Tender Estimation QS/15/40/16
Introduction
This report has been written for Tender Estimate assignment in the 3rd semester.
This report is mainly focused on study of the estimation in the construction industry. A
Tender Estimate establishes the base line of the project cost at different stages of
development of the project.
A Tender Estimate at a given stage of project development represents a prediction
provided by the cost engineer or estimator on the basis of available data. It is defined as
that area of engineering practice where engineering judgment and experience are
utilized in the application of scientific principles and techniques to the problem of
Tender Estimate, cost control and profitability.
The method of tender pricing process, the consideration while pricing, information
required for pricing, factors affecting in making all in rates, preliminaries, suppliers
quotation and the discount types are the main area covered in this report. Being the
quantity surveyor, he is the one playing in monetary environment of the construction
industry.
The quantity surveyor mind is required not only for the estimating he will have to be
able to forecast what will be happening in future. In estimating by means of norms any
one can do or else computers can do. But the reason why still quantity surveyor is
required he is going to analyze the situation where the adjustment to be made
according to the situation. Those type of calculation have established.
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Acknowledgement
I take this page to acknowledge most important people in my life. First and foremost I
would like to gratefully acknowledge the enthusiastic Tender Estimation lecturer Mrs.
Pabasara Kariyavasam of British College of Applied Studies (BCAS) for her valuable
guidance and advice. She inspired us greatly to work in this project. Her willingness to
motivate us contributed tremendously to this assignment.
I would also like thank the authority of BCAS for providing us with a good environment
and facilities to complete this module. Also, I take this opportunity to thank the
Programme Manager Mr. Haseeb for offering this subject, Tender Estimation. This gave
me a clear vision of what a Quantity Surveyor must do in future as his job.
Finally, my honorable mention of thanks goes to my family and friends for their
understandings and supports on me in completing this assignment.
Without helps of the particular that I have mentioned above, I would face many
difficulties while doing this assignment.
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Content
Introduction ……………………………………………………………………………............................01
Acknowledgement ……………………………………………………………………………………… 02
Content………………………………………………………………………………………………………..03
Task 01(Page 04-09)
Task1.1………………………………………………………………………………………………………..04
Task1.2…………………………………………………………………………………………………..…...05-07
Task1.3…………………………………………………………………………………………………….....08-09
Task 02 (Page 10-13)
Task2.1……………………………………………………………………………………………………….10-11
Task2.2……………………………………………………………………………………………………….12-13
Task 03 (CRA & 14-14)
Task3.1………………………………………………………………………………………………...……..14-15
Task3.2…………………………………………………………………………………….………………….CRA
Task 04 (CRA & 15-17)_
Task4.1……………………………………………………………………………………………………….16-19
Task4.2………………………………………………………………………………………………………..CRA
Task 05 (Page 18-21)
Task5.1…………………………………………………………………………………………………..…..20-22
Task5.2…………………………………………………………………………..…………………………..23-25
Conclusion…………………………………………………………………………………………………. 26
Reference……………………………………………………………………………………………………27
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Task 01
1.1 Describe the steps of tender pricing process.
Decision making to computation
Tender program
information that requires in pricing
other document to be submitted with the tender
Collect necessary
Pricing the tender
Prepare
Tender adjudication
Tender Submission.
 Make the decision to accept tender application, this process initial step of a
competitive tendering process in which qualified suppliers or contractors are
invited to submit sealed bids for construction or for supply of specific and clearly
defined goods or services during a specified time frame.
 Tender program –Contractor look at the tender to make a plan and sea that can
activities enabling on time tender submission of tender.
 Collect necessary information that requires in pricing – In pricing contractor get the
information about price lists, sent quotations and collect cost data about materials.
 Pricing the tender – Then use the information and start pricing the tender by
building up unit rates, pricing the total BOQ and build up cost.
 Prepare other document to be submitted with the tender – Then contractor collect
the document that need to submitted with the tender document like bid bond to
requires value, method statements, work program, financial statements, previous
work record, site organizations chart, site layout, sources of resources etc.
