Improving the Tendering and Contracting Process With Kreo
The tendering and contracting process can often be a minefield. It’s full of hurdles and barriers that can often make finding a contractor more difficult than it needs to be.
As you’ll be aware, the entire concept is not set up for success as both parties start at opposite ends of the spectrum. Both sides want to get the best deal, but while a client might seek to save as much money as possible, a contractor may see opportunities for additional spend to improve quality. Without clear lines in the sand and a joint understanding of the project deadlines and budgets, projects can easily become inefficient, costly and late.
Luckily, Kreo is here to clean up the process.
In this post, we’re going to show you exactly how Kreo’s software can help you when tendering bids to contractors and why the old days of traditional tendering are long gone.
The Problems With the Old-Fashioned Construction Process
The tendering process aims to select the most suitable contractor given the budget and time available and establish the contract price.
The process is problematic for two major reasons. The first is the lack of information on which to price, and the second is clients awarding bids purely on the lowest price.
Contractors desperate to win work will put in low bids, particularly in a downturn to keep their teams together. They will then hope to boost the final price by charging extra for ‘variations’ – changes the client makes to a project as the work progresses on-site after the contract has been signed. The client will often dispute these variations and legal wrangles ensue.
The risk involved in tendering is often dependent on the process that was chosen. Single-stage selective tendering or two-stage selective tendering are the two most commonly used methods. In both versions, the contractor will charge a lump-sum for doing the work, either as a traditional lump sum contract, or a design-build contract.
Rival bidders to the tender then compete on the basis of factors like price and quality, personnel or ideas and innovation, which, taken together, add up to ‘best value’ rather than lowest price. However, for all the talk and numerous reports advocating such a ‘balanced scorecard’ approach, clients and their advisers all too often just look at the projected total cost of the project and make a snap decision based on price. This presents a huge frustration for contractors when their price is undercut by competitors taking shortcuts.
You might be saying “that’s the way things have always been done!” We’re here to tell you there’s a better way.
Using Software for Tendering and Contracting
In order to gauge and analyse the state of the industry presently, we surveyed 235 professionals who identified as working within the construction, building or architecture industry. Within this, specific job breakdowns were as follows:
All of the insights we discovered in this survey is available for FREE in our eBook, The State of Construction Bidding, Tendering and Pricing Report 2018.
When it comes to BIM software, only 33% said they use it for cost estimating and, in three-quarters of typical construction projects, it takes longer than a week to create cost estimates.
59% of construction companies surveyed said they use software for running tenders. When it comes to tender contracting options, 26% said they use design-bid-build, 24% said design-build, and 49% said construction management.
On the other side of the process, we found that, for 7 out of 10 typical construction projects, bid preparation takes longer than 4 weeks. This illustrates the extent to which construction companies become immersed in the heavy lifting of bid preparation, making it difficult for them to adjust and refine models, timelines, cost estimates and quantities.
Around 1 in 5 companies report costs of over $100,000 per bid. This just illustrates the extent to which the cost of bidding puts pressure on the profit margins of construction companies.
So, now we know there is an opportunity in our industry for companies to embrace software like ours when tendering and contracting, how exactly can Kreo’s software help these companies?
Kreo Gives You Accurate Estimates
Kreo uses artificial intelligence to estimate costs to save you time and effort in the early stages of your projects. As we saw with our survey, cost estimation can often be a lengthy process but, with our AI, it's now quicker and easier than ever to estimate costs.
One of the great ways that Kreo helps you to estimate costs and plan your projects accurately is with the ‘What-If’ function. Kreo lets you plan out different scenarios based on costs and price. If you change a deadline to an earlier date, the intelligent system will calculate your costs for that scenario.
Pre-tendering estimates (PTEs) help you to estimate the cost of a project before you invite bidders to join the process.
Being able to accurately estimate the cost of your projects before you tender any bids is an invaluable asset to any client. It allows you to have a baseline of figures to reference when comparing bids. What this means is that you only need to consider bids that are around your desired specifications, filtering out those bids that are not appropriate in terms of cost and time.
PTEs provide a final comparison with your budget, and, along with the cash flow estimate, enables you to confirm that sufficient funds are available before committing to seeking tenders.
You Can Invite Bidders in Kreo
Based on the data inputted by contractors, Kreo compares and ranks the bids, as well as creating a series of graphs and charts that you can export. This makes the whole process easier than ever and allows you to compare bids within Kreo to make an informed contracting decision.
As the client, you are then able to shortlist, nominate and notify the winners of your bids all within Kreo’s software, making the process easier still.
For a look at how this process works in Kreo, watch our short YouTube video.
Kreo Speeds Up the Process
When looking at the ways Kreo can improve the tendering and construction process, it’s clear there is one major benefit... time.
Having the entire process in one place helps to speed up the whole tendering and contracting which, in turn, saves time on your projects. When you are able to save time on this initial phase of your project, you are able to begin work with the contractor earlier and meet deadlines sooner.
One of the biggest impactors on the speed of a project, not to mention cost, comes from disputes between stakeholders on various aspects of the project. With Kreo, the collaboration between these stakeholders is easier than ever so you can be sure everyone is on the same page. As a result, the number of alterations required is reduced, and those that are needed are made through collaborative processes, causing fewer disputes and disruptions.
Kreo’s artificial intelligence also helps to speed up the process, saving time calculating quantity takeoffs and offering more accurate estimates that need fewer alterations on the whole. By saving you time, Kreo allows you to be more creative and focus on the aspects of your project that deserve your attention.
Kreo is making the tendering and contracting process easier than ever, bringing transparency and collaboration to the bidding process. With Kreo, you’ll save time, resources and work from more accurate estimates that mean you are more informed when making contracting decisions.
Of course, the tendering and contracting process is just one element of a construction project and there are likely to be a number of hiccups along the way. Thankfully, with Kreo, that doesn’t have to be the case. Our BIM software is designed to make the entire construction process as simple and collaborative as possible.
If you want to learn more about how Kreo can help with your projects, book a free demo with one of our team.