Negotiated contracts are replacing tendering as the preferred method to procure work in the Bay of Plenty’s buoyant construction industry.
Tauranga Master Builders president Johnny Calley was responding to the council stormwater tender that failed to attract a single bidder and ended up being negotiated outside of the open tendering process for $320,000.
Mr Calley said businesses had the luxury of picking their work in the current busy environment where loyalty and long-term business relationships counted for a lot.
“Subcontractors are looking after the builders that looked after them when times were quiet.”
Although there was plenty of work available, he said builders still had to actively pursue contracts, with tendering on the decline because it was driven by the lowest price.
“Negotiated contracts are the preferred model for most businesses, including builders.” It involved negotiating a rate for the job.
Mr Calley said tendering was a cost-driven and not relationship-driven process, and could be misleading.
Fulton Hogan regional manager Gavin Riddle said he was taken aback that no one bid for the stormwater contract, even though the market for drainage contractors was buoyant.
He said Fulton Hogan was selective about what it tendered for.
“We are reasonably stretched so you must make sure you can meet clients’ expectations. The last thing we want to do is win a contract and then not deliver on time.”
“We are currently fielding multiple inquiries both locally and offshore that will impact on the second quarter of this year and beyond, so our order book is looking healthy. As a result of this, we are being selective on the tenders that we bid on.”
GJ Gardner’s Tauranga franchise managing director, Shane McConnell, said the franchise had long-term relationships with its subcontractors. “Most of our guys have been with us for 10 years, and some contracted exclusively to us.”
He said one-off private jobs were being hit by the busy market because the trade preferred the easier and cleaner process of working for group house builders. The biggest challenge for him had been getting gib fixers and brick layers.
Mr McConnell said there was a lot more pressure on construction timeframes. “Guys are scheduling more robustly. They can’t fly on the seats of their pants any more.”
Bricklayer Gareth Whitley said it was good that brickies were busy, but the downside was they were struggling to keep up with demand. Part of the reason was the shortage of skilled bricklayers.
He said the shortage dated back to the last recession, driven by the global financial crisis, when zero apprentices were put through for five years. “We are barely keeping up with new builds.”
Homeowners with small jobs needed to be patient because he could only fit them in the gaps between big jobs. “People should be prepared to wait a couple of months for jobs around the house.”
By John Cousins
SOURCE: Bay of Plenty Times/NZ Herald