 Tender adjudication – However after contactor add mark-up percentage on to the
cost and apply in BOQ to ready the tender document to submission.
 Tender Submission – After complete the pricing the BOQ, dully filled the form of
tender, incorporate all necessary submittals specified in tender document, specially
bid bond, submit the tender with required manner. And In order to prevent such a
disaster, do not leave things to the last minute. Plan the process well and make sure
that you allow for all potential problems, such as ensuring all files are safely stored
and backed up and printers are working and have a sufficient stock of ink or toner.
From above factors will influence in successful in tender submission.
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1.2. Identify the factors to be considered in pricing a tender
Pricing a tender is a pricing construction operation usually spared throughout specified
time period. cost of operation, therefore depend on some certainties and uncertainties
as well behavior of these factors should be considered in conjunction with all aspects of
the tender. finding from the examination of tender documents and information
collected would be helpful in pricing the tender. The factors to be considered in pricing
are;
Types of contract – Lump Sum. Measure & Pay, Design and build
Special condition or instruction given by client
Price fluctuation
Advance payment
Payment structure
Standard form of contract – SBD Form by ICTAD, FIDIC
Construction period and maintenance period
Location of site, Accessibility, Facilities available, Neighborhoods
Nature of the workplace - weather, Ground condition
Availability of material, Labour, Plant, Technology
Construction methods
Credit facilities from suppliers
Stock of materials
Sub contractors
Method of measurement used in preparation of BOQ
Imported materials
BOI facilities
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Accommodation of workplace
Rules and regulation-Local authorities, Government
Taxes
Extend of design information available
Potential design changes by client
Accuracy of the available cost data
Competition in the market
Estimator’s skill and estimation methods
Tender validity period
Description for some factors
Payment of structure
Since most construction companies are obtaining the capital from the bank loans.
contractor has to know the payment structure from the client. Because client has to pay
the bank loans payments and the interest as well.
And the Progressive payments are a common billing procedure for construction
projects, for instance. For example is a shipment that cannot be delivered all at once.
The client is served by not having to pay an unaffordable payment up front, and by
having a tool to keep workers motivated to complete the project. The project manager is
served by having ability to pay worker wages and buy materials. We must conformed
the payment dates.
Location of Site, Accessibility, Facilities Available, Neighborhood
The site at which the construction is carried out has a mass outcome on the cost. It is so,
depending on where site is situated. So transport facilities, labor agencies, security
services, local services like water, electricity are available or not. and neighborhood, if it
is a residential area, work will not be allowed to be carried out at night time due to the
noise. If there is a school, work shall have to start after school hours.
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Type of contract
A construction contract is the warranty that the executed job will receive the specific
amount of compensation or how the compensation will be distributed. There are a
several types of construction contracts used in the industry, but there are certain types
of construction contracts preferred by construction professionals. Construction contract
types are usually defined; by the way, the disbursement is going to be made and
specifies other specific terms, like duration, quality, specifications and several other
items. So we should read the specification and drawing and decide the best contractor.
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1.3. Identify the sources and nature of information required for cost
estimating
Cost Estimate
We need to considerations two primary factors when planning the project: budget and
time. Cost estimates are necessary for accurate budget projections, which should
eliminate most over runs.
Human Resource Plan
The information in the human resource plan useful for estimating costs includes the list
of roles and responsibilities, personnel rates, and recognitions and rewards.
Project Schedule
An approved project schedule will give you the information about the resources needed
to complete the project work. This information is crucial to make cost estimates. As you
learned in the previous chapter, activity resources are estimated by performing the
Estimate Activity Resources process. Therefore, the Estimate Costs process should be
closely coordinated with the Estimate Activity Resources process, which in turn
depends on the Estimate Activity Durations process because activity duration is
determined for the given resources.
Scope Baseline
All three components of the scope baseline; scope statement, WBS, and WBS dictionary
are useful in estimating the project cost. The scope statement will provide the costrelevant information, such as project and product acceptance criteria, assumptions and
constraints, product description, key deliverables, and project boundaries around the
scope.
