Category Archives: Tender

“Fixed price tenders”

Today, when I Googled “fixed price tender”, a Wisdom Homes website page about their Five Star Pledge comes up as the 6th result. It’s only preceded by pages offering definitions of the term and some forum threads all asking what it means to have a fixed price tender. If I can find a cheaper fixed price tender from another builder for a similar house, wisdom will beat it by $1000!

So I guess you could be forgiven for thinking that a fixed price tender will be, well, fixed. That you could actually compare it with another fixed price tender easily. Imagine the surprise you’ll get when your fixed price tender has words like these in it:

  • to be costed when…
  • allowance
  • by owner
  • note only
  • subject to….

All these words mean that the price at the bottom of the tender could change.

Here is where to look for those change words in your tender:

  • Piering. In our tender it actually says “Provide concrete Piering (Fixed Price) up to 1.5m deep.” The next sentence says “Should additional piering be required, any extra costs will be charged to the owner.” What this means is that the “fixed price” includes all the piers up to 1.5m deep. If any particular pier needs more than 1.5m, we’re going to be charged extra. Other builders work it as a combined allowance. For example, you might be allowed 90m worth of piering. So if all the peirs add up to be 90m you’re ok, anything over and you’re charged. In some cases, anything below 90m will be credited back to you. Our clause doesn’t say anything about crediting us back if all the piers are well under 1.5m. And then there is the trust issue: unless you’re watching them pour the concrete how will you know how much piering you actually used?
  • Service connection points. For sewer, water, stormwater, phone, NBN, electricity, gas. They will all say “within … meters of the building”. So, for example, our sewer connection is included if it is within 10m of the building and connecting to an existing junction point within the site boundary. If the sewer connection point is 11m away from our building we pay extra. If the junction point is not installed on our site boundary we pay extra. This can be an issue with big blocks, or where you need to set the house a long way back from the road (typically these connection points are installed adjacent to the street)
  • Earthworks.  Our equal cut and fill allowance is for 1m of fall over the block. If your block is really sloping and needs to be levelled out then you will be charged extra.
  • Retaining walls.  If you need a retaining wall installed to correct the slope of your block, it’s extra.
  • Tree removal.  If you’ve got trees to clear, more $$. Same goes for long grass and debris.  If someone has left their rubbish on your vacant lot it needs to be cleared before site work commences or you’ll be charged for its removal.
  • Footpaths.  If you have a council footpath along your block any damage to it could be your responsibility.
  • Subject to developer, council and statutory authority conditions of approval.  If the developer/council/anyone who needs to approve your plans asks that you change your plans for a particular reason, you’ll be charged. If there are extra fees for resubmitting your plans for approval after the changes have been made, you’ll be charged for that too.
  • Flooding.  If your land is affected by flooding you’re up for more money. This could be in the form of consultant fees, flood reports, surveys or corrective measures.
  • Building adjacent to sewer. If your house is to be built near a sewer line then a peg out fee may be charged. Then, if any changes need to be made then you’ll be charged for those too. Our house will be adjacent to a sewer and I don’t understand why they simply cannot cost these changes seeing as we know it’s there. What they have done is put in a $2000 provisional allowance to cover it. But, this means if the price of a peg out fee (currently $910), for example, changes between now and when it is finally costed we will be charged the increased price. If extra piering or other concrete is needed we will not be charged today’s price, but the price when it is actually purchased. I’m told the reason they cannot cost it right now is because the block is unregistered.
  • Stormwater Hydraulic engineers design.  If your council requires a hydraulic engineer to give their ok to your house design to make sure you’re not adversely impacting the stormwater system you’re going to be charged. I’m not sure why the builder cannot find out now if this will be required and cost it. The clause just says “note only” and there has been no allowance made for it.
  • Standard fees. Standard development application fees should be included. Any other application fees will be charged to you.
  • Council damage bonds.  Some councils require you to pay a bond (around $1000) in case you damage some of their assets (usually footpaths and kerbs). The builder will probably ask you to pay that even though you won’t be the one driving the excavator that will likely do the damage!
  • Subject to developer approval.  If your developer, like ours, wants to approve everything from your choice of brick to your external paint colours and plant choices then this clause is likely. Ours says that if modifications are required to suit the developer then we will be charged.
  • Restrictions as to User. Because the land is unregistered the Section 88B is not available. This document outlines restrictions on how the land can be used. For example, if there is an easement. If your plans have to change because of this then you’ll be charged.
  • Impact on adjacent lots. At the moment there are no other houses next to us. If there is before we lodge our plans for approval then we will need to pay for a footprint survey to confirm the setback of our house lines up with the other properties.
  • Bushfire prone areas. We have been given a provisional allowance to cover whatever is needed to make our house bushfire safe. If it costs more, we’ll be charged.
  • Changes to State Legislation.  If legislation changes and affects a part of the build then you’ll be charged.
  • Changes to taxes, charges and levies. If one of the approving authorities changes their taxes, charges, levies or pretty much anything else, you’ll be charged.

I think that’s it.

A few of these things are because the land is unregistered. The developer is stipulating the building contract must be signed before we can settle on the block. They allow 21 days between registration of the block and settlement. 21 days is not enough time for the builder to find out all the unknowns and then get the tender and plans back through estimating and drafting. So we’re stuck with it the way it is.

In my opinion, this should not be called a “fixed price tender”. I think its false advertising.

There are other builders who do offer something that looks much more like a true fixed price. Check out Anne and Alok’s blog for a good example of this. There were a few things for them that changed after the tender and the builder coughed up for it. That must have given them some peace of mind.

