Using post-tender estimates

A post-tender estimate is the link between tender reporting and cost reporting. It is prepared at RIBA Plan of Work Stage 4 (Tender action), or OGC Gateway 3C (Investment decision), after all construction tenders have been received and evaluated.

In many instances it is incorporated into the tender report and can potentially become the first cost report. It is an entity in it’s own right forming a bridge between post-tender and contract, remembering that this is a pre-contract activity.

The purpose of a post-tender estimate is to forecast the cost of the project in a similar fashion to a cost report but in the case of the post-tender estimate the scope of works would be all encompassing. The aim of this estimate is to confirm the funding level required by the employer to complete the building project.

The post-tender estimate would be based on:

• the outcome of any post-tender negotiations, including the resolution of any tender qualifications and tender price adjustments;
• agreeing fixed-price values, assessing the risks of currency exchange rates, reviewing any price caveats that will present as cost risks on the project;
• any actual known construction costs;
• any residual risks;
• site issues which may have been uncovered through further ground and site investigations;
• client variations and instructions which could not have been incorporated at tender stage;
• cost updates of project and design team fees, as well as other development and project costs, where they form part of the costs being managed by the cost manager.

When reporting the outcome of the tendering process to the employer, the cost manager should include a summary of the post-tender estimate(s). The post-tender estimate should have a high degree of accuracy because the uncertainty of market conditions has been removed. Post-tender estimates are used as the control estimate during construction.