Suicide bids coming in 40% below cost

Grant Prior 12 years ago
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Desperate contractors are putting in suicide bids up to 40% below break even levels.

A survey of quantity surveyors by the RICS has revealed the true extent of below-cost bidding across the industry.

A quiz of nearly 400 QSs revealed that  20% of tenders submitted during 2010 and 2011 were priced at a “subeconomic level.”

Most suicide bids were priced at 10% below the true value of the project but in some extreme cases prices were pitched at 40% below cost.

The survey also discovered that two thirds of QSs have gone up against suicide bids while 78% think the problem will get worse during the next year and two thirds have advised clients not to accept bids because they are too low to be viable.

David Bucknall, chairman of Ryder Levett Bucknall and chairman of the RICS Quantity Surveyor and Construction Professional Group Board, said:  “The QS is being presented with a golden opportunity to prove the value of their professional advice and expertise.

“If we change and integrate the way we procure construction work, then we can mitigate and in due course eradicate sub economic tendering and still get maximum value-for-money.

“Sub economic bidding is the old model; we need to move towards early collaboration and integrated bidding by the whole supply chain.

“QSs are in a prime position to lead this process by offering their clients accurate information and advice which will help them mitigate risk and operate to the highest of professional standards.”

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