What is a negotiated tender, and when does it make sense?
A feasibility price is an early, structured view of what an architectural design is likely to cost. It is not a tender and it should never be presented as a guaranteed construction price.
Its value is timing. It gives the client and design team useful cost information while the home can still be adjusted without undoing months of planning, documentation and consultant work.
We regularly receive concept plans for homes that have already moved well beyond the client's original budget. Nobody has necessarily done anything wrong. The problem is that too many cost-setting decisions were made before a builder priced them.
Good feasibility pricing changes that conversation early.
What a feasibility price should do
A useful feasibility price should answer four questions:
- What is the likely construction cost based on the information available?
- What level of quality and finish has been allowed for?
- Which parts of the design are driving the cost?
- What is still unknown, provisional or subject to further investigation?
The document should not be a single figure with a broad contingency added underneath it. It should divide the project into recognisable trade packages and explain the basis of the allowances.
Depending on the project, that may include:
- Site establishment, supervision and temporary works
- Demolition, excavation and spoil removal
- Piling, underpinning, retention and concrete
- Structural steel and framing
- Roofing, cladding, windows and external doors
- Plumbing, electrical, mechanical and fire-related services
- Internal linings and architectural finishes
- Stone, tiling, timber flooring and custom joinery
- Fixtures, fittings, appliances and specialist equipment
- Pool, landscaping and external works
- Builder's overheads, margin, contingencies and GST
Where the design has not yet nominated a product, the allowance should still describe a quality benchmark. An allowance for standard residential glazing is not comparable with an allowance for a thermally broken, high-performance window package. The same applies to joinery, stone, appliances, lighting and tapware.
What information does the builder need?
Feasibility pricing can begin from concept plans, but the quality of the result depends on the information available.
The most useful starting package includes:
- Architectural plans, elevations and area schedules
- A feature and level survey
- Any geotechnical or preliminary engineering information
- Planning and heritage constraints already identified
- Interior, landscape and pool concepts
- Reference images or a written description of the intended finish
- A clear statement of the client's construction budget
Not every item needs to be resolved. The unresolved items simply need to be identified rather than hidden.
Why a square metre rate is not enough
Rates per square metre are useful for a very early sense check. They are not a reliable way to price an individual architectural home.
Two homes of the same floor area can have completely different cost profiles. One may sit on an open site with a simple structure and conventional finishes. The other may retain a heritage façade, include a basement beneath the existing house, require extensive temporary works and use high-performance glazing, custom stone and complex services.
The floor area may be the same. The work is not.
The biggest cost drivers are often the parts that a square metre rate cannot see:
- Excavation and ground conditions
- Access and material handling
- Retention of the existing house
- Structural spans and transfer systems
- Building envelope performance
- Extent of custom fabrication
- Services and automation
- Pools, landscaping and boundary works
- Supervision and coordination required by the design
A real feasibility process
On a recent architectural project in Kew, the preliminary budget was built trade by trade from the concept information available at the time. Each section recorded inclusions, assumptions and items requiring further design.
That approach did more than identify a total. It showed the design team where the budget was concentrated and where additional information would improve certainty. The client could then decide what to protect, what to investigate and what to adjust.
That is the proper purpose of feasibility pricing. It supports design decisions. It does not replace detailed documentation or a construction tender.
How accurate should it be?
The answer depends on the stage of design and the quality of the inputs.
At concept stage, the result is necessarily a range supported by assumptions. As the drawings, engineering, services and selections develop, the range should narrow.
Across TCON's negotiated-tender projects over the past three years, early feasibility budgets have generally landed within approximately 10 per cent of the eventual construction price where the scope and quality level remained consistent. That is an internal TCON observation, not a guarantee. Major scope changes, market movements, latent conditions and design development can all move the final cost.
The builder should explain those limitations clearly.
Feasibility pricing compared with tendering
Feasibility pricing happens while the design is developing. Tendering happens when the project is sufficiently documented for builders and trades to price a defined scope.
A feasibility price:
- Tests budget alignment
- Uses allowances and assumptions where detail is incomplete
- Identifies cost drivers and information gaps
- Supports design decisions
A formal tender:
- Prices a defined documentation package
- Seeks current trade and supplier quotations
- Identifies exclusions, qualifications and commercial terms
- Forms the basis of contract negotiation
One should lead into the other. A feasibility price is not a cheaper substitute for a tender.
When should you ask for one?
The best time is after the architect has established the concept, but before the project is locked into town planning and detailed documentation.
There are also useful review points at:
- Completion of schematic design
- Before lodging a planning application
- During design development
- Before the documentation package is issued for tender
The budget should move with the design. It should not arrive at the end as a surprise.
Talk to TCON
If you have architectural plans, even if they are only at concept stage, send them through with the intended level of finish and your working construction budget. TCON can review the design, identify the major cost drivers and advise whether a detailed feasibility exercise would be useful before the project becomes expensive to change.
Building with TCON
Considered architecture demands considered building. Building with TCON is a complete account of how TCON works. Available on request and reviewed personally by Tim before release.
Request a copy of Building with TCON.