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Understanding What a True Fixed Price Tender is

Understanding-a-Fixed-Price-Tender

When you’re looking at building your home, a construction tender is an essential part of the process. It details what is covered as part of the entire building journey, and what each parties’ legal responsibilities entail.

A lot of builders will tell you that their tender is fixed price, but in many circumstances it is not. It is not to say that there is no place for an ’unfixed’ tender but if you are looking for a Fixed Price Tender, it’s important to understand what key properties to look for and what benefits they provide.

Here at Vogue Homes we’re committed to educating our customers to ensure their building process is as simple and rewarding as possible. We’ve composed this blog to provide further insights into a True Fixed Price tender, and answer any questions you might have.

What Is A Fixed Price Tender?

A fixed price tender is a contract entered into between a construction company and a client for the provision of contracted services at a set price at the onset of a project. The builder being contracted will be responsible for the proper job execution and will provide their own means and methods to complete the work.

This type of contract is usually developed by estimating labour costs, material costs, and adding a specific amount that will cover the builder’s overhead and profit margin. In most circumstances, there will be exclusions, which is perfectly normal and reasonable, but it is important that the builder is transparent about what these will be.

Key Benefits of A Fixed Price Tender

As opposed to other construction contracts which can contain a greater degree of uncertainty, a fixed price tender offers a number of tangible benefits.

Provides Certainty

Since a fixed price has been decided on at the onset of a project, this allows both the owner and builder to budget any required expenses with a greater degree of certainty. With transparency in pricing and a clear understanding of when funds are due, an owner can plan their finances and make sure they have adequate resources available.

Any Changes Must Be Agreed To By Both Parties

Throughout the building process there might be occasions where building specifications change (i.e. requested add-ons by the owner). If this scenario does occur, the benefit with this type of contact is that it must be agreed to mutually by both parties and detailed in separate legal documents.

Less Supervision Required

Non Fixed Price building contracts could result in the owner being liable to pay the builder additional costs for various reasons throughout the length of the building project. These types of contracts are generally required to be more closely monitored in order to ensure any cost overruns are kept to a minimum.

With a fixed price tender, since costs have already been agreed to at the onset, the owner will not need to supervise as frequently and has a greater peace of mind.

What To Look Out For In A Tender to show if it is  Truly Fixed or not

Just like any formal document, it’s important that you carefully analyse the items covered as part of the agreement in order to understand all that’s involved and the total price of the contract. There are some signs to look out for that will alert you to the fact that the Tender you have is not a TRUE fixed price tender, here are two main items below:

  • As soon as you read the words “up to 50lm of ……”, this tender is NOT fixed, it is telling you it is fixed, up to a point. If the amount of that item needs to be more, then the builder has the opportunity to charge you more, covering themselves in case they did not do their due diligence in order to fix your price.
  • If a description reads as “provide 80lm of fixed piering”, your tender is NOT fixed. Similar to the point above, this description indicates that the builder will only provide 80lm of piering, should your home require more on site, you will most likely be charged, making your tender no longer fixed.

In a Truly fixed price tender, you should read words like “Fixed piering included” or “Fixed BASIX costs included”. You should also review any terms and conditions that may form part of the tender as there may be indicators there that suggest the builder may want to charge you at a later date, such as “Piering over the length nominated in this tender will be charged at $100/lm”. If you are ever unsure, ask the question to the builder, and if you decide that you want a fixed price,  have the builder specify that an item is fixed and remove any notes regarding extra charges from the tender.

Difference With Us

Here at Vogue Homes we’re committed to providing our customers with fully transparent pricing. We complete our due diligence upfront to ensure we can provide our customer True Fixed price tenders. We complete reports such as soil tests, surveys, acoustics (where required) and more to ensure we can provide as much certainty as possible. If for some reason we are still not able to fix your tender after all the due diligence,  we will be the first to tell you so you can make an informed decision.

Additionally, what makes us different from the rest is the value for money we offer. With Vogue Homes most upgrade options come as standard inclusions, which means you get much more for less.

If you have any questions regarding our building process, you can refer to our comprehensive building roadmap right here.

A True fixed price tender can be hard to come by in the construction industry.

Once you can find a True fixed tender, then an agreed up front price, provides certainty to parties involved, requires less supervision from the owner, and provides a clear process for any required changes.

In some circumstances, it may be beneficial to a customer to have an un-fixed tender, but the principles are the same – as long as the builder is being transparent and upfront about what is included or excluded you can make an informed decision.

Here at Vogue Homes we are a customer centric builder, who have made the entire building process simple and convenient. We complete our due diligence so that we can offer fixed price tenders to ensure that we are completely transparent.

We’re committed to looking after our customers throughout the entire building journey and are happy to answer any questions you may have.

For any of your building needs, why not contact us today.

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