's easy grabs there.

and

it would be really interesting

to

get, say, Chris from

PrimeBuild on to have a chat

because I know he runs his pre con really

tightly

and has been doing it for a while to kind of get his understanding

of the areas that he looks

at

because it's not just, I will remove some joinery, Or change the

cladding, like

there are other

things that I think a builder

can bring to the table

that is

really valuable and can save that fee

before it

gets to site.

I

think builders

also need to understand they're not architects, they're not there to design.

100%. And I think that is

where the issue lies,

that

architects are

damn good at

designing, Yeah.

they're creative, they push boundaries, they want to push boundaries

and as builders we need to respect that and don't

kick back.

We need to go, hey,

uh, how can

we actually get what you want?

We'll

discuss

the buildability and

structure.

You give us the brief.

Let's now

make this work together because

I get bored

doing the same thing all the time.

So Greg challenged me,

but we've got to do it within a way

that is

going to make

it work.

So we might have to compromise it a little bit

here and

there, but we want to also

make

sure the

architect is trying to get their design

across the I

if

we're asked our opinion on

something, sure.

But I don't think it's our role in design.

You know, I have this

conversation with someone on my team in pre construction all the time.

It's

not our role

to

design this.

It's

our role to

talk about

implications on cost and performance, but it's not our role to design

we

had one

recently where there was bare stone cladding and it was super expensive

to install and the system behind it, the bare stone looks really well

priced and the cladding

itself and everything behind the structure and system is super

expensive.

So we're

like, we're

trying to do

volume management.

So

we will go to the client

and keep the, we'll go to the architect

and keep the client out of the conversation.

for a second and say,

Hey,

this is expensive.

Are you open to changing this?

These are just some other suggestions,

but that might be something that might be

non

negotiable.

So we're not going to touch

on that.

So

you do, it, you can do

it,

respectfully.

And if you're

wanting

to, if the

architect he was, they would pretty much

say, Hey, we need some volume management options,

have a crack at it.

So

we're

like, okay, these

are the things

we

think,

but Hey, you've got to

come

back to

us and be like, no, we like, or we don't

like.

That's

an interesting point about the

clients that you've just brought up there.

and I think, you know, there are potential clients that

are listening to this podcast.

There aren't going to be

conversations that the builders and the design team, and the

thermal modelers and the engineer, Those conversations are going to

happen,

and you might not be sitting in the

room.

Yeah, Because it's

almost not worth your time to sit there because you're kind of going to

be asking questions and catching up.

So, you know, please don't think that we're excluding you from

these conversations intentionally.

Well, maybe

it is

intentional, but it's not,

throwing

anyone

under the bus

Yeah.

and then being like, Hey,

architect, that

cladding is

So expensive.

How about we look at this?

to the clients?

like, why did you pick an expensive cladding?

The architect's just trying to do their job,

Yeah.

so we can't

like, you've got to be

respectful to them as well.

100%.

what we need to understand

here is this is a process.

when you start out here

and

I'm drawing on my little,

my, my,

book here, You start out

here

and you kind of go

this way and that way

and

this way and

that way.

And then you end up over here and it might be slightly different from

your original idea of what that structure is going to look

like.

But that is the process.

Yeah And it's got all that

IP from every single person within that process,

adding their

information and their thoughts on the project.

As long as every single person in that team is making that

project king or queen

and everything that you're doing is for the project.

The,

project is a champion.

everyone needs to put their ego aside and

yes,

the

architect wants to design something awesome.

Uh, yes, we want to build it in a way that we want to build it.

Sometimes we've got to give up on that and

that's okay.

Yeah.

The

client's

going to want best

value for money, but it's about working together to get the ultimate result.

And that's how you get the best projects.

is how the projects

run this most smoothest on site.

I don't know if that's the greatest English, that's how

there's a higher level of trust

is how it's,

the collaboration

just makes life so easy.

