The Complete Pre-Construction Process

Hey, Construction Legends. So in this video, we're going to talk about the full pre-construction process, everything that happens before you sign a contract on a construction process. We're going to go into the nitty-gritty a little bit. It's definitely going to be worth your time. Um, hi, my name is Cian Dillon Brennan. I am CEO of a company called Quantum Contract Solutions, and the reason we make these videos is there's so many construction companies out there that are doing silly things contractually, losing a lot of money because of it, and we don't want you to be one of them. Okay, so let's go back. So really, there's two parts of it, right? The very first part is you've got your tender, you're either tendering or bidding or whatever you call it, or you've been asked to submit a proposal. At the other end, you've signed the contract and you're ready to go, right? Let's talk about everything in between. So when you're looking to tender, you typically go to a tender portal. The tender portal could be like a private corporate one. It could be on a large company's website. It could be a government tender. You could be prequalified and you could be already asked by a company. They know you or they've reached out to you and asked you to tender on a particular project based on your set of skills or your certain set of skills, as Liam Neeson would say. Liam Neeson. I got to be careful there because I'm Irish. Can't get that wrong. Okay. And so that's the kind of first way. The next way is you can they can come to you directly. You could be referred, you could have done work for them before, and really they're coming to you as a sole source and they have asked you for a proposal and they go, hey, can you just put forward a proposal to us? And then you give them a proposal and they'll review it. And if they're happy, they'll give you a contract. They might sign your contract. Very unlikely. More often than not, they'll just come over the top with their contract. That's a different story. Long story short, you put your your price for with your terms and conditions, they say, hey, we agree to your terms, we agree to your price, but here are our terms and conditions, which are way worse than yours. And that happens all the time. We've got a great way to get around that. But we'll talk about that in another video. So that's really two ways. The other one you got to be careful of is if they go out to market to look for prices. And really, all they're looking for is to build an estimate internally. They're trying to understand how much the scope of work is going to cost them when they do tender. So they're trying to go out to the market and they tender and they have no intention whatsoever of awarding the work. They just want to get a guide for the prices. Okay, so in any kind of circumstance, you're going to receive a batch of tender documents or bidding documents. What are you going to bid against? Or if they've asked you to propose a scope of work, that might be slightly different, but long story short, you're at some stage gonna come face to face with a contract that they want you to sign. Okay, so you have to, as part of your bid, as part of your proposal, you have to prepare your technical qualifications, you have to prepare your commercial qualifications, and that's what I'm interested in the most, right? Is how can we reduce our risk, reduce our cost by making sure that we sign the best possible contract we can sign and understanding what What are the risks of the contract that they're asking to sign? Because let me tell you that you can have a contract that is 100 pages long and it's not too bad. You can have a contract that's 4 or 5 pages long and what's included in those 4 or 5 pages, once you understand the risks, you're like, oh wow, I can't believe I'm taking on that risk. And remember that more often than not, wherever you are on the construction hierarchy, if you're down the chain a little bit, the risk gets pushed down the chain. You know that there's a meme somewhere where there's one bird on the top, you know, and there's other birds on the next branch. And then again, there's another branch and there's just, you know, all of the bad stuff, all of the, you know, the bird droppings flow all the way down. So in that analogy, the bird droppings come all the way down and the risk is really high on these contracts down the bottom. Okay, so you've got to be careful of what you're signing up to. Now, you're then going to prepare a document that is called a clarification document, negotiation document, or departures document, which goes through the contract and says, I'm not agreeing to this. Here are the reasons I'm not agreeing. And the way that you present that is really important. You've got to make it really easy for their guy internally to understand why you're proposing them and how it makes sense. I'll give you an example. If you're a scaffolding company and they're asking you to sign up to a defects liability clause, right? So if anything happens after the project is over, you'll come back to site to fix it. But if you think about it, if you're a scaffolding company, you've already completed, like, there's nothing, all your stuff has gone offsite. Like, defects liability makes no sense. You got to explain to them, hey, defects liability makes no sense to us because all our equipment will be offsite. The work will be done. Therefore, let's get rid of this clause. Right? So you explain it to them, they understand, and they're like, okay, yeah, fair enough. That doesn't make sense. But if you don't, if you just say remove this, they're like, oh, because that guy on their side is typically a contracts administrator. He's not going to be an expert. On your specific scope of work. Typically what happens is it comes into us and he puts the technical stuff over to the technical guy, the legal stuff over to the legal guy, whatever it is. And so if he can approve those things quickly himself and you can explain them, he'd love to. It just makes his life so much easier. So that's one thing to agree on. So now you're going to go, they're going to come back with some queries and over and back on your technical stuff, on your commercial stuff as well. But with your commercial stuff, you're going to go over and back and you're going to negotiate. You're going to negotiate on your terms. Are the general terms that you're signing up to, your payment terms, all of that sort of stuff is up for negotiation, and also your price. So hopefully you know what you're doing, you've got the expertise on how to negotiate a contract and making sure that your technical stuff is all right. And then they think, hey, this guy is super professional, we're going to go with them, we have confidence that they know what they're doing, their price is reasonable, and then they award you the contract in principle. And they issue you the final contract for signing. Now, the key thing here is if you've agreed stuff, you know, in your technical qualifications and also in your commercial qualifications, you need to be really ruthless on checking that final contract to make sure that they have been incorporated into the contract. Because, and let me tell you from our data that we have, hundreds of construction companies, We do this all the time. 50% of the time, they haven't all been included. 50% of the time. So you've got to check every single time if it's all been included or not. Once you're happy that it's all been included, or if it hasn't, you go back to them and say, hey, you haven't included this. They come back, they make the change again. I have no idea, is that just, you know, if it's done on purpose or not, but they're the stats. They send you the final contract to sign. You sign it. And then you're good to go. That's the full process from start to scratch. Make sure you hit all of those things in the middle. Make sure you negotiate the best terms for your company. By negotiating better contract terms, it's reducing the downside, less chance if stuff goes really wrong for your company, that it doesn't go so bad. It's not going to be the end of your company. You're limiting the downsides. All of the most successful construction companies in the world are concerned with reducing their downside rather than trying to increase their upside. Okay, because that way you stay in business over the long term, you make plenty of money, and that's more important than getting those huge wins with lots of risks that you've managed to pull off. Okay, it's a long-term strategy, it's a more, you know, intelligent strategy if you want to stay in business over a long term. You've got a family business you want to pass on to people or whatever it happens to be, these are the type of things you've got to think about. That's it for this video, and I'll catch you in the next. Bye!