Enterprise Environmental Factors
Enterprise environmental factors relevant to estimating costs include market conditions
and published commercial information that will provide the cost of resources, including
human resources, materials, and equipment. This will also provide the information
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related to the availability of products and services and their cost and rates. Supply and
demand conditions can also influence the project cost.
Organizational Process Assets
This includes the organization's policies regarding cost estimates, cost estimating
templates, and information from previous projects, including lessons learned.
There are four common types of cost estimates are:
Planning estimate: a rough approximation of cost within a reasonable range of values,
prepared for information purposes only.
Budget estimate: an approximation based on well-defined but preliminary cost data and
Firm estimate: a figure based on cost data sound enough for entering into a binding
contract.
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Task 02 Prepare standard rates for labour, construction plant and
materials
2.1 Identify the factor to be considered when calculate all in rates
labor, plants and material
When calculating all in rates for labours
Need to see the thing more than salary of a labor to find the all-in rate of labor but is
apply for pavement labors only.
 Number of weeks or days per year
 Working hours
 Annual holidays per year
 Sick leaves per year
 Public holidays per year
 Inclement weather details
 Basic wage
 EPF, ETF
 Insurance scheme
 Tool money
 Accommodation
 Bonus
 Allowance
 Over time
 Extra payment for special skills
When calculating all in rates for materials
 Transportation cost
 Purchased cost
 Transportation cost
 Distance to the site
 Residue wastage
 Quantity Unskilled hourly wage
 Discount
 Loading and unloading
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When calculating all in rates for plant
 Purchased price in plant
 Scarp value
 Repair and maintenance cost
 License and insurance
 Fuel usage details
 Lubricant usage details
 Operator cost
 Tire cost and life time
 Transport cost to site
 Deprivation
 Working hours
 Taxes
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Task 2.2 Calculate all in rate for the provided items.
1. All in rate for skilled labour (Electrician)
Annual salary 36,000 × 12
= 432,000/-
Employer’s contribution for EPF 12%
=51,840/-
Employer’s contribution for ETF 3%
=12,960/-
Insurance 3% of 432,000/-
=12,960/-
Annual bonus
=18,000/-
Refreshment
=24,000/-
Overtime
10 hours × 52 ×
36000
24×8
× 1.25
=121,875/-
Total expenditure for annum
=673,635/-
All in monthly rate
=56,136.25/-
All in daily rate
=2,339.01/-
All in hourly rate
=292.38/-
2. All in rate for bricks
Purchasing prices of 5000 bricks
= 45,000/-
Transport cost
= 3,750 /-
Wastage 2% of 45,000/-
= 900/-
Un skilled labour 15 × 160
= 2,400/-
Total cost of 5000 bricks
= 52,050/-
All in rate of one brick
= 10.41/-
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3. All in rate for ceramic tiles (2000 nr)
Purchasing price of 30cm × 30cm ceramic tiles 133 × 2000
= 266,000/-
Transport cost
= 4,000/-
2000 × 2
Unloading and stacking
= 320/-
Cost of 2000 ceramic tiles
= 270,320/-
All in rate of one tile
= 135.16/-
4. All in rate for excavator
Hire charge (one week)
2,500 × 44
= 110,000/-
Repair and maintenance 15% of 110,000/-
= 16,500/-
Fuel
150 × 25
= 3,750/-
725 × 8
= 5,800/-
Lubricant oil
Skilled works 185×4
=8,140/-
Total cost for one week
= 144,190/-
All in rate for one hour
= 3,277.05/-
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Task 03
3.1 Identify the factors that need to be considered in building up unit
rates for bill items given in the class room activity
In order to identify the Unit rate need to find the All-in rate prices of every item that needed
to make unit rate. However concrete work need to use fining the mixing the concrete then
placing the concrete but the unit rate is come under the placing the concrete. Reinforcement
bar is cost of one ton cost of reinforcement bar with placing cost.
All the price is must be the All-in Rate.
