Accepting 'suicide bids' damages building procurement

15 December 2010

15 December 2010 | Lindsay Clark

The building industry has warned buyers against accepting ‘suicide bids’ for construction projects.

A survey of 525 Chartered Institute of Building (CIOB) members found that 82 per cent believe that the practice exists within the industry.

Offering extremely low, or ‘suicide’, bids for contracts can have a hugely detrimental effect on projects and the contractor, which filters down to affect sub-contractors and all involved in the construction process, the CIOB said. “In the words of one respondent, we must ‘educate the [clients] who believe that buying a building is the same as buying paperclips’,” the report said.

A total of 77 per cent said clients are not sufficiently knowledgeable about procurement in the construction industry, which often leads to poor advice being taken and results in a project coming in over budget, late, or to a poor standard.

While 93 per cent had been involved in projects that came in over budget, 57 per cent of those said the chosen procurement method directly contributed to cost overruns.

Half of respondents indicated that a lack of communication is the most significant problem arising during the procurement process.

In the public sector, CIOB respondents said standardisation should become a priority. “Not only would this decrease overall cost, but it could facilitate a more integrated supply chain and result in a decrease in waste,” the report said.

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