tendering and estimating 8

How the Estimate is Calculated

1.Measure & Price Quantities

• Estimator measures items from drawings/specifications.

• Applies rate to each quantity

• Total price = Rate X Quantity

2.Summarize Costs

• Net Estimate: Sum of all measured items

• Gross Estimate: Items added to the Net estimate: Profit, Overheads, risks and uncertainty items

What are overheads ?

the indirect, ongoing costs of running a business that are not directly tied to a specific project, such as rent, salaries, and insurance.

Material and subcontract quotations

During the tender preparation process, the main contractor contacts: subcontractors and suppliers. This is to get prices for the materials and services and ensure accurate cost estimates for the tender. The estimated user is to prepare the final tender price.

Factors influencing subcontractor prices.

▪ Workload – How busy they are.

▪ Relationship – Past dealings with the main contractor.

▪ Discounts – Main contractor’s discount passed on- the contractor may

offer a discount to the client to ensure prompt payment. This is then passed on to the subcontractor to price accordingly.

▪ Payment Terms – How quickly they get paid.

▪ Location – Where the work is taking place.

▪ Specialisation – How specialised the work is

Supplier process

▪ Estimator prepares material schedules.

▪ Suppliers give quotations based on these schedules.

▪ Materials are purchased using a purchase order

Factors Affecting Supplier Prices

▪ Payment Terms – Negotiated terms can impact cost.

▪ Agreed Rates – Nationally agreed rates from buying departments.

▪ Discounts – Level of discount negotiated.

▪ Location – Where the supplier is based.

▪ Urgency – How quickly materials are needed.

Factors that can affect quotes

1.Lack of Information

Quotes often based on old data or previous experience instead of recent information or current details.

2.Errors in Information

Missing or incorrect details lead to inaccurate quotes.

3.Gap Analysis Outcomes

During estimating, gaps in processes may be found, affecting costs.

4.Variant Offers

Items offered outside original contract (e.g., tech upgrades to enhance equipment or services).

5.Abnormal Quotes

Prices much higher or lower than normal; usually withdrawn from tender.