Using post-tender estimates

Post-tender estimates are always based on the tender return. Where possible, variations to the scope of the works are calculated using adjustments of measured works quantities where the rate remains constant.

The basis of the estimate is determined by the extent of changes that have occurred either during or after the tender period.

You will need:

• updated tender drawings and specification for the purpose of being part of the contractual set of information;
• a quantified risk register which identifies any residual risks. This should be generated by the client and the project team; and
• information (drawings and sketches) which represents the intent associated with any client variations.

The post-tender estimate may form part of the tender analysis which develops into a recommendation for a contract sum which is based upon the tender with variations incorporated.

As with all estimates, the first step is to define the scope of works which will be covered by the estimate. In the context of a post-tender estimate it is important to determine the extent of works beyond the construction costs. It may be that the client will only want the construction costs tabled with all other project costs being held in a separate estimate/budget allocation.

However for a post-tender estimate to be fully effective it needs to be a reconciliation of the project costs where previous budget allocations are adjusted to reflect the finished scope of works. If risk or other elements of work have been incorporated into the tender then the allocation for these items would need to be omitted or reduced accordingly.

In a similar way, if there are elements of work that have not formed part of the tender but were originally contained in the construction cost plan then a separate allowance should be made for these in the budget reconciliation.

In this way the post-tender estimate represents a sanity check for the project and a review of the scope to determine the overall project outcome. It is for this reason that the post-tender estimate is most effective if it goes beyond the construction costs.

The emphasis on fixed price has come more to the fore with recent tenders largely as a consequence of the uncertainty caused by the Brexit negotiations. This has had a major impact on exchange rates: the currency fluctuations make it difficult to predict supply costs over time and can make it difficult to establish what values should be attributed to fixed prices where elements are heavily exposed to importing materials and products. The wider impacts on workforce and potential shortages are not clear and are not necessarily a key driver at this stage. However, as things progress, the emphasis on the costs risks are likely to shift as the proposed strategy and agreements resulting from the Brexit negotiations become evident.