A pre-tender cost estimate is prepared before tender returns are received or before a contractor submits its bid. For a project owner, it provides a benchmark against the approved budget and later tender prices. For a contractor, it brings quantities, trade pricing, assumptions and risk allowances together into a submission strategy.
What is included in a pre-tender estimate?
The format depends on the available design and procurement route. An early estimate may use floor areas, elemental quantities and benchmark rates. A later estimate can be based on detailed measurement, Bills of Quantities, trade packages, supplier quotations and subcontractor returns.
- Review of drawings, specifications and tender instructions
- Quantity takeoffs or checking of supplied quantities
- Trade pricing and rate build-ups
- Preliminaries and programme-related cost
- Provisional sums, design-development and risk allowances
- Clarifications, qualifications and exclusions
- Reconciliation against the current budget or previous estimate
For developers and project owners
A pre-tender estimate helps determine whether the developed design remains within funding before the market is approached. It can identify elements that have increased, allowances that are no longer adequate and scope that is absent from the drawings or specifications.
The estimate also provides a basis for reviewing tender returns. Large differences between the benchmark and submitted prices can then be investigated by trade instead of considering only the tender total.
For contractors preparing a bid
Contractor estimating requires more than multiplying quantities by generic rates. Rates should reflect the intended construction method, labour productivity, material source, plant, wastage, subcontractor coverage, programme and site constraints. Tender addenda and queries must be incorporated before submission.
The estimator should distinguish firm quotations from allowances and confirm how preliminaries, overhead and profit are applied. A final commercial review checks arithmetic, scope coverage, qualifications, cash-flow implications and significant risks.
Information required
- Latest architectural, structural and services drawings
- Specifications and schedules
- Bill of Quantities or pricing schedule, if issued
- Tender instructions, conditions and addenda
- Site information and access constraints
- Programme or required completion period
- Known supplier and subcontractor quotations
- Client budget or contractor pricing strategy, where relevant
Missing information should be recorded as assumptions, provisional allowances or exclusions. This makes the estimate auditable and allows it to be updated when information is issued.
How rates should be developed
A rate may include materials, labour, plant, wastage, transport, subcontractor attendance and other project-specific requirements. Historical rates can provide a reasonableness check, but they should be adjusted for pricing date, location, specification, quantity, procurement conditions and market movement.
High-value or volatile trades benefit from current market quotations. Quotations should be checked for scope, validity period, exclusions, taxes, delivery, testing and coordination requirements before they are incorporated.
Risk and contingency
Risk should not be hidden within arbitrary rates. Identify uncertainties such as incomplete services design, ground conditions, restricted working hours, authority requirements, long-lead materials or uncertain quantities. The estimate can then include transparent allowances appropriate to the information available.
Final checks before tender
- Confirm all addenda and revised drawings were included
- Review unusually high or low trade totals
- Check provisional quantities and provisional sums
- Compare quotations on a like-for-like basis
- Reconcile the total against the budget or cost plan
- Record exclusions, qualifications and tender assumptions
- Complete an independent arithmetic and scope review
When to appoint an estimating consultant
Allow enough time for document review, queries, measurement, market enquiries and checking. The appropriate lead time depends on project size and design quality. Where the tender period is short, agree priority packages and deliverables at the outset so the most material cost decisions receive attention first.
Preparing for a construction tender?
Send the current drawings, specifications, pricing documents, addenda and tender deadline. YuHuang can review the information and propose an appropriate estimating scope.
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