Friday, 20 September 2013

Sourcing my extension! (part 1)

This is a multi-part article from Market Dojo co-founder, Nick Drewe, who is currently planning a house extension and is embarking on the sourcing phase of the project.  We’ll let Nick introduce in more detail below…..

I recently got married and had a fantastic honeymoon in Turkey, co-incidentally the first time I’ve had more than a week off work in well over 3 years!  Now I’m back, our next task as a married couple is to build a major house extension.  

Up until now we’ve had the plans drawn up by the architect, giving us an indicative budget of £70,000.  We’ve had all planning and building regulations approved and we’re in the midst of adhering to the Party Wall Act (not fun - but that’s for another time).  Our architect, Ben, is helping us manage the whole project, given his experience and the fact he lives 10 doors up the road from us!

Ben drew up a very comprehensive tender package, including all drawings, national standards, specifications, and a detailed list of the scope of works, and has approached four contractors that he has worked with in the past.  Two of those contractors haven’t even bothered quoting for the job.  The other two came in with quotes of £93,000 and £98,000, both excluding VAT.  The quotes have been paper-based and are barely comparable, with wildly different items included within their cost breakdown.  Therefore, not only are they greatly over budget, but I have no confidence that they even fulfill the requirement.

And so I’ve decided to take things into my own hands.  I shall distribute the tender package (all 20 megabytes of it) to the Bristol building trade as a whole to find out a) what the real market price is for my extension works and b) to make sure they quote and deliver exactly what we’ve asked for.

I’m in the privileged position of having unlimited access to the professional Market Dojo eSourcing tool, designed for exactly this purpose.  Over the years we’ve witnessed our clients, including housing associations who are tendering building services like this, save millions.  Some clients run tenders worth just a few hundred pounds.  In fact I recall Hamworthy Combustion, our first client, saving £5,000 on a £25,000 contract by using our application.  Why on Earth should I not use this approach?  Well, exactly.

So this is where I’ve got to so far.  I’ve created a test event on Market Dojo so I can interact with it as a test builder and I’ve invited my brother, who is a project manager in the building trade but is unfortunately based the other side of the country, to do likewise.  This will help us validate the structure and communication of the tender.  I’ve added my ‘Brief’, which gets included in the initial invitation email to the builders, so they will have a heads up on what I’m looking to do and how they can proceed.  I’ve added an online questionnaire for the builders to answer my specific questions such as providing references, adherence to standards, confirmation that their price is all-inclusive, etc.  I’ve decided to score the questionnaire so I can rank the builders based their answers.



I’ve created a robust Lot structure that pairs up with the breakdown of jobs in the Scope of Works, ensuring all quotes that come in are like-for-like and against our requirements.  I’ve uploaded the 20MB of tender documentation so I can track when they download it, but I’ve made sure that the Scope of Works is included with the invitation email to give reassurances to the builders that this is a genuine job.  I’ve also added my architect as a collaborator on my tender so he can dip in and out to check how things are going and can help me to answer the questions.  I’ve even added my wife as a viewer in case she has the inclination to have a look at what we’re up to!

My final task is to pull together the list of builders, i.e. the sourcing exercise.  All I need for Market Dojo is a list of email addresses.  Typically if the tender is being run manually and paper-based, I would be inclined to invite only 3 or 4 builders, since the efforts of burning CDs and posting them out, checking they’ve arrived, having dozens of phones calls to handle the questions which are repeated from one builder to the next, collecting all the paperwork and somehow collating it together despite the incomparable nature of the bids, is all very laborious.  However, since I’m running this online, there is very little extra effort whether I invite a few builders or a few hundred.  Therefore at this point I shall be casting my net far and wide and see how it funnels down.

My first point of call is Google.  Searching for ‘builders in bristol’ and other related terms like ‘house extension bristol’, I’m able to find lots of candidates.  I’ll be asking for references as part of the questionnaire, so at this stage all I need to know is if they look professional, if they mention jobs that look similar, if they are reasonably local, and if they have an email address.  I encountered websites like mybuilder.com a lot, so clearly I am not the first to think of running an online tender process for personal building works, although those sites don’t have the facility to properly manage your tender or to invite builders from outside their system, or even to run a reverse auction to settle the negotiaton if I so please.  Additionally builders have to pay fees, which is not a model I believe in as it reduces competition and the fees would end up being passed on to me anyhow.

I will also ask friends and family for referrals, and scour professional associations for any recommendations as well.  At this stage, the more the merrier.

So as of today, I have pretty much built my tender and found my list of prospective builders.  My action over the weekend is to hit the button and make it live.  At that point I really should start ringing round the builders to let them know I’ve been in contact and that I am a genuine prospect.   That way I’ll increase my chances of receiving the competitive offers and finding that proverbial ‘needle in a haystack’ builder that precisely meets my objectives.

Stay tuned for part 2 as I manage the tender and hopefully get some competitive offers!

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