Anthony Nicholls’ Post

Transcript

So knowing the cost of your construction project, the trick here is to find that out as early as possible and with the least expense as possible. One of the mistakes that people often make is to type into Google construction costs. For my projects it's very generic and it's not based on location. So the cost of doing projects in South Central London we vastly difference to doing it in the middle of the countryside. In Derbyshire, Yes, use it as a bit of an idea, but equally know that it's just a guide. It's not what you've got to base your entire project on, thinking that's what it's going to cost, the second approach. Is talking to somebody like an architect. The advice an architect will give is normally from comparable projects from before. So we've done new build. It was this size. Your new build is twice as big, so your budget should be XYZ. You get a more clearer idea of the cost of an architect than if you just googled it, but you still need to get more cost certainty, and that's what we want to have a chat about now. So cost certainty, what is it and why is it important? That cost certainty, in my opinion, is knowing that you're going to go into that project with a budget. Quote from a contractor or whoever. It may be a builder and it's going to finish up at that budget. If you've got that, you've got cost certainty. If there's any doubt in the figures that you've been given, or if there's too many provisional sums or no allowances that are noted in there, you haven't got cost certainty. From my experience, if at the start you can get to something like 90% of the cost of fixed. Then that is a good position to be in if you've got 50 or 60% of the cost. From your quotes, you tend to receive the main contractor. You builder, you haven't got cost certainty actually leaves you really exposed. So to establish cost certainty, what you really, really need to do is get a firm understanding on what your project is. You want to build a new build house, you want an extension, whatever it may be. But let's just take for example, you've got an old listed building. Cost certainty is hard to achieve when you're undertaking that site. Project You need to understand all of the issues that could go wrong. The only way to do that is to do investigation works. Explore as much as you possibly can at an early stage and establish, is my roof going to fall down? Is this floor going to be OK? Can I actually do this? Is that going to stand up? Is that all going to fall down? The other thing is I'm finishes and this is where sometimes the cost of projects can spiral. The next question really is when do you engage with a construction company? When did you get them involved? If you look at a traditional approach, it normally follows quite a long way down the line. So you've got an idea for the projects, you invited an architect in, the architects drawn up, you've gone into a Planning Commission, you've gone out and gone to the extensible surveys. You've then got your planning permission back approved. And at that point you're engaging with a construction company and you normally have about 3 or 4 weeks, sometimes five at a push for a construction company to price that tender. So what it does mean is a contractor, whether whether their intention is good or not. That we've put in provisional sums. And a provisional sum is exactly that. It's provisional. It's because there's not enough information there. Well, there's uncertainty in the drawings to be able to price that item up. And the more provisional sums you have, the less cost certainty you have. OK, so we're now in a position where you've got, say, 4 tenders back from 4 building contractors. The best way to explain this is I like to do it is an analogy. So if you can imagine the tenders that you've had in at a round pegs, the higher the tender, the higher the figure, the bigger the round peg if the figure from the highest tender. Is too big. It's not going to fit in the square hole. Second and third, the same thing. And then you've got this 4th one, which is the lowest tender in the round peg that does fit in a square hole. The chances are, and as I've found in my time in the industry, is that that round peg fitting in that square hole, it only fits because there's corners have been cut and as the project proceeds that that expense gets bigger and bigger and bigger and all of a sudden your budget is blown. So what is a negotiated tender route? The reality is it's really, really simple. It just positions the contractor. And when that normally come in quite late in the project to put them actually right at the beginning and the bit that is tricky is known at that contractor is going to be the right person for you and you're not going to know that until they're in front of you and talking about how they approach doing construction works and how they price construction works. The best place to look as with anything really is recommendations. So if you can get recommendations from construction companies that have done work in your area, that's a great place to start. So once you've established the contractor that you want to use. If it's the traditional tender route as we've touched on and they know they're three or four that price in the project and they've got a short space of time and you won't get their full attention. If you're doing a negotiated contract route and they know that you are the only person as a contractor that they're talking to, then they will give you an awful, awful lot of attention. They will take the time to go through it properly. They will consider all of the aspects of the bill that you want to achieve. That will give you some great advice and they will work with you on your price. And what I mean by that is that. They'll listen to what your budget is and they'll be able to straight away be able to say that we can achieve that. No, you haven't got a hope. You can't achieve that in a million years, and that's the advice you want from the start. If you want to have a successful project and you don't want to go to great expense in terms of time and money wasted for a project you can't actually afford, then get the contractor involved as early as possible.