Pre-tender and post-tender negotiations in Australia

One of the main features of the Australian building industry is the high level of subcontracting of building works. This paper reports on a survey of 43 subcontractors regarding various aspects of the relationship between subcontractors and general contractors. In particular it reports on the practice of'bid shopping' in which the general contractor in various ways attempts to reduce the subcontractor’s price below that of the tender. Generally the subcontractors were strongly against bid shopping attempts to tie with general contractors and negotiations in general. However, the strength of the responses was determined by the size of the firms. The larger firms were more open to negotiations and deals than the smaller firms. The overall benefits to the general contractors who 'shop' are doubtful, most subcontractors adjust their mark up by up to 20 % to allow for such negotiations.