Appraising tender prices

The tender documents will differ dependent on the contract type, as follows:

Tenders should be appraised and evaluated as soon as possible after the closing date for submissions, by individual(s) familiar with the project. It is important at the outset of a project to ensure that sufficient time is included within the project programme to properly evaluate the cost and quality of the tender submission. The individual(s) analysing the tender should treat the information provided by the contractor as confidential and should not discuss the information supplied with other tendering contractors until a contract has been awarded.

Firstly an arithmetical check should be conducted on the submitted pricing. The quantity surveyor should ensure that the figures all carry forward correctly to the summary pages and there are no discrepancies.

If bills of quantities are used, the accuracy of the quantities is the employer’s responsibility. The contract sum is the total arrived at in the fully priced copy of the itemised contract bills. Therefore, the tender appraisal process will adopt a method of highlighting large fluctuations in rates that the tenderers have priced. Large fluctuations may result in the quantity surveyor having to ensure that the contractor has priced the individual’s items correctly to the standard that is stated in the bill of quantities.

In addition, the general level of pricing should also be examined for:

• similar items that appear in different parts of the bills are priced consistently (for example, cart away items that appear in a number of elements such as substructure and drainage, which should have the same rate against them.);
• unexpected highs or lows in elemental cost which may be the result of unpriced items or mistakes;
• front loading of pricing, which would result in the client paying more during the early stages of the project (for example, the contractor has included high prices for the substructures but low prices for finishes in order to improve their early cash flow);
• items that are marked provisional, to be remeasured during the course of the works, have been priced at rates that are consistent with the rest of the works;
• caveats inserted by the contractor (for example, ‘disposal of hazardous material has not been included in the tender figure’);
• overhead and profit percentages that are clearly identified.

On a design and build contract, tender evaluation becomes a far wider remit and requires input from the whole design team. Tenders will need to be assessed both in terms of design proposals, compliance (depending upon the level of design contained within the tender documents) and cost. Part of the process of analysis may involve assessing best value by considering not only cost but also what design and specification standards are being provided for that cost.

Final decisions and recommendations are generally made in close consultation with the client. In this instance, tender recommendations will be a joint one involving the whole design team. This is a major departure from assessing traditional contracts where recommendations generally fall to the quantity surveyor.

Contractor’s proposals, on contractor-led design projects, should be checked systematically to ensure that they meet the employer’s requirements. The structuring of the requirements, the proposal and the contract sum analysis in consistent elemental form will greatly assist in this process.f