Project Appraisal: The Builder’s Go/No-Go Framework
Project appraisal is not optimism. It’s disciplined decision-making: should we tender, on what terms, and what must be true for this job to be profitable?
1. Strategic Fit
- Capability match: do you have proven delivery for this building type, complexity, and risk profile?
- Geography: are you buying into an unfamiliar labour and supplier market?
- Client quality: decision speed, history of disputes, and willingness to document.
2. Contract Risk Scan
Common “red flags” that change pricing and approach:
- Time bars and notices: aggressive notice periods with harsh consequences.
- LD exposure: high LDs relative to project margin.
- Design completeness: high proportion of provisional design, unresolved services, or performance solutions.
- Unbalanced clauses: one-way variations, unpriced client changes, or unfair assessment mechanisms.
3. Commercial Reality
- Prelims vs duration: long program jobs can be margin killers even with good trade rates.
- Procurement risk: long lead items and subcontractor capacity.
- Cashflow profile: does the claim structure fund procurement or starve it?
4. Output: A Clear Tender Strategy
A good appraisal ends with a decision and a plan: key assumptions, clarifications, exclusions (if any), procurement strategy, and risk allowances that match reality.
5. A Simple Scoring Model (Fast, Repeatable)
Good builders avoid “gut feel only” by using a light scoring model. Score each item 1–5 and require a minimum total to proceed:
- Documentation quality: are the drawings and specs buildable, or are you pricing unknowns?
- Programme realism: do the required dates match procurement reality?
- Cashflow profile: does the claim structure fund procurement?
- Client governance: who approves variations, and how fast do decisions happen?
- Commercial leverage: are you one of many bidders, or do you have a genuine differentiator?
6. The Tender “Non-Negotiables” List
Many builders win more by declining bad work than by chasing volume. A non-negotiables list prevents you accepting jobs that are statistically likely to lose money (e.g., extreme LD exposure, unworkable programme, or unfair notice regimes).