Mixing of Gr.20 reinforced concrete
 All in rate for material(cement, sand, aggregate)
 All in rate for labour (Skilled, un skilled)
 All in rate for plant (Tools, mixer)
 Grad of concert (GR.20)
 Hiring cost of vibrator with operator
 Location of the work
 Quantity of work item
 Wastage of materials
 Facilities (considered that what are the facilities in the site)
 Method of scaffolding used
 Machinery out put
 Percentage of Overhead and profit
Block wall
o All in rate for material(cement, sand, block)
o All in rate for labour(Skilled, un skilled)
o All in rate for plant(Tools, scaffolding)
o Quantity of work item
o Location of the work
o Facilities (considered that what are the facilities in the site)
o Method of scaffolding used
o Motor ratio
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o Wastage of materials
o Percentage of Overhead and profit
Mild Steel Bar Reinforcement (12mm Diameter)
 All in rate for material(mild steel, binding wire)
 All in rate for labour (special skilled, unskilled)
 Wastage of materials
 Location of the work
 Facilities (considered that what are the facilities in the site)
 Percentages of sundries
 Quantity of work item
 Percentage of Overhead and profit
Plastering
 All in rate for material(cement, sand)
 All in rate for labour(Skilled, un skilled)
 Mixing ratio
 Thickness of plastering
 Wastage of materials
 Weather condition
 Location of the work
 Facilities (considered that what are the facilities in the site)
 Quantity of work item
 Percentage of Overhead and profit
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Task 04 Demonstrate ability to costing of preliminaries / overhead
cost of the contractor
4.1 Describe preliminaries and overhead cost in bill of quantities.
Preliminaries
The first sectional bill in a BOQ is preliminaries bill. Preliminaries are not included in
the measured work items. But these items are necessary to carry out the measure work
items. Preliminaries can be classified into two parts like fixed charges and time related
charges.
The cost of fixed charges are to be considered independent of duration of use. But time
related charges are defined as works where the cost of which is to be considered as
dependent on duration. The more the duration the more the cost. These make an
important place in determining the cost of project. And this may vary from contractor to
contractor. Some of the preliminaries are : List of drawing and other documents.
 Setting out for the work.
 Provision for performance bond.
 Temporary roads.
 Take necessary preservations.
 Sanitary and accommodation for employers.
 All risk insurance.
 Payment for local authorities.
 Provision for progress chart.
 Boards and signs
 Scaffoldings
 Site office, stores and vehicle yards
 Provision for first aid.
 Maintenance for public road.
 Temporary fencing
 Site safety
 Final clearance.
 Water for work
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 Electricity for site activities
Overhead cost
Besides the “construction items” which have been priced (labor, plant & materials), the
other items need to be priced in order to ascertain the tender price is overhead costs of
the company. This is the most certain & easiest to estimate costs of all the costs.
However, they causes more problems than any other costs.
The definition for overhead cost is:
Costs that support the production process in a Project but are not directly
related to the production process (do not occur on site).

Relate to off-site costs which must be recovered to maintain the head office &
local office facilities.
Company overheads can be two types indirect and general. Further classifications can
seen through the diagram below.
Fig.1.Flowchart of company overheads
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Indirect expenses (Project Overheads)
 Vary with & are caused directly by individual jobs but are not directly chargeable
against specific phase of work. Example of project over heads are : Welfare fund payments, apprentice training, social security, workmen’s
compensation, unemployment taxes, miscellaneous payroll - related
expenses, direct supervisions, building permits, temporary buildings, sales
taxes etc., Site staff salaries, Maintenance of site vehicle, Equipment’s for
site office, Furniture for site office, Site stationeries, Site welfare facilities
etc., Site services, Office furniture etc.
 Either added as percentage of estimated direct job costs - Suitable for
contractors who perform same type of work all time, with stable work load.
 Normally expressed as overhead percentage of turnover.
 Company policy to be clearly understood
 Affected by market - Bad market conditions – scarce work, turnover drops
General Overheads (Head office overheads)

Can’t be charged directly to single job. Examples of such cost are:o Costs of maintaining office, rent, telephone, property taxes, interest,
insurance, marketing material, office equipment; depreciation, salaries &
cost of employment of directors & staff; Printing, stationery, postage &
telephone; cars & other vehicle costs for office staff; advertising &
entertainment; Finance cost & professional fees, Salaries and costs to
employ directors and staff, Rental fees, rates and maintenance of office,
stores and yards, Fuel and power charges, Cars and other vehicles cost for
office staff, Solicitor fee, Office security, Consultancy fee, Welfare and
medical facilities

Contractors often think that overhead costs can be reduced by reducing prices on
jobs.

