A tender is a competitive price for a defined scope of work, and pricing one well is part measurement, part judgement and part presentation. The firms that win consistently are rarely the cheapest. They are the ones whose numbers are accurate, whose bids are easy to read, and who only chase work they are well placed to win.
This guide walks through the whole process, from opening the tender documents to pressing send. It covers the take-off and measurement, how to price the works, the parts that protect your margin such as prelims, risk and contingency, and the commercial layer of overheads and profit. It also tackles the difference between cost and price, the value of clear qualifications and exclusions, and the practical things that lift a win rate.
Throughout, the figures are ex VAT and the references are to the standards UK contractors actually use, including the RICS New Rules of Measurement for measurement.
Read the tender documents in full
Before you price anything, read everything. A tender pack usually contains drawings, a specification, a form of tender, the proposed contract terms, a pricing document or bill of quantities, and often a preliminaries section setting out how the job must be run. Each document can change the price, and the ones builders skim are exactly the ones that bite later.
Pay close attention to the scope and to what is excluded from it, the programme and any sectional completion dates, the form of contract and its payment terms, and any unusual requirements such as specific insurances, bonds or design responsibility. If something is ambiguous, raise it as a tender query rather than guessing. A clarification on the record is worth far more than an assumption you cannot prove.
It is also the moment to decide whether to bid at all. If the scope is poorly defined, the programme is unrealistic, or the terms transfer risk you cannot price, a considered decision not to tender is often more profitable than winning the wrong job.
The take-off and measurement
With the documents understood, the next job is the take-off: measuring the quantities of work from the drawings. Where the client has provided a bill of quantities you are pricing their measured items, but it still pays to check the quantities against the drawings rather than trusting them blindly.
For tendering, measurement in the UK commonly follows the RICS NRM2, the detailed measurement rules within the New Rules of Measurement that deal with detailed measurement for building works. NRM2 sets out how items are measured and described so that every tenderer is pricing the same thing in the same way. That consistency is what lets a client compare bids fairly, and it is what makes your own price defensible if it is questioned.
Accurate measurement is the foundation of the whole bid. A missed quantity or a double-counted item flows straight through to the price, and on a competitive tender there is little room to absorb that kind of error.
Pricing the works
Pricing the measured work means building a unit rate for each item from its components: labour, materials and plant. Labour is the time the task takes at your actual labour rate. Materials are the quantity required plus a realistic waste allowance, priced from current supplier quotes rather than last year's figures. Plant is the equipment needed, hired or owned, for the duration the task requires.
Build rates from these parts wherever you can. A rate built up from components moves correctly when a material price jumps or a labour rate changes, whereas a remembered lump sum quietly goes stale. On the larger or more uncertain items, getting fresh subcontractor and supplier quotes before you commit a rate is time well spent.
Preliminaries, risk and contingency
Beyond the measured work sit the costs of running the job and the costs of the things that might go wrong. These are routinely underpriced, and they are routinely where tenders lose money.
Preliminaries cover site set-up and running costs that are not tied to a measured item: site management, welfare, scaffolding, temporary services, insurance and the simple cost of being there for the length of the programme. Price prelims against the real programme, because if the job runs longer than you assumed, the prelims run with it.
Risk and contingency deal with uncertainty. Identify the specific risks in the job, such as unconfirmed ground conditions, incomplete design or a tight programme, and price them deliberately rather than hiding a vague percentage in the rates. A contingency that is tied to identified risk is something you can explain and defend. A round number plucked from the air is not.
Overheads, profit and margin
Once the cost of the works, prelims and risk is settled, you add the commercial layer. Overheads are the cost of running the business that no single job pays for on its own: the office, vehicles, software, and staff not charged to a specific project. Profit is the return that makes the work worth doing. Together they are usually expressed as a percentage on top of cost.
Margin is easy to talk about and easy to lose. A common and costly mistake is to add a percentage to recover cost and assume it equals the same percentage of profit on the price, which it does not. Be clear about whether you are applying a mark-up on cost or working to a target margin on price, because the two produce different numbers and confusing them erodes the very profit you are trying to protect.
Cost versus price, qualifications and exclusions
There is a clear line between cost and price. Cost is what the work will cost you to deliver. Price is what you choose to charge, after you have weighed the competition, your need for the work, the risk in the job and the relationship with the client. Two firms with identical costs can rightly submit different prices because their commercial situations differ.
Use qualifications and exclusions to control scope
Your bid should make clear exactly what you have, and have not, allowed for. Qualifications state the assumptions your price is based on, such as the design information you priced from or the access you have assumed. Exclusions list what is not in your price, such as statutory fees, works by others or items not shown on the drawings.
Clear qualifications and exclusions are not a way of dodging work. They are how you make sure you are paid fairly for the scope you priced and protected from scope you did not. A clean, honest set of qualifications also signals competence to a client and makes your bid easier to evaluate.
Presenting the tender
Presentation matters more than many builders expect. A tender that is clear, well organised and easy to compare is more likely to be trusted, and trust influences who wins. Follow the client's required format exactly, return every document they asked for, and make sure your numbers add up and your qualifications are stated plainly.
A short covering summary that sets out your price, your programme and your key assumptions helps the client see the value in your bid quickly. The aim is to make their decision easy, because a confused evaluator rarely chooses the confusing bid.
Why tenders are lost, and how to win more
Tenders are lost for predictable reasons, and most of them have nothing to do with being slightly more expensive than the next firm.
- Pricing the wrong scope because the documents were not read in full.
- Errors in the take-off that make the bid too high or too low.
- Prelims and risk underpriced, so the job is won but not profitable.
- A bid that is hard to read, late, or missing required documents.
- Chasing work that was never a good fit, against firms better placed to win it.
Improving your win rate
The fastest way to win more is to bid better, not cheaper. Be selective about the opportunities you chase and put your effort where you have a genuine edge. Price accurately so that the work you win actually pays. Present clearly so the client can trust and compare your bid. And review the tenders you lose to learn why, so the next bid is stronger.
Speed helps too, as long as it does not cost accuracy. Being able to turn a sound tender around quickly lets you bid for more work without dropping standards, which is exactly where a pay-per-project estimating service can take the pressure off when several opportunities land at once.