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The cost of the offerings to the DRP Gods

On Thursday last week we received what is supposed to be our “final fixed price tender”. When we accept the tender it will form part of the contract that says exactly what will and won’t be provided. Understandably, we’ve got the fine tooth comb out. I have issues with the term “fixed price tender” because I can see a whole list of clauses that are “to be costed when…”, but that is another story.

It looks like we’ve changed admin person permanently as well, which is nice for us because we didn’t like the old one. The new one has been going above and beyond already and has even called the DRP on our behalf to discuss a few things. Let’s hope it stays that way. While we’ve got the chance we’re composing a list of questions to ask our new admin person, most of them we’ve already asked the old one but didn’t really get an answer.

This morning my fine tooth comb has focused on exactly how much the DRP has cost us. Below is a list of all the things we’ve had to do to comply with the DRP’s “guidelines”. It adds up pretty quick.

  • to meet higher than standard BASIX requirements, upgrade water tank to 6000L in lieu of standard 3000L rainwater tank, $2000
  • provide corner façade parapet including provide 1 18-06 aluminium awning window to external side elevation of home office, $6213
  • provide Moroka texture paint finish to porch brick piers and parapet in lieu of standard,  approximately $3000
  • provide classic 1 façade and stria cladding to front and rear of house, no charge
  • provide 600 mm eaves overhang to first floor in lieu of standard, $2500
  • provide 1 aluminium awning window to side elevation of powder room in lieu of standard (same size), $45
  • provide 1 aluminium awning window to side elevation of ensuite in lieu of standard (same size), $45
  • provide 1 06-18 aluminium sliding window to side elevation of home theatre, $360
  • provide 1 06-18 aluminium sliding window to side elevation of bedroom 2, $360
  • provide 1 06-12 aluminium sliding window to rear elevation of bedroom 4, $325
  • provide 1 06-12 aluminium sliding window to rear elevation of upper lounge in lieu of standard, no charge
  • provide 1 06-18 aluminium sliding window to rear elevation of bedroom 3, $360
  • provide 450 mm deep powder coated aluminium window hoods with fixed louvre blades to ground floor windows of the northern and western façade (7 windows and 1 door), $4390
  • to meet higher than standard BASIX requirements, provide $5000 allowance for 1.5 kW photovoltaic solar package, $5000

Total $24598

Generally, we feel like this about it:

but people keep telling us that ultimately it will make our house look better and be nicer to live in or easier to sell. I don’t know about all that. All I know is we haven’t got final DRP approval yet. And, we still have to cost in landscaping which also has to be approved by the DRP.

Revised tender

Last night we received the revised tender, which needs to reflect the changes the DRP have requested.

In all, I think it was pretty sloppy for having taken six business days. Eight of the items were either wrong (size, type, position), not included at all, or included when they should not have been. We’ve sent it back with a list of things for them to correct. Who knows how long we will have to wait for them to correct their mistakes.

James also called the DRP to get some kind of verbal indication that we would get pre-approval. The DRP guy is a nightmare- he launched into a whole new list of things he would like us to do, including moving the whole garage forward!

Since none of that was on the DRP’s original list, Wisdom won’t entertain the idea of making any more changes unless it’s requested in writing. So, we have to wait for the plans to be resubmitted and hope the DRP change their mind between now and then.

The DRP has reached a new height of craziness in my opinion. Now they are not only inconsistent between houses but they are inconsistent between conversations. You call the guy one day and he wants one set of things and you call him the next and he wants a whole different list of things.

I can’t say I’m impressed. There are hundreds of houses at Bunya, surely by now the DRP and Wisdom should have sorted this kind of thing out.

customer service

Tender presentation

I don’t know about you, but when I think of the word “presentation”, I think of a room of people in boring clothes trying to stay attentive to a poorly formatted PowerPoint presentation that has way too many words in it, and not enough pictures.

Hold that thought. Now, replace the PowerPoint screen with a printed document. Got it? Yep,  congratulations! You’re at the tender presentation.

You walk in, sit down on one side of the table with the sales person on the other, and they proceed to read the tender document to you. Ours is 9 pages long and has 69 clauses.

boring-presentation-300x300

If your sales people have been good to you up to this point, there should be nothing in the tender that you don’t already know about. The document sets out what is included in the base price of your house, what is an additional charge or provisional allowance, and what is to be done by the owner of the property (you). It will also include “note only” clauses which are clauses the builder has put in to cover themselves for any unforeseen changes. An example of this is that the tender is subject to developer approval- if the council wants you to change something then you will pay for it, not the builder.

Most importantly, it should provide you with the initial estimate of the build price. As it is not the final estimate, you can probably expect it to go up before your construction starts.

Since the sales person is so kindly reading out all the clauses to you, you may as well ask questions if you have any.

Things to make sure you’re aware of:

  • who (either you or the builder) is responsible for what? For example, if there are trees to be removed who will be doing it? Who will pay the water and electricity bills during construction?
  • who will pay the council fees or bonds? Usually, the builder will pay “standard” fees for development approvals but the owner will pay any other fees.
  • is the tender inclusive of GST?
  • does the builder allow you to bring in your own tradespeople to do work during the build? (Probably not but you should be aware before you try it!)
  • does the builder allow you to visit site for inspections? If so, how often?
  • if you’re asked to pay a deposit for the next stage of the process then make sure its in line with what they are legally allowed to ask for. Check out NSW Fair Trading for information on that.
  • are all the “standard inclusions” in there? This may include any promotional packages or upgrades you have accepted.

Our tender was pretty straight forward. The builder has not had access to the site, so we know the tender could change once all the soil testing and surveying is done. The builder should be upfront about anything that may change the price.

For those interested in timing- our tender was presented 19 working days after we requested it, which is within the 4 weeks we were told to expect by the sales people.