By Francois Rossouw, Commercial Building and Civils Director
Every developer eventually faces the same decision: two tenders on the table, one meaningfully cheaper than the other, and a deadline pressing them to select one. It is tempting, especially in a market where every basis point of return is scrutinised, to read the lower number as the smarter choice. This is usually the most expensive decision a developer will make.
Cheap and quality are two different questions. A cheap contractor asks, “what will this cost me to build?” A quality contractor, “what will this cost me to own?” Those numbers are rarely the same, and the gap between them tends to show up at the worst possible time: after transfer, after occupation, once the contractor has moved on to the next site and the client is left living with the consequences.
At Commercial Building and Civils (CBC), part of the Abcon Group, we have been on both sides of this decision. Having built both for our own developments and, increasingly, for external clients who had no reason to choose us beyond the work itself, it’s become clear that the signals separating a quality contractor from a cheap one are visible well before the first brick is laid – if a developer knows where to look.
Track record is the obvious starting point, but it needs to be specific to mean anything. “Experienced” is not a credential. Longevity in this industry is itself a quality signal, because poor workmanship, cash-flow mismanagement and reputational damage tend to be fatal to a construction business long before it reaches its thirtieth year.
The second signal is harder to fake: does the contractor have capital of its own in the outcome? A contractor that only carries contractual risk has an incentive to finish and move on. One that carries financial risk has an incentive to finish it properly. Abcon is currently developing major sites across Gauteng in partnership with three banks acting as equity partners rather than lenders. Banks are, by definition, risk-averse institutions. When they choose to co-invest rather than simply finance, that is a judgement about delivery risk that a tender document cannot replicate.
We see the same discipline in our own stock model. Every home we build is built on the assumption that if it doesn’t sell immediately, we will rent it out ourselves. That single decision changes the incentive structure of the entire build. Workmanship is not a warranty clause we hope nobody invokes; it is next month’s maintenance line if we get it wrong, because in a meaningful number of cases, we are the ones holding the keys. A contractor with no exposure to its own defects has no equivalent discipline built in.
The third signal is structural: how much of the process does the contractor actually control? Every handoff between town planner, architect, contractor and bond originator is a point where information gets lost, timelines slip and costs creep. CBC operates town planning, design, construction, bond origination and leasing in-house. That is a way of ensuring that when something changes on site, the person who can fix it is a colleague, not a subcontractor three phone calls away.
None of this means the cheaper tender is always wrong. Sometimes it genuinely reflects efficiency rather than corner-cutting and developers are right to test that. But the way to test it is to ask harder questions than the price sheet answers. How long has this contractor been trading, and can they show delivery at this scale more than once? Do they carry any financial exposure to the outcome, or only a contractual one? How many separate parties are involved between design and handover, and who is accountable if two of them disagree?
Reputation is worth checking too, and not just through referrals a contractor selects for you. A visit to Google Reviews and Hello Peter can be enlightening.
The lowest number on a tender document will always be persuasive in the moment it is presented. The real cost of a build, though, is settled over the following thirty years, in maintenance bills, in resale value, in whether the building still does its job a decade after the contractor has left site.
