Two jobs, one document
A pricing document is produced to obtain a price, and that is the job everybody has in mind while it is being prepared. It then does a second job for the rest of the project, which nobody is thinking about at the time: it supplies the rates and the structure used to value everything that changes.
The two jobs pull in different directions. Getting a price quickly favours a short document. Valuing change favours a detailed one. Where the first consideration wins completely, the second is paid for later.
The question worth asking before issue is simple. If a variation arrives in eighteen months, what in this document will be used to price it.
This applies whatever the contract form. The document may be a bill of quantities, a schedule of works, a contract sum analysis on design and build, or a schedule of rates. The name changes and the second job does not: whatever was priced competitively becomes the reference point for everything priced afterwards without competition.
What a thin breakdown costs
A contract sum supported by a handful of lump sums leaves a valuer with nothing analogous to work from. Every change then becomes a fair valuation built from first principles: labour, plant, materials, overheads and profit, negotiated between two parties with unequal information.
The contractor knows their build up and you do not. That asymmetry is not misconduct, it is simply how it is, and the only correction is a pricing document that fixed the rates while there was still competition.
This is also why the cheapest tender and the lowest out-turn are frequently different bids, a point we made in tender bid analysis and normalising.
The same logic applies to the programme submitted with the tender. A programme showing activities, durations and sequence gives you something against which delay can later be assessed. A single bar showing start and finish gives you nothing, and extension of time claims then become an argument about a document that was never capable of supporting one.
What to ask for
Four things improve almost any pricing document. A breakdown detailed enough that each significant element carries its own rate. Preliminaries separated into time related and fixed, so that a change in duration can be valued. Percentages for overheads and profit stated as figures. And dayworks rates stated, so that work with no other basis has one.
None of that lengthens a tender period materially. All of it is close to impossible to obtain after signature, because the party being asked has no reason to agree.
Provisional sums and their effect
A pricing document carrying large provisional sums has fixed less than its total suggests. Whether a sum is defined or undefined changes what the contractor has allowed for in programme and preliminaries, and the two look identical in the total.
Keeping provisional sums few, and defining them where the information exists, is worth the effort at document stage. Our post on defined and undefined provisional sums covers what each one commits you to.
Qualifications belong in the price, not the appendix
Tenderers qualify their bids, and qualifications move risk. A paragraph transferring ground risk back to the employer is not a technical note, it is a price adjustment expressed in words.
The correct treatment is to extract every qualification, value it, and either accept it into the price or require its withdrawal before award. Leaving them in the appendices means the accepted tender is not the tender you compared. We covered this in tender qualifications and exclusions.
What this means for you
Treat the pricing document as a two year instrument rather than a one month one, and specify its structure before tenders go out rather than accepting whatever comes back.
Where changes are already being valued from a document that gives you nothing to work with, the position is recoverable but slower, and it starts with establishing what rates do exist. That work runs through client side quantity surveyor and, where we hold the contractual authority, through the employer’s agent appointment.
A last point about timing. Everything described here has to be specified before tenders are issued, because it forms part of what tenderers are asked to submit. Requesting a detailed breakdown after bids are in produces either a refusal or a reverse engineered document assembled to justify a total that was reached another way, and the second is worse than nothing.