Very dangerous – overhead costs can only be reduced in the office.

Reducing the price bid for a job cuts profit – not overheads.
 Price cuts come off the top – out of profits – while overheads go on forever.
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How the overheads are included in the project’s cost

Either added as percentage of estimated direct job costs
o Suitable for contractors who perform same type of work all time, with
stable work load.

Detailed separately in tender.
o Cost identified and attributed directly to certain job (i.e. component of
unit rate)
o Varying workloads, different type of jobs.
o % add‐on simply adds another element of uncertainty.

Necessary to distribute overheads against each project currently involved in, in
an equitable manner.

Generally larger projects receive a larger percentage of overheads.

Once annual overheads have been recovered, you can reduce costs or even omit
from new projects.
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Task 5 Describe the procedure followed in preparation of a quotation
Task 5.1 prepare twosampleinquiry letters to subcontractor and
supplier in order to collect their quotations.
Sub contractor
Harvard Construction Pvt Ltd.
5.5.2016
Alcon (Pvt) Ltd.
123, Galle road,
Colombo-05.
Dear Sirs,
NEW OFFICES FOR MANIFOLD METALS PLC.
NORTH LANE, STANSFORD
We invite you to tender for the Aluminum cladding work for the Super luxury
condominium project and enclose the following details which describe the quality and
quantity of the work.
Approximate Quantities: External wall 550m2 and Front Decoration 10 m2
Referance Number: 2015C/11/15
Bill pages: External wall 8/1-3
Front Decoration: 8/4
Specification pages: 2/25-27
Drawing No: External wall: EXT/1/2.2
Front Decoration: FRT/1/1
From of tender (2copies)
The name of the parties, general description of the works, and details of the main
contract are given in the preliminaries. Your form of tender, price bill of quantities must
be delivered to this through our email address (Harvard @gmail.com) within two hours.
The form of sub-contractor will be CIDA incorporating all relevant published
amendments and the following:
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Payment: Weekly
Discount to main Contractor: 2.5%
Price Fluctuations: Fixed price
Liquidated damages: 5000 days
Retention: 5%
Method of Mesurement: NRM 2
Defect lability period: 3 mounths
We will provide all sub-contractor with lighting and electricity services near the work
and common welfare facilities on site. Sub-contractors will be provide the followings
services and facilities
1. Unloading, storing and taking material to working areas.
2. Clean-up site after the fixing cladding.
3. Power and fuel charges to temporary site accommodation.
If you have any queries about this enquiry please contact the quantity surveyor for the
project, Mr.K. Silva
Would you please confirm by return your willingness to tender by the date for tender.
Yours faithfully,
R.Jeya
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Supplier
Harvard Construction (Pvt) Ltd.
5.5.2016
Sanken lanka(Pvt) Ltd
123,Galle road,
Colombo-05.
Dear Sirs,
Super luxury condominium,
Malambe.
We are tendering for the above project and ask you to submit your best rates for the
following items to be delivered to the site. The project is due to start on Monday
5.06.2016. If you have queries in relation to this enquiry please contact our Quantity
surveyor Mr.K. . Silva
Please reply within two hours through our email address (Harvard @gmail.com) and
state any known or anticipated price rises likely to affect our tender.
Yours faithfully,
R.Jeya
Item
Description
Approximate
Quantities
1
Concrete- C20
250m3
2
Concrete-C25
40m3
3
Concrete-C25
10m3
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Specification pages
2/11-15
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Task 5.2 Describe the different forms of discounts offered in the
construction industry and explain how you incorporate them in
pricing.
