Enhancing Tender Time: Improving Subcontractor Selection

Over the past few years, the construction sector has faced unprecedented difficulties, marked by uncertainty, projected pricing concerns, labour shortages, and increasing insolvencies. Many firms are preparing for a potential downturn in revenue, and so are turning to examine the critical phase that holds the key to the industry's success — procurement.

As a hub of decision making that will impact the project in its entirety, supply chain and procurement, including the careful selection of subcontractors and precise pricing, must be carefully considered.

To support the industry and help it navigate these challenges, the focus must be on empowering builders and subcontractors to make smarter choices. 

“It's absolutely crucial that main contractors find the perfect subcontractor match during the tender phase,” believes Simon Herod, International Lead at digital tendering specialist platform, EstimateOne. 

“When you're in the tender phase, getting the right subcontractor onboard can make or break your project. To find that perfect subbie fit, you've got to do your homework and make sure their skills line up with your project needs.

“Thanks to digital features, contractors have a powerful tool at their disposal. You can proactively scout out a network of subcontractors and assess what they bring to the table. No need to always stick with the usual suspects; digital tools make it easier than ever to connect with a wider pool of subcontractors.

“Choosing well-qualified subcontractors who offer competitive pricing is a game-changer for nailing those accurate estimates. If you win a job at the wrong price, you're setting yourself up for trouble. It can lead to cutting corners and financial headaches down the road.

“During the tender phase, improving your subbie selection process should be a top priority. By gathering all the information you need to make smart choices. Consider things like award rates, past performance, and their track record. When you do this right, you'll attract subbies who are a better match, and that means more reliable quotes for your project.”

EstimateOne was founded 14 years ago by Mike Ashcroft and Andrew Ritchie, and now operates in the UK, Ireland, Australia, and New Zealand. Born out of a simple yet pervasive problem in the construction industry — the tedious nature of tender send-outs — the company is now Australia's largest digital procurement platform for commercial construction, helping over 94,000 organisations to tender over 14,000 projects worth a total of US$137bn in 2023.

Data-driven selection supporting the labour shortage

As the construction industry continues to face a labour shortage crisis, data-driven selection is being increasingly used to allow contractors to make precise assessments of risk and project outcomes

“We'll need an extra 225,000 workers by 2027 just to meet current demands,” Herod says. 

“So, relying solely on your tried-and-tested network of subcontractors might not always cut it. That's where data-driven selection comes in. Using data gives you the power to target specific trades where you know you need more coverage.”

Adaptive holistic pricing practices 

Successful financial strategy is imperative to any business, and construction is no exception. Managing cost estimates for projects is essential, with finance teams having to adapt their pricing tactics to deal with the ever-shifting market.

“Your estimator and pre-construction team have a pretty tough job,” explains Herod. 

“They've got to lock in up to 80% of your project's margins before a single piece of equipment hits the job site. That's why having a rock-solid pricing strategy is absolutely essential for any project's success.

“By embracing a holistic pricing strategy, you're not just playing it safe; you're setting yourself up for success. You'll minimise the chances of unexpected costs and delays, and you'll make your project run like a well-oiled machine. In a world where surprises can be costly, taking this comprehensive approach is your best bet for a smooth and efficient project.”

Collaboration and communication: Supply chain management

With supply chains so essential to the construction industry, positive relationships and effective collaboration is crucial. Herod outlines three key tips:

• Don't go overboard: Ensure that partners aren’t overwhelmed with information that isn’t necessary to them
• Customisation: Create specific trade packages and send relevant documents for each trade.
• No spamming: Avoid irrelevant communication and excessive emailing

“There's plenty of paperwork to be getting on with when you work in construction, but with digital tendering, you’re lessening the load slightly.”

“Seamless communication between main contractors and their supply chains is the glue for any project's success. At EstimateOne, we’ve found that increased engagement with your supply chain is directly linked to a higher number of successful tender wins.

“Open communication with your subbies fosters trust. That’s why we promote soliciting subbie feedback involving them in project planning, which not only minimises misunderstandings and disputes, but also results in competitive pricing and superior project outcomes. This is all so much easier online, as opposed to playing phone ping pong. My final tip: remember to reward the subbie that supports you, this is how you build your network and supply chain.”

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