Using pre-tender estimates

A pre-tender estimate is the last cost check of the project before it is issued to tender. The design should be sufficiently developed to allow specification levels and construction methodology to be determined, in this way the estimate should be a very accurate reflection of the works.

During the detailed design process there are several factors that may have influenced the final design and as a result the pre-tender estimate could be outside the cost plan range. For example:

• additional site issues may have been uncovered through ground and site investigations (obstructions in the ground, contamination, utility service lines, etc);
• client aspirations or instructions which may have altered the scope of the works;
• architectural design elements have been detailed so that they no longer represent the intent reflected at cost plan stage;
• structural elements increased in size due to testing of preliminary design;
• services installations altered due to development of solutions;
• specialist lighting introduced with an extent beyond the cost plan provision;
• contingency review based on levels of information;
  
• review of the current state of the market against inflation allowances.

The pre-tender estimate is based on the tender information which will be significantly more extensive than that at cost plan stage. In this respect it will have picked up all of the factors as listed above. The output order of cost will determine the actions that need to be taken, in some instances it may result in the tender release being held to allow budgetary issues to be resolved.

It is important to identify the reasons for change in the scope of works, this will help identify whether there are changes to the budget or whether the scope change represents deferred work items and therefore not affecting the overall total budget.

In this respect the pre-tender estimate may be used to kick start a Value Engineering process in order to bring the scheme back within budget. Similarly if the costs are below budget as a result of changes the client may wish to add elements back into the works to maximise commercial return.

In a significant number of cases the pre-tender estimate can be used to target potential Value Engineering opportunities but the tender would still be issued to see if the competitiveness of the market would bring the project back on budget, if not then the main Value Engineering items have already been identified and these can be worked through with the selected tenderer.