Bid budget workbