We have economic volatility, regulatory transformation, and industry instability on one side, and a lot of money available through tendering bids for businesses and subbies who are looking to grow on the other. Large commercial tenders require more than a few simple material and labour estimations. Tendering presents challenges in equal stead with opportunity; let’s see how you can best navigate it all.
Why you need to master timing in tendering
Some of the biggest issues and challenges in tendering come when there is a timing mismatch between the signing of the contracts and the delivery of the work.
When joinery contractors lock themselves into fixed-price agreements during periods of lower inflation, cost increases (material and labour rate surges) can have devastating results. This is particularly common in the post-pandemic environment, where construction insolvencies have nearly tripled since the 2021-2022 financial year. Carpentry and joinery subcontractors are positioned at the end of the payment chain, and financial distress flows downward.
One of the biggest challenges you will face in tendering is that a quote submitted today, based on current material costs, may be inaccurate if the project has a long lead time (common in large commercial developments). It can be hard, or even sometimes impossible, but creating processes or including contract clauses that might mitigate this timing risk is essential.
Why are fixed-price contracts a challenge in tendering?
Fixed-price contracts can be a driver of financial distress for carpentry and joinery (and all) subcontractors. These arrangements have contractors agreeing to complete a defined scope of work for a set price, which is not adjusted for the changes in material costs or labour rates we’ve discussed above. Clients get cost certainty, which can be necessary for project financing, but the entire inflation risk falls on the contractor.
Industry bodies, like the Australian Constructors Association, have argued that the total risk transfer model is fundamentally unfair and economically unsustainable. Instead, they propose flexible contracting models, like cost-plus arrangements, which mean actual material and labour costs can be passed on with rise and fall clauses tied to movements in the Consumer Price Index or any other specific commodity indices.
In cases where fixed-price terms are unavoidable, strategic risk management moves, like reducing price validity periods to mitigate shifting market conditions, are a good idea. You can also consider building higher escalation contingencies into bids. As we’ve seen a lot of contracts and bids at E1 (EstimateOne), we also recommend conducting in-depth financial checks on builders before committing to projects. After all, everyone wins if all parties remain solvent throughout the project.
What regulatory challenges exist for carpentry and joinery contractors?
The biggest issue in the regulatory environment for Australian carpentry and joinery contractors is change. The National Construction Code includes several changes that impact how joinery projects are designed, documented, and delivered.
Some important provisions relevant to carpentry and joinery that are worth noting include:
- Improved waterproofing requirements for balconies in apartment buildings
- New condensation mitigation rules for insulation and internal wall linings
- Tougher commercial energy efficiency standards for window joinery and external cladding
These are some relevant and current changes, but the point here is that changes are continual and inevitable. Contractors need to be aware of what is changing so they can update their technical knowledge and potentially invest in new materials or installation methodologies.
If we use the shift from the Victorian Building Authority to the Building and Plumbing Commission as an example, we see that accountability is changing. The new commission has a “rectification order” power, which allows it to make builders fix defective work even after an occupancy permit has been issued. What this essentially means is that the liability period for subcontractors is longer, as defects discovered by homeowners after moving in can now be referred back to the original contractor for repair, even if it’s years after the work was completed.
There are also changes to the domestic building insurance rules to consider, as claims are no longer limited to instances where a builder has become insolvent; they also apply if a builder fails to comply with a rectification order. Documentation, site measurements, and installations require a fine-toothed comb as a result; shortcuts or lazy quality control mean big fines, license suspensions, or expensive fixes that will ruin your profitability margins.
What technical challenges can joinery projects encounter?
Joinery packages run into trouble when they lack precision in their installation. Architectural intent and site reality won’t often align, making the detailed fabrication drawings that guide workshop manufacturing absolutely vital.
Some of the most common technical issues for joinery projects include:
- Incomplete or inaccurate site measurements
- Poor coordination with building services
- Designs that are unbuildable due to material limitations or site constraints
- Issues with site access
Planning errors can be as big a problem as execution failures, and in joinery, misfits caused by late design changes are a real and costly challenge.
Subcontractor coordination is another area of risk, and joinery relies on power outlets, plumbing, and even HVAC to be in place. If on-site trades deviate from approved plans, joinery components can require expensive modifications, which can lead to project delays. Walls need to be square, and floors must be level when you are working with precisely manufactured cabinets, and on-site adjustment isn’t always feasible.
One way to try to mitigate these things, which are often out of a joiner’s control, is freezing design decisions before shop drawings are signed off. Final site measurements can also be done only after all framing and services are in place. This level of coordination can be tricky to lock in, or even articulate, in the tendering phase. Where possible, price in some kind of contingency so you are not left absorbing substantial cost overruns.
What workforce challenges exist for carpentry?
The biggest workforce for carpentry is a severely constrained pipeline for apprentices. The dropout rate for carpentry apprentices is around 60%, which can be due to a variety of reasons, including inadequate wages. Entry-level rates can be as low as $18 per hour, making it difficult for young workers to cover basic living expenses.
Contractors can find themselves in a strange and frustrating position of high work demand, which allows for premium rates, but a lack of skilled staff, which limits their capacity to take on new projects. This drives up the internal wage costs for the existing workers, leaving less for apprenticeships.
When tendering, workforce constraints make it harder to provide accurate estimations. Labour availability directly affects the ability to create or meet project timelines. The addition of extra staff also means a greater focus on safety in an industry where serious workers’ compensation claims cost $5.4 billion in the 23/24 financial year.
Work Health and Safety regulations require construction businesses to manage physical and psychosocial hazards, which can include stress, harassment, and inadequate support. Mental health is included in workers’ compensation claims, which is yet another risk that can drive up insurance premiums or lead to lost productivity. These are all important considerations to factor into tender bids.
How to make tendering easier in 2026
The more forward-thinking you can be in tendering, the better. There are plenty of digital tools available to make the process simpler. Examples include 5D Building Information Modelling, which integrates time and cost dimensions, comprehensive risk registers, Monte Carlo simulations to model potential cost outcomes across thousands of scenarios, and other tools that can provide a data-driven basis for bid pricing that accounts for uncertainty in a project. E1 also helps make the bidding process for carpentry and joinery tenders much easier, helping you spot the right opportunities and build reliable builder relationships.
We also recommend early contractor involvement so carpentry and joinery specialists are a part of the design phase. When these experts give input on buildability, material availability, and lead times before designs are finalised, variations can be reduced. The goal should be more predictable outcomes for everyone involved, which can sometimes work against the competitive landscape at bid time, but ultimately delivers better value as costly design changes and reworks can be avoided.
Alexander
Green
General Manager - Subcontractors
