How the stage runs
Once the bids are in, the ACT duty unfolds in a sequence of steps. It calls for method and rigour: an abnormally low bid that goes undetected, or an item overlooked in negotiation, can cost far more than a variation later.
| Receipt and registration of bids | Checking that the submissions are complete. Some can be set aside at this point if mandatory documents are missing: insurance, qualification, an incomplete price. |
|---|---|
| Opening the bids | Each pricing schedule returned by a contractor is transcribed into a comparative table, structured by package and sub-package so that it can be read across. |
| Technical and financial analysis | Checking that the prices hold together, detecting anomalies, under-valuations, omissions, abnormally low rates. Seeking clarification from contractors where needed. |
| Comparative bid table | The summary presented to the client to support the award decision. Carries the amounts by package, the gaps against the estimate, and the technical observations. |
| Negotiation | Financial and technical settlement with the selected or shortlisted contractors. Ambiguities cleared, completeness of scope confirmed. |
| Settling the contracts | The results of the negotiation are carried into the contract documents. The final contract is assembled: administrative conditions, specification, signed pricing schedule and drawings. |
Financial analysis: reading the price
Analysing a bid is not a matter of comparing gross totals. It requires understanding how the price is built, so as to detect where it is fragile and to anticipate the site problems that will follow.
How a contractor's selling price is built
The fundamental equation: selling price excluding VAT = DS + FC + Fop + FG + B&A
DS, direct costs: the direct cost of materials, labour, hourly rate multiplied by unit time, and plant. The raw production cost, carrying no indirect charge.
FC, site overheads: costs specific to the site but not directly productive: site manager, site set-up, delivery and removal of plant, cleaning.
Fop, operational costs: costs at the level of the regional office: contracts manager, estimators, logistics. Generally 6 to 10 % of direct costs plus site overheads.
FG, general overheads: head office costs: management, finance, IT, research and development. Generally 4 to 8 % depending on the size of the firm.
B&A, profit and contingency: the commercial margin and the risk provision. The firm's cushion against the unexpected on site.
Reading the profit and contingency line
The B&A is what reveals the financial health of a bid. A bid whose B&A is too thin is a fragile bid: at the first hazard on site the contractor is in deficit and will look to recover through claims and variations.
| B&A above 5 % of the selling price | A balanced bid. The contractor has enough cushion to absorb ordinary site hazards. A sign of financial health. |
|---|---|
| B&A between 3 and 5 % | A zone to watch. The contractor is under pressure. An unforeseen discovery, an extended programme or a change of brief can put its result at risk. |
| B&A below 3 % | A fragile or abnormally low bid. The contractor has either under-valued certain items or is betting on recovering through claims. To be handled with care, and justification sought. |
| B&A nil or negative | An abnormally low bid in the regulatory sense. A public client is obliged to seek justification. On a private contract it is an alarm: the contractor cannot carry out the work at that price without losing money. |
How to spot an abnormally low bid without access to the detailed breakdown
Comparison between bids is the first tool. A bid more than 20 to 25 % below the average of the others on the same package deserves close analysis.
Comparison with the PRO estimate is the second. Where a bid falls well below the estimate, by more than 15 to 20 %, either the estimate is overstated, which should be checked item by item, or the bid carries omissions.
Breaking the price down by item is the third. Asking the contractor to decompose its price against the pricing schedule exposes the under-valued items and allows the method of execution to be discussed before the contract is signed.
The comparative bid table
The comparative table is the summary the design team presents to the client to support the award. It is not a list of totals: it documents the analysis and the recommendation.
A typical structure
| Package | PRO estimate | Contractor A | Contractor B | Contractor C | Lowest vs estimate | Recommendation |
|---|---|---|---|---|---|---|
| Structural works | 485,000 € | 462,000 € | 501,000 € | 488,000 € | −4.7 % | Contractor A, subject to checking subcontractors |
| External joinery | 98,000 € | 87,000 € | 102,000 € | n/a | −11.2 % | Check for omissions in the glazing item |
| Plasterwork | 143,000 € | 138,000 € | 151,000 € | 129,000 € | −9.8 % | Contractor C: estimated B&A below 3 %, seek justification |
| Mechanical services | 187,000 € | 195,000 € | 178,000 € | n/a | −4.8 % | Contractor B, subject to the equipment schedule |
| Electrical | 112,000 € | 108,000 € | 117,000 € | 103,000 € | −8.0 % | Check the metering provision |
Illustrative example, to be adapted to each project.
The table must be accompanied by a written analysis report setting out the technical observations package by package and giving a reasoned award recommendation. That document protects the client, and the design team, if the award is later contested.
Negotiation and settling the contracts
On a private contract, negotiation is free. On a public contract it is constrained: negotiation is not possible under a standard open tender, save under an adapted procedure or a competitive dialogue.
What settlement usually covers
- ℹ Clarifying scope: confirming that the contractor has included everything in the specification. Where an item looks suspect, ask about it explicitly.
- ℹ Technical alternatives: where a contractor proposes an alternative material or method, confirm technical equivalence with the specification before accepting it.
- ℹ Programme: checking that the period offered is consistent with the overall construction programme. An unrealistic period is a source of future damages, or of a stalled site.
- ℹ Insurance and qualifications: confirming that the contractor carries the required cover and is qualified for the work.
- ℹ Subcontractors: identifying what the contractor intends to subcontract. Subcontracting must be declared and the subcontractors approved by the client.
ℹ Key principle: whatever is negotiated verbally must be written down before signature A verbal agreement reached in a settlement meeting has no legal value if the signed contract does not carry it. Every change of scope, every clarification, every alternative accepted must be written into the contract, in the specification, in an addendum to the quotation, or in a technical statement signed by the contractor. A design team that does not formalise what was agreed exposes itself to claims during construction: the contractor can legitimately maintain that the item was not in the bid as signed.
What ACT decides for the rest of the appointment
The quality of ACT governs everything that follows. A rigorous analysis and well-settled contracts make for a calm construction stage. Contracts signed with ambiguities or omissions produce disputes on site, without exception.
| A well-structured pricing schedule | Monthly applications easy to verify. A basis for valuing additional work available immediately. |
|---|---|
| Scope of each package clarified | No disputes between contractors over where one package ends and the next begins. Fewer variations arising from interfaces. |
| Subcontractors identified | No surprises during construction. Subcontracts signed before work starts. |
| Realistic contract periods | A credible construction programme. Liquidated damages resting on solid ground. |
What Quostra takes on at ACT
Analysing the bids, building a structured comparative table, spotting the abnormally low bids, documenting the award recommendation: several days of an economist's work, calling for both technical command of the trades and current knowledge of market prices.
ℹ Quostra, the construction economist on demand Cost estimates, pricing schedules, developer appraisals, summary notes. The deliverables that take you days today, taken on by a dedicated economist. You have better things to do. Submit your project and an economist takes over. → quostra.com
Sources: Léonard Hamburger, Maître d'œuvre Bâtiment, 3rd ed., Eyrolles, 2016 · Yves Widloecher and David Cusant, Manuel de l'étude de prix, 4th ed., Eyrolles, 2018.