From the design budget to the base tender budget
The chain has three links, and each has its own rule. The works design must include a budget "stating the unit prices and, where applicable, their breakdowns, the schedule of quantities and the details needed for its valuation" (LCSP, art. 233.1.d, unofficial translation). That budget gives the presupuesto de ejecución material (PEM, the net works budget), which the General Regulation of the Public Administration Contracts Act (RGLCAP, Royal Decree 1098/2001, art. 131) defines as the sum of the units of work multiplied by their unit price and of the lump-sum items.
The base tender budget is built on that foundation. The same article 131 of the RGLCAP adds to the net works cost the general overheads, "from 13 to 17 per cent, to be set by each Ministerial Department", 6% industrial profit and VAT. The definition and calculation of the base budget are covered in the article on the base tender budget, and the difference between net works cost and contract price in the article on PEM and PEC.
The LCSP distinguishes two figures with different functions. Confusing them is a frequent error in the contract file.
| Figure | What it includes | VAT | Function |
|---|---|---|---|
| Net works budget (PEM) | units of work by unit price and lump-sum items (RGLCAP art. 131) | no | technical basis of the design |
| Base tender budget | net works cost, general overheads, industrial profit and VAT | yes, unless otherwise provided | the contracting authority's "maximum spending limit" (LCSP art. 100.1) |
| Estimated value | total amount payable according to the estimates, with upward modifications provided for at their maximum amount | no | determines the procedure and advertising (LCSP art. 101) |
The estimated value is not a smaller budget, but a different scope. It includes at least the net works costs, the general overheads and the industrial profit and, if the tender specifications provide for modifications under article 204, "the maximum amount it may reach, taking into account all the upward modifications provided for" (art. 101.2). For works, the supplies the authority makes available to the contractor are added (art. 101.8) and, where there are lots, the overall value of all of them counts (art. 101.12).
Appropriate to market prices
The central requirement lies in one phrase of article 100.2: the base budget must be "appropriate to market prices". It is not enough for the design to be technically correct; its prices must be capable of being bid by a real firm at the time of the tender.
The specifications must show how it was calculated. The same paragraph requires the pliego de cláusulas administrativas particulares (specific administrative clauses) to break down "the direct and indirect costs and other possible expenses calculated to determine it". Where the cost of wages forms part of the price, the estimated wage costs must be stated, broken down by gender and professional category, "on the basis of the reference collective agreement".
The date matters as much as the price. For the estimated value, the LCSP takes as its reference the "usual market prices" at the time the contract notice is sent or, if there is none, when the procedure begins (art. 101.7). A design drawn up with prices from 2 years ago and tendered without updating reaches the market with a base budget that is no longer a market budget, even if it was one when it was approved. Three practical checks support that appropriateness: that the unit prices have a breakdown and an identifiable source; that the date of the prices is written down and close to that of the notice; and that the wage costs in the breakdown are consistent with the reference collective agreement.
Review of the design
From 500,000 euros, design review is mandatory. Article 235 of the LCSP requires a supervisión (design review) report before the design is approved when the base tender budget is "equal to or greater than 500,000 euros, excluding VAT". Below that figure it is optional, except where the work affects the stability, safety or watertightness of the works.
The same threshold allows the design to be simplified. For base budgets below 500,000 euros, excluding VAT, the content of the design may be simplified (art. 233.2). Simplification reduces the cost of preparing it, but not the requirement for the budget to be appropriate to market prices.
Minor works contracts do not escape entirely. Below 40,000 euros of estimated value, article 118 requires the budget for the works, the design where the rules require one, and the review report where the work affects the stability, safety or watertightness of the works (art. 118.4).
The geotechnical survey is part of the budget's reliability. Article 233.3 requires it unless it is incompatible with the nature of the works, and article 233.4 obliges the author of the design to pay compensation, under article 315, where the survey failed to foresee circumstances that cause an increase of more than 10% of the initial price.
What a badly calculated budget costs
A base budget that is too low saves nothing: it delays. A bid above the base budget exceeds the maximum spending limit. If no suitable bid arrives, the subsequent negotiated procedure without advertising is only possible "without the base tender budget being increased in any case" (art. 168.a.1.º). If the budget was unrealistic, the way out is a new tender with a corrected budget, often with the design revised as well. The options are analysed in the article on failed tenders and bids above the base budget.
And if the contract is awarded, the deviation reappears on site. A design with short measurements or poorly defined items turns into modifications of the contract, which are only permitted for reasons of public interest and within the limits of articles 203 to 207; those limits, read as budget lines, are covered in the article on how far a public works price can grow.
An inflated budget is not neutral either. It commits more funding than necessary and can change the applicable procedure, because the estimated value decides the thresholds: minor contract below 40,000 euros, summary simplified open procedure below 80,000 euros, simplified open procedure up to 2,000,000 euros, and harmonised procurement from 5,404,000 euros, the threshold applicable since 1 January 2026.
The contracting authority's checklist
Before approving the design and the contract file, the contracting authority can go through six questions.
| Question | Where it is checked |
|---|---|
| Does the budget have unit prices, breakdowns and a schedule of quantities? | design, art. 233.1.d |
| Is the schedule of prices dated, and recent relative to the notice? | design and file report |
| Are direct and indirect costs and, where applicable, wage costs broken down in the specifications? | specific administrative clauses, art. 100.2 |
| Has the review report been issued, mandatory from 500,000 euros excluding VAT? | contract file, art. 235 |
| Does the estimated value include the modifications provided for at their maximum amount? | file report and specifications, art. 101.2 |
| Is there a geotechnical survey, or a justification for its absence? | design, art. 233.3 |
A negative answer to any of them is cheaper to correct now than in a failed tender or a modification. Before the notice, revising the design or the specifications is enough; afterwards, a new procedure or a modification limited by law is needed.
This article describes the state of the rules on the date of verification and is intended as professional guidance. It does not replace legal advice or an examination of the specific case.