An Increase in Supply & Demand
The knock-on effect
During the recession many suppliers cut down on stocks and staff, but a surge in demand has driven up costs and material lead times in places. At Speller Metcalfe, in August 2014 we are seeing predominant materials affected as:
- Bricks: up to 30 weeks– from a previous average of 6 weeks;
- Timber frame: 16 -18 weeks– up from an average of 10 weeks;
- Blocks: 4-6 weeks – an increase on a two week lead time.
This can also be down to transportation as much as lack of supply – suppliers are booked up well in advance and simply don’t have the capacity to transport materials as they did previously. However with a willingness to be flexible, alternative materials and suppliers can be sourced by working with the contractor from an early stage.
Unrealistic project budgets
A portion of the tenders coming through have also been based on schemes that were proposed and budgeted for in 2013, however in a market of longer lead times and higher pricing these parameters are largely unrealistic. Contractors can find it increasingly difficult to meet these limitations, which largely results in surprised or discouraged clients when a tender is put forward with significantly increased costs and/or programme deadline.
So how do we combat this disparity?
Securing tender lists helping to raise awareness
We are still seeing tenders land unannounced or with just a week’s notice; at Speller Metcalfe we have increased our estimating capacity to cope with an increased workload and now employ eleven full-time estimators, however we don’t always have resources to spare for impromptu tenders – something echoed by other contractors. By providing us with sufficient notice, clients are enabling us to ring-fence estimating resources to ensure we can meet capacity.
[If you have a project in the pipeline that you would like us to secure, contact us here].
Early contractor involvement
This also filters through to the procurement route – by bringing your contractor in at an earlier stage they can provide a variety of value engineering services, contributing to a more realistic budget and programme.
As such we are seeing more clients lean towards the two stage tender procurement route; this enables the contractor to work with the client and project team early on, allowing them to advise on value engineering, buildability issues and provide in-house expertise from the project start.
At Speller Metcalfe, we have noticed an increase in two-stage tenders as a preferred route for client and contractor. Our current workload includes Stratford Hospital where we have just been announced as the approved contractor for South Warwickshire NHS Foundation Trust’s £17m redevelopment. We have also tendered and won Stratford Leisure Centre, Warwick Hospital, National Star College and a cinema complex at Harvey Shopping Centre in Essex.
If you would like to know more about the benefits of two-stage tenders, click here.