Pricing schedule or priced bill: what is the difference and when to use each

The difference lies not in the form — both are tables structured by item — but in the nature of the commitment created between client and contractor.

Under a global fixed-price contract, priced through a lump-sum pricing schedule, the contractor undertakes to carry out everything described in the specification for the amount it has entered. If the real quantities turn out to exceed what it allowed, that is its risk: it cannot claim more, unless the additional work results from a change of brief decided by the client.

Under a remeasurable contract, priced through a bill of estimated quantities, the contractor enters a rate for each unit of work — the cubic metre of concrete, the linear metre of excavation, the square metre of render. Final payment is calculated by multiplying those rates by the quantities actually carried out, measured after the works. If the real quantities exceed the estimates, it is the client who pays the difference.

ℹ The golden rule The lump-sum schedule transfers the quantity risk to the contractor. The priced bill keeps it with the client. Choose the schedule when quantities are well known and the project well defined. Choose the bill when quantities are uncertain or depend on ground conditions unknown at tender.

Here the contractor enters a lump sum for each item. If it has misjudged the quantities for item 01.04 it cannot claim more — that is its entrepreneurial risk.

Here the contractor enters only its unit rates. The anticipated amount is calculated by the economist as quantity × rate, but is not a firm commitment: if the excavation reveals a greater volume than foreseen, the package will be paid on the real quantities.

Note: the estimated quantities in a priced bill are established by the economist from the project and serve only to calculate an indicative amount for comparing offers. They are not a contractual commitment on the real quantities.

It is entirely common, and often advisable, for a single tender to use a lump-sum schedule for the packages whose quantities are well defined and a priced bill for those carrying risk. On a heavy refurbishment, for instance: a schedule for the external joinery and the services packages, whose scope is defined, and a bill for the demolition and earthworks, whose quantities depend on the state of the existing fabric.

A pricing schedule can be more or less detailed. One with a single item per package ("structural package, lump sum: … €") permits no comparative analysis. One broken into six to ten items per package lets the economist spot under- or over-priced items during the tender analysis and steer the negotiation towards where savings are available.

On some contracts the administrative conditions provide that the schedule submitted by the contractor also serves to calculate the monthly valuations, each item being valued at its percentage of completion. The structure must then be fine enough to allow a realistic assessment of progress item by item.

ℹ The trap of a priced bill on a public contract On public projects a poorly established bill can generate serious dispute if the real quantities significantly exceed the estimates. The procurement code sets specific rules for variation in quantities: beyond a certain threshold, generally 25 %, the unit rate can be renegotiated. The economist must establish the estimated quantities with all possible rigour, and set out in the administrative conditions the rules applicable if they are exceeded.

The choice between the two has a direct effect on how the economist analyses the offers.

On a lump-sum package, the analysis focuses on the coherence of the breakdown: are the items properly valued? Are there abnormally low items suggesting deliberate under-pricing? A competitive overall offer can hide a front-loaded price structure that will be recovered through variation claims.

On a remeasurable package, the analysis bears on the unit rates: are they consistent with the market? Some contractors practise a strategy of unbalanced pricing — very low rates on the items whose quantities are likely to fall, very high rates on those that could rise. That strategy is hard to detect without close analysis and can prove very costly to the client if the movements go the contractor's way.

Quostra establishes the schedule or bill appropriate to each package, consistent with how far the drawings are developed and with the specifics of the project. The choice between the two is documented and argued in the note accompanying the tender package, so the client understands the risks attached to each option.

Schedules are structured with enough detail to allow comparative analysis at the award stage. Bills are established with the most rigorous estimated quantities possible, accompanied by a note on the assumptions adopted and the margins of uncertainty.

You have better things to do. Submit your project on quostra.com and an economist establishes the schedules and bills appropriate to each package.

The lump-sum pricing schedule and the priced bill are contractual instruments of different natures: the schedule fixes a lump sum whose quantity risk belongs to the contractor, the bill fixes unit rates whose quantity risk returns to the client. The choice depends on how well defined the work is and how uncertain the quantities are. A single tender can and should use both, package by package, to allocate risk optimally. In either case, the quality of the structuring — number of items, consistency with the specification, level of detail — directly governs the quality of the tender analysis.