How to Review a Contractor’s Tender: A Guide for Residential Developers
8 min read
Introduction
Choosing a contractor is one of the biggest financial decisions you’ll make during a development project. Yet many developers focus primarily on the lowest price rather than understanding what is actually included within each tender.
A well-structured tender review can help identify hidden costs, reduce project risk and improve the likelihood of delivering your project on time and within budget.
What to Review
Whether you’re building a bespoke home, apartment scheme or residential development, here’s what you should review before appointing a contractor.
1. Don’t Compare the Bottom-Line Price Alone
The cheapest tender is not always the best value.
Two contractors may submit prices within a few percent of each other but have very different assumptions, exclusions and risk allowances.
Instead, compare:
overall contract sum
preliminaries
overheads and profit
provisional sums
contingency allowances
exclusions
qualifications
programme
Understanding why prices differ is often more valuable than the difference itself.
2. Check That Every Contractor Has Priced the Same Scope
One of the most common causes of cost overruns is inconsistent tender returns.
Ask yourself:
Have all contractors priced the latest drawings?
Have all tender queries been answered?
Has everyone included the same specification?
Have assumptions been clearly stated?
If different contractors have priced different information, comparisons become unreliable.
3. Review Qualifications and Exclusions Carefully
Many contractors qualify their tenders.
Examples include:
utility connections
planning conditions
drainage diversions
specialist surveys
statutory fees
temporary works
abnormal ground conditions
These exclusions may later become additional costs.
A lower tender containing numerous exclusions can ultimately prove more expensive than a higher tender with fewer qualifications.
4. Assess the Construction Programme
Programme should form part of the commercial evaluation.
Consider:
overall construction period
key milestones
sectional completion
procurement lead times
commissioning periods
allowance for weather and seasonal working
An unrealistic programme often creates commercial pressure later in the project.
5. Understand the Contractor’s Assumptions
Contractors frequently include assumptions where information is incomplete.
These may relate to:
structural design
foundations
existing services
contamination
access
design responsibility
client decisions
If these assumptions later prove incorrect, additional costs may arise.
6. Review Provisional Sums
Large provisional sums reduce cost certainty.
Ask:
Why is the item provisional?
Can additional design information be completed before contract award?
Is the allowance realistic?
Reducing provisional sums before construction generally improves budget certainty.
7. Consider Quality, Not Just Cost
A contractor should be assessed on more than price.
Review:
relevant project experience
financial stability
proposed site team
health and safety record
quality management
references
supply chain capability
The cheapest contractor is rarely the lowest-risk appointment.
8. Evaluate Commercial Risk
Tender reviews should identify where commercial risk sits.
Examples include:
inflation exposure
design development
planning conditions
statutory approvals
client changes
supply chain volatility
Understanding these risks allows informed negotiation before contracts are signed.
9. Ask the Right Questions Before Appointment
Before appointing a contractor, consider:
Are all tender returns genuinely comparable?
Is the preferred contractor’s programme achievable?
Have qualifications been resolved?
Are significant risks still priced as provisional sums?
Has value engineering compromised quality?
Does the procurement strategy remain appropriate?
These questions can significantly influence the project’s final cost.
Common Tender Review Mistakes
Many developers unknowingly make one or more of these mistakes:
choosing the lowest price without understanding exclusions
comparing tenders prepared on different information
overlooking programme implications
accepting unrealistic allowances
failing to negotiate commercial risks before contract award
Most disputes begin long before construction starts.
Frequently Asked Questions
What is included in a contractor tender review?
A tender review typically examines price, scope, exclusions, programme, assumptions, provisional sums, commercial risks and contractor capability to determine which submission offers the best overall value.
Should I always appoint the lowest-priced contractor?
Not necessarily. A lower tender may contain exclusions, unrealistic assumptions or programme risks that increase the final project cost.
Who should review contractor tenders?
Many developers ask their architect or quantity surveyor to undertake the review. An independent client-side commercial adviser can provide an additional strategic perspective, particularly on procurement, commercial risk and negotiation before contracts are signed.
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An Independent Tender Review by Mavora?
Tender reviews often involve significant commercial judgement. An independent review can provide reassurance that:
tender returns have been compared consistently
key commercial risks have been identified
exclusions are understood
procurement strategy remains appropriate
negotiations focus on the issues most likely to affect project cost and delivery
For many residential developments, a relatively small investment in independent commercial advice before appointing a contractor can help avoid much larger costs later.
Mavora would be happy to have an initial discussion to understand your project and where we could help.