And I'll also, I've got

a note

here

that

the

thing is once you're

on site,

there's a, and there's an issue that arises

because all the issues

arise at the

start of

a project, in

demolition

or in the In the ground.

You've already got that trust, you've already got

that report that

you've developed.

So when those issues come,

you're like,

Hey,

this was, we spoke about this

a lot earlier

that this might be an issue and we've come across

it.

And

it's now

a problem,

They're like,

okay,

cool.

Thanks for being upfront and transparent compared

to if it's a

negotiator.

if it's a tender process,

it's

like

the client.

It's like,

is this really a thing where you're

just

trying to get

me for extra Like there's already

that

question.

You

haven't developed

that complete form of trust yet.

Yeah.

I mean,

it's, you almost

can

like split it.

to There's two phases of building.

In fact, there's two parts of building.

There's the relationship building and then there's the actual building of the home.

And I feel if you miss

the relationship building, then you are setting

yourself up for problems

it's

how things are going to go wrong.

And

I just think we need to

value

each

other's time and everyone knows their role.

All the architects we know and we work with have never said anything like this,

but you had a few comments recently.

When we did a post about, um, working together as a team, and the architects

and on a model to architects kick back and practically said that

build it shouldn't be charging

for their

time, that that's what a waste of like, what a waste of client resources,

blah, blah, blah.

Now, I'm

going to

put it back

on those

architects that think

that way

and say, what if we had a process

of a client goes

out

to

three architects

and goes,

hey, design me

all the

concepts.

and then when

I'll pick, once you've done all

your concepts and we can compare,

we're

going to now pick

our.

Architect we want to work with.

and guarantee no architect is

going to go through

that

process.

There's no difference

from the builder process

spending their time

estimating

it

and then coming up with a

cost to then pick the builders.

I want to work with.

I would also, maybe, and I'm

I'm gonna be

completely naive here, but I would argue

that getting

a solid estimate together

could take 50

to a hundred hours more, way more I mean 80, 80.

to 150.

But then I would argue for to get a sketch design together and, and I'm

happy to be called out here by designers

and architects,

I

would say that it take less time to get a concept together.

yeah I agree, and

it, that's also not including the

value

management, but then you could ask, argue with the architect about this,

the tweaking of the concept, but it's probably the same amount of time in there.

it's also the cost where, like, We pay external people to help

us get the estimate to make sure our numbers are correct.

You work with

an estimator, I

work with estimator and quantity surveyor,

and

so there's an

expense from our

end

to get people to run the numbers to make sure we're running them correctly.

for the client and for the architect.

You know, that's a really interesting point because, you know, we,

like just talking on costs and maybe why we need to charge, like I have an

internal estimator and I have someone working full time in pre construction,

quite

often.

we do sense check it to an external estimator.

Current, right now, we're looking at at another

estimating, or sorry, modeling

tool,

company and tool, who can actually build the model in 3D, which

gives us bill of quantities and a model that the team can use on

site.

this

is all

encompassed in that price that we charge clients.

So we're actually

investing time and energy and money to make sure that we're costing it

correctly so we

can make money so I don't go

bankrupt.

Yeah.

And then we're

getting

a really great, efficient, construction process on site.

What have you said before?

The best project is the client gets their home built correctly.

Yep, The architects get to see the design and their company and

their

projects profitable from their side.

Yeah, And the builder

gets a

project that is challenging, but also

they get to walk

away making a profit.

That's

the whole idea of running a business.

That

is the

ultimate project and

everyone is happy

Then also everyone has to give up a little

bit.

Yep.

100%. Look, and I

guarantee that all those architects and designers out there would much prefer

to see their

designs in real life rather than scrunched up and put in a bin in the corner.

Because that's the reality of what's happening

at the moment.

I would love to know

how many

dreams have been scrunched up and thrown into the corner.

I've had three since November.

So that's three within

four months.

Yep.

So what's

the solution?

Like

I feel, and again, we

would love

to

get um, an architect

sitting here because we know

that this is completely one sided right now.

I

think it's also, let's go

onto the, the tender process

because I can also

understand why you would tender.

Oh, that's a good point.

Because as a builder,

like I think that

I had a good,

chat with a client that's also an

architect and they do a lot of

public housing systems and they're explaining that because

it's for the government,

there's no other way you

can not do it because it needs to be fair.

you need a

tender.

So the government are getting the best of value for the projects because

they're, held accountable by the people.

And I understand that

to some

extent, I still struggle to

wrap my

head around

it.

because I'm like, well, what if you could work with

someone,

give it, get to have an ultimate budget

up front and maybe you've got to work to that budget.

And then if it doesn't, if

it goes over,

the project doesn't

go ahead.

So my understanding is

some of these government.

Projects

though, and correct me if I'm wrong that there is a fee that

is charged from the tenders

you have to submit your tender

of

your fee of what it's going to

cost.

And then

they

practically

pick the lowest fee and go.

Well, you're

going

to now Design it.

I'm pretty sure that's how it works, Alright, okay.

So you bid you've got to bid

for the job It'd be great

to have some clarity around that if

someone could sort of give us an idea and get some like Yeah.

Look, I

understand that and I guess when you're talking about spending other people's

Like money, when there's more parties involved, I understand

in that respect, but we're

talking

20,

30, 40 billion dollar projects.

Yeah.

yeah.

Like

they?

They, require more

collaboration

as

well.

don't they?

And

I also, well, I agree, but I also feel like

there's

less

emotion attached in the end product.

We're talking about dealing with people's homes.

Yeah.

You know, where,

as you said before,

like 10 years.

Yep.

That's what

we are.

A 10, 10 years marriage and you know at the end of the day, I want

to be having fun conversations with my client, with them telling me

how much they love the project rather than say, hey, my door doesn't

work anymore or a window's leaking.

Yep.

100%.

And

I think

what we also need to,

before we keep poo pooing on the tender process,

the tender process is a race to the bottom.

That's, that's simply all of these.

it's builders not knowing how to run their business not knowing their overheads,

not knowing what it costs because they're like, Oh, can we get this cheaper?

Can we get this cheaper?

We don't

really know how to

estimate

So we can just put some random numbers against it and hope for the best.

And then they win the tender.

And all of a sudden

they've missed a lot of stuff

because they're

not paid for their time

because they

didn't want to invest

the time

into understanding the plans and architectural

details.

Yeah.

And also, you know, this is another thing that's come up recently too, because

you've talked about profitability, markup and margin and stuff like that.

You know, we often get asked

by architects,

even in the negotiated tender process.

What's your

builder's margin

or profit?

And I'm like, okay, well, which one is it?

Is it profit?

Is it gross?

Is it net?

Is it

markup?

Is it Yeah, so, what are we looking at?

Are we looking

at when all

is

said and done and the

project's finished, what are we trying to

get?

Or what are

we marking

up?

completely different things.

Now I will go on the

record here and say that

we mark

up our projects 25

because

I

know

my overheads,

And I know what

net profit I want to go

to.

And

it's probably the same for every builder.

So I'm going to have

a

complete guess at this.

You haven't told me.

You're probably going to want to run at

about a 10 percent overhead

and a 15 percent

markup for the profit of the

project.

It's

pretty much more than a guess, Yes, it's

the same as mine.

And, and the other thing

that we

need to, to to understand too is that

where the

gross numbers and the net numbers sit too.

Yep.

So

that's

the

other thing, And again, we're probably

straying just a little bit

here.

But we don't make 15 percent off a project That's the other thing.

No, No, no, no, no,

no, This this

is,

this

is the, this is

the thing where it really, you really need to understand what that then builds up.

And I reckon that's probably maybe even a conversation or another time, Yeah.

we've actually got some numbers that we're referring to and rather than

just, you know, spitting off things.

