Pre-tender estimates

Pre-tender estimates

A pre-tender estimate sits somewhere between cost planning and the post contract cost control. It is the quantity surveyors final costing of the works before tenders are received. At this stage the works can be benchmarked against available cost data to provide comparisons against the provisions on other projects and related to unit values.

The pre-tender estimate allows a reconciliation of the cost plan with the tender information from which any deviations to be identified. If changes have occurred without the client’s approval then this is the final opportunity to capture these before it is too late. It also identifies whether changes to the design are additions or require the implementation of value engineering.

The pre-tender estimate also gives a benchmark by which the returned tenders can be measured. This is particularly prevalent when the procurement route is single contractor negotiation.

When undertaking a pre-tender estimate it is important to consider the form of contract that will be reflected in the tender return. Much of this comes down to risk allocation.

The ECC comes in 6 options which are:

Main option Contract type Pricing mechanism Risk allocation
Priced contract with activity schedule
Lump sum
Priced contract with bills of quantities
Target contract with activity schedule
Cost reimbursement with pain-gain mechanism
Target contract with bills of quantities
Cost re-imbursement contract
Cost re-imbursement
Management contract
Cost re-imbursement

Where the tenderer is being asked to take the risk then there needs to be due allowance made in the pre-tender estimate. In contrast, where the client takes the risk it is important as an early warning to the tender return to start to identify the risk in order to determine what provisions the client needs to maintain for the project.

This section is maintained by Patrick McNamara of AECOM.