The schedule of unit rates and labour incidence

Article 31 of Annex I.7 to the public contracts code places the schedule of unit rates alongside the bill of quantities and the quadro economico, and adds any price analyses to them. The three documents form a set and must be read together.

The schedule gathers, for each item applied in the bill, the code, the full description and the unit rate, without quantities. It therefore covers both items taken from the prezzario and those determined by analysis, which must be flagged as such and accompanied by the corresponding analysis.

The difference from the bill is functional. The bill answers the question of what the works cost, the schedule answers the question of what one unit of each operation costs. It is the second question that arises during construction.

At tender stage the schedule serves two distinct purposes. The first concerns the bid, the second the construction stage.

The first is informative towards bidders. It allows the rates applied to be checked and the bid to be framed with knowledge of how the tender amount is structured.

The second is as the reference for future valuation. Works and supplies are valued by applying to the quantities executed the net unit rates taken from the schedule, to which the percentage discount offered by the successful bidder is applied. The document therefore outlives the tender and becomes the operational instrument of the whole construction stage.

The schedule should not be generated once the bill is complete but populated as the bill is built, and the difference shows in the quality of the result. The difference shows in the quality of the result.

The first step is defining the minimum content of each line. It needs the code, the full description in the prezzario wording, the unit of measurement, the unit rate, the source with the edition used and, for analysed items, a reference to the corresponding analysis. A truncated description makes the item unusable at the very moment it has to be compared with work executed differently.

The second step is checking for duplication. In bills of any size the same operation tends to appear under different codes, as a result of successive imports or partial revisions. A schedule containing two different rates for the same work is a contractual problem before it is a formal one.

The third step is selecting the items to include with variations in mind. The criterion is not the amount in the design but the likelihood of quantity variation: finishes, excavation and below ground work are the categories where quantities most often depart from those forecast, and their coverage in the schedule is worth more than that of categories which are economically significant but quantitatively stable.

The fourth step is the final reconciliation with the bill, to be carried out after the last revision and not before. It is the check that catches the most common inconsistency, namely a rate amended in the bill and not carried across to the schedule.

Document	Content	Function
Schedule of unit prices	The price of each operation, with its description	Contractual basis for the bill and for variations
Price analysis	Composition of the price between labour, materials and plant	Justifies the price and supports reasonableness
Labour incidence schedule	Labour percentage by work stage	Feeds the separate declaration of labour costs
Declaration of labour costs	The amount stated in the tender	A formality carrying exclusion where it is due

This is where the deliverable's practical value concentrates. Variations are valued by applying the rates in the schedule of unit rates attached to the contract, reduced by the discount percentage offered at tender.

The consequence is direct and often underestimated at drafting stage. An operation present in the schedule can be increased or reduced by applying a rate already agreed. An operation absent from the schedule requires a new rate to be determined, through a formal procedure and with a margin for negotiation the design does not control.

A drafting rule follows: it is worth including in the schedule items of modest economic weight but likely quantity variation, because their value lies not in the amount they represent in the design but in the cover they provide during construction. Low value items are often those most subject to variation.

The same article 31 provides for amounts and the related percentages to be aggregated in tabular form by reference to the specific parts of the works to which they relate, and to be derived at detailed design stage from the bill of quantities. For the purposes of interim payment, amounts and percentages may also be shown broken down into their principal components.

This table plays a decisive role under a lump sum contract, where the consideration is fixed and valuation proceeds by percentages rather than by quantities. The apportionment across the parts of the works governs the rhythm of interim payments, and an apportionment built carelessly produces imbalances that surface once the site is already under way.

Where operations are valued as a lump sum within a measured contract, those operations are identified in the instrument approving the detailed design with specific technical reasons and with the summary amount of their presumed value and their incidence on the overall tender value. Identifying them in the instrument of approval is therefore necessary.

The labour incidence schedule is the deliverable making the labour component embedded in the rates legible, aggregating it by reference to the parts of the works. It derives from the bill and the analyses, and in practice is often completed as a formality.

Its usefulness is in fact substantive, on two levels. At design verification stage it makes the estimate of the labour component checkable, and that component is the one most exposed to errors in unit inputs. At tender stage it feeds the separate declaration of personnel costs.

Article 41 paragraph 14 of the code places on the contracting authority the obligation to quantify and state labour costs separately in the tender documents. On the bidding side, the economic operator must state labour costs separately in addition to the discount on the tender amount, failing which it is excluded.

One technical point warrants attention because it generates recurring errors. The labour costs estimated by the authority under article 41 paragraph 13 relate solely to those costs and may not incorporate any other element. The price analyses used to determine the tender amount, by contrast, include overheads and the contractor's profit percentage in addition to technical costs.

The two figures are not interchangeable. The value feeding the separate declaration is the labour component taken as an elementary cost in the analyses, not the figure resulting after the percentages are applied. Setting up the working file so that both readings can be extracted without recalculation removes the error at source.

A schedule generated automatically from the bill without review is the first. It reproduces truncated descriptions, duplicates items under different codes and omits the analyses, rendering the document useless at the precise moment it is needed.

Omitting low value items is the second, and narrows contractual cover on the operations most subject to quantity variation. Contractual cover narrows precisely where it is most needed.

Inconsistency between the rates in the schedule and those applied in the bill is the third, and almost always arises from a partial revision of the bill not carried across. It almost always arises from a partial revision carried on only one document.

A labour incidence schedule built by subtraction rather than by aggregation is the fourth. It produces a figure that is arithmetically consistent and technically meaningless, and does not survive verification.