Trade Discount vs. Cash Discount
Discounts are a reduction on the price of the goods or services that are provided by the
seller to the buyer. Discounts result in the buyer having to pay an amount less than the
listed price for the products, and such discounts are usually offered for to encourage
customers to purchase more of the company’s products or to ensure faster payment.
The article discusses two types of discounts; trade discounts and cash discounts and
explains how these two types of discounts are quite different to one another.
Trade Discount
A trade discount is an incentive provided to a customer to purchase more of a product.
There are many types of trade discounts that include discounts for purchasing goods in
bulk, discounts provided for new customers, discounts for customers that purchase
goods repeatedly, year-end discounts, etc. The aim of offering a trade discount is to
encourage the buyer to purchase a larger quantity. Trade discounts maybe offered as a
dollar amount reduction from the quoted price or may be provided in the form of a
percentage reduction. The trade discount offered will increase in size with the quantity
of goods that are purchased; higher discounts are offered for a larger volume of
purchases. The trade discount that is offered to one vendor may be different to another
since the discount will depend on the type of goods and quantity purchased. Trade
discounts cannot be recorded in accounting books. Instead, they are recorded as
revenue (the amount that was provided as a discount will be reduced from total
revenue).
Ex: 1000 Birck @10
=10000
Discount5%= 10000x5/100 =500
Supplier code to contract Rs.10000 after give discount 5% so main contractor have to
pay only Rs. 9500
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Cash Discount
Cash discounts are provided to customers either when a customer pays an invoice with
a specific period of time, or when the customer makes a cash payment to the seller
instead of using checks or credit cards. Cash discounts are stated in contractual
agreements and are used to reward customers to make early payments on their invoice.
This discount maybe printed on the invoice itself, and once the seller issues the invoice
with a standard payment period of 30 days customers can refer to the discount details
on their invoice and see how much of the total amount can be saved as a discount when
early payments are made. Cash discounts are also used frequently for customers that
pay cash instead of using credit cards. For example, gas stations offer discounts on the
price for customers who pay in cash since gas stations can save on credit card
processing fees when customers pay in cash.
Ex: Total sub-contractor price=1000000
Discount5%= 10000x5/100 =50000
Sub-contractor price Rs.1000000 after give discount 5% so main contractor have to pay
only Rs. 950000
What is the difference between Trade Discount and Cash Discount?
Trade discounts and cash discounts are similar to each other in that they are both
offered by the seller to the purchaser, and they both reduce the final amount that needs
to be paid. The aim of a trade discount is to encourage customers to purchase a higher
volume of the company’s product. The aim of a cash discount is to encourage the buyer
to settle the invoice within a specific period of time, also for cash payments, instead of
using checks or credit cards. While a trade discount is provided on the purchase of
goods, a cash discount is provided at the time the payment on the invoice is made.
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Summary:
Trade Discount vs Cash Discount
 A trade discount is an incentive provided to a customer to purchase more of a
product.
 Cash discounts are provided to customers either when a customer pays an invoice
within a specific period of time, or when the customer makes a cash payment to the
seller instead of using checks or credit cards.
 A trade discount is provided on the purchase of goods, and a cash discount is
provided at the time the payment on the invoice is made.
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CONCLUTION
I have gained knowledge Tender Estimate. This will be helpful throughout the exam as
well as my professional
I have stated clear information up to the best of my knowledge in this assignment and I
can easily understand the concepts which I have explained
Finally I would like to say that I have enjoyed and I must say I am happy to be a student
of Quantity Surveying with the best guidance and support.
The motivation from my lecturer was tremendous and I feel confident that I am
receiving the training required to be a good Quantity Surveyor. I also hope this
assignment will benefit those who are following this course. I am satisfied even through
this assignment took up most of my time.
Thank you.
Riham.
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Reference
1.
2.
3.
4.
Lecturer guides
https://en.wikipedia.org
www.modularconstructionaustralia.com.au/pricing
http://supplymanagement.ubc.ca/strategic-sourcing/tendering-process/steps-tenderingprocess
5. http://wiki.answers.com/Q/What_are_the_Factors_involve_in_pricing_general_and_s
pecial_attendance_on_sub_contractor_in_tendering_and_estimating
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