So I guess

my comment to architects out there is if you are going to ask the question,

be quite specific about what information you're trying to understand.

Because me

saying,

well,

we put a 25 percent margin on it and then you sort of reverse

engineer that and go, well, that's a

huge number.

go.

Well,

businesses need money to run.

Yep.

We have

cars.

we have employees, we have overheads, we have bookkeepers, we have estimators, we

have all these

kinds of things

insurances,

Insurances.

There's a hundred million ounces.

Now, my markup.

is

going to be a lot

different

to someone who is a bag it on builder

markup

because

I'm obviously not on the tools.

However, their

carpentry rate is

going to

be higher.

their carpentry rate is going to be higher.

Exactly.

So you need

to

kind of look at everything on balance when.

you are

using that as

a key factor

in deciding where you think that project is from a cost point of view.

Yep,

Because I think that it

can be a little bit misleading.

And you're playing with fire.

If you're engaging someone that doesn't

understand this,

there is a

high

risk

that

you're going to either one, the project's not going to be profitable for them,

so they're going to lose interest.

So then they're

going to be cutting

corners to get it across the line.

Yep.

Or, and

most likely in the current

climate,

they're just going to go bankrupt.

Yes.

I think as an industry where we're talking, we're going to organize an

event later this year As an industry, we're going to have a conversation with

everyone and bring everyone into the room and understand how this process and

how architects and builders can align.

Because I fear they're not on the same page.

Yeah.

I think.

That is a huge issue because we both want the same results and we just need to work

together.

Do you know what would be even interesting, more interesting, is

actually bringing clients into that and understanding what they want?

Because do clients want a

tender?

comes down to education because if you speak to someone they don't

know about and negotiate a tender.

they're of course going to say, hey, I want a tender.

Yeah.

I think the thing you, it needs to start with the education.

Between builders and architects who then can educate the client

because

they, they don't know about construction or they've gone through and done

in a certain way in a past time.

And

that's how it worked for them And seemed to work well.

But now we don't speak to

the builder.

So once you start to dissect it from the client's perspective.

Did it actually really work?

Yeah, I mean, I feel we've had many successful Negotiator tenders

And the things we get wrong in the negotiator And I was also I was

also about to say, I've also had negotiated tenders which haven't gone.

Well, yeah, you know, and We're always learning from this We,

you know, And I think the ones that haven't gone well is when if we go back to

that honesty thing is when I haven't been

honest.

Um, I'm not going to

as honest as I probably should have been at the beginning,

where maybe I've known that it might've gone over.

Yeah.

But I was like, Oh, well, let's just see.

Where is it because your process, you didn't know your process that

well and you've refined it since?

I think so.

And I also feel

that the last couple of years have been quite tricky with, , you

know, fluctuations in prices where we were, we gave a price.

You know, 12 months before that final price and then we've seen prices go up.

and there's

inflation at like three and a half percent.

And that's

not a great

experience.

for clients.

you know, I would love that if we gave an estimate and that's

what we'd then contract it on.

And I feel, you know, the way that we're approaching it now,

using the tools that are available to us, you know, our knowledge

past projects and a new tool that we're starting to use, that we can

give a pretty accurate estimate.

That should.

Range of where the project should land.

You know, we're also putting in other inputs to accommodate

performance construction as well.

I know you're using the same tool.

Maybe we

can talk about it at some other stage,

But I actually feel that

that's a really great way to pressure test it.

And if I go back to what I think

the perfect, , process is at that stage, get two or three builders

running that process, spend the money,

because if you spend the money, you know, you need a good data.

You know, you've got to pay for that information.

It's at that point, pick one of the builders that you're comfortable with.

Because I'd almost guarantee if you, me and Mark all did

that process, We'd be within

5 percent of each other.

our roof is going to be the same.

Mechanical ventilation is going to be the same.

