Construction Tenders 101!

A Builder’s Tender can be very complicated documents.  Tenders need to be clear, concise and detailed around what is included and not included in your overall build price.  Anything short than that and it’s a massive red flag.  

Tender Breakdown

So let’s break down a construction tender in really simple terms (I will discuss in much more detail each of these items in other blogs of course):

• Base Price:  this is the base home price, i.e. the price you pay for the home excluding site & authority costs, upgrades, etc… Essentially the very basic home that you would receive based on the builder’s “standard” inclusions
• Facade Price:  some builders will break this down and some will not.  I will always go with the builder that breaks it down so I know how much I am paying for what exactly… 
• Site Costs
• Authority Costs
• Specific Site / Authority costs:  these are specific costs associated with your site only and may not be applicable to other sites
• Design Variations (architectural or otherwise): these are associated costs with making changes to your home design
• Upgrades:  these are the costs of your upgrades that are not in the builder’s standard inclusions.  Examples:  40mm stone, 900mm appliances, etc…   
• Final Price:  this is the final price that you will actually pay for your home.  It’s important that you understand that this is the MOST important figure in the entire document as it’s the number that you will actually end up spending

Presentation

Now every builder presents their tenders differently.  A builder might have a higher base price and lower site costs, whereas another builder might do the opposite.  One builder might include the piering in their base price and another builder might include piering in their site costs with extra piering required for your site in another section. 

It gets bloody confusing and you are stuck wondering:  what is going on and who is right or wrong?

The reality of it though is that it does not matter how the builder presents their tender, you just want to boil it down to this:

1. Inclusions
2. Exclusions
3. Overall Price

Keep It Simple

So to keep things simple, do not over-analyze each of the line items and associated costs.  Simply ask yourself:

1. how big is my house?
2. what are the inclusions / exclusions?
3. do I understand the costs / charges?
4. what’s the overall price?
5. am I comparing apples to apples?

If you select your preferred builder based on base price or individual site / authority costs, then you are asking for trouble.  You do NOT pay the base price to get your home built and completed.  You pay the TOTAL final price, so always be looking at that – anything else is camouflage. 

So it is important that you understand your tender and your builder’s pricing strategy.  

Finally

Your construction tender is a legal document that outlines your home price, inclusions, exclusions, terms and conditions, plan references and all outlined upgrades.  So it’s critical that you understand what’s in it because once you sign it, it’s as binding as the your building contract. 

Make sure that it’s clear and do not take the sales person word for anything unless it is in writing – remember, if it is not in writing, it has not happened!