Uh, whatever, the other trades

we use are the same.

Now, I'll say this though.

as The negotiated tender is in a builder's best

interest.

And I say that in a way because one,

I think that we come in tighter on our numbers because we've

kind of got the project, we've just now got to get it to site.

So we're respectful and like, Hey guys, come in tight because we really

want to get this project to site.

But hold on.

the other thing is it allows us to schedule in our projects for the

future, knowing we're blocking them out when projects are going to be.

So you're now on there's a higher chance your project is going to start

most likely when you want it to start because we've been able to schedule in

and control the cost.

the other thing too, which I hopefully would give clients and architects a

bit of assurance around this is we're almost hanging our hat on

this number, which we haven't dove really really deep

into the design.

There's no details.

But we've had enough experience and we're relying on these industry

tools and past projects to recognise that the range that we're giving

you is a good realistic number.

Now we're going to try fucking hard.

To re To get in that band.

Yeah.

Like 100 get in that band because if we're not, then our process is shit.

There's no point

doing

it.

and the thing is, you can't as architects, which is really challenging for them, is

they can't look at projects in three using and say, Hey, we built This for that.

This is what it's gonna cost now.

Unfortunately, that luxury is going outta the windows since COVID.

And that's really difficult on them because I think with architects,

is if they've got a budget of say, $800,000, now they're gonna give a pen

and paper and go, where do I start?

Because 800, 000 gets you nothing these days.

And

that's the reality.

Well, It doesn't get you as much as

it did.

But also, the other important thing to note with that point is that the

architect's getting the contracted value.

Yeah.

Not the as built value.

Because as builders, we've

got, well we've priced it back here and then we've started here, and then we've

taken 12 months to build the project.

And then we'll do like a post mortem on

the project and really understand what that project cost us.

So we actually have that real cost of the project,

real time, in

today's current market.

Unfortunately architects don't have that.

And Chris Gilbert brings that up

too, in the conversation that we've had.

that us as builders, if we could plug that data in somewhere,

then architects are winning.

And maybe that's the solution.

I

what is working isn't currently working.

I think we're all still

finding our feet.

I think that we have ours pretty well dialed in.

But then I've completely flipped my process recently on its head

too, because I'm like, well, we can improve on it again, 100%.

And I think that's where a good builder will be able to

able to

Understand the process.

A good architect will also be able to question us on our process.

with some very clear guided questions on how does your process work?

How does it work?

I think the most important question an architect can ask

is how has your process failed in the past?

So then they can start to understand what didn't go wrong So we can now

give this project the best chance to go ahead How have you learned from

how you were doing things two years ago and what chances have you made?

let's test how transparent the builder is and

go, oh no, all of our projects are fine and dandy.

Well, the reality is, I've had four or five projects in the last

two years that haven't got to site

because they didn't meet budget.

Well, and I'll tell you what, I've also had projects that have gone to

site where if I look at, you know,

our projected, profitability, it's 12 to 15 percent off where I'd wanted it to be.

totally.

So,

but I think we wrap that up.

I think this is our first episode in person, so bear with us

for a few episodes to see how we get it.

All these will now be on YouTube as well.

we're really keen to start spitting out some way better content.

Um, we've got some awesome stuff in the pipelines.

Around webinars and trying to bring out.

little, uh, handbooks.

got some ideas that we're going to really start to help build this

industry up and not just make it a podcast but make it a big collaboration

between everyone.

So, yep.

And the good news is a lot of this information that we're

talking about is going to

be free.

Yeah, we do need to fund this at some point, , but that's

where the sponsors come in

if you want to sponsor, reach out to us, Uh, we do have a few lined up

that are keen to come on board, so.

Awesome.

again, want to say a massive thank you to Hit First Hire, yeah,

for letting us film here today.

Building Better Exchange.

Better building Exchange.

Better building exchange.

See you, Matty.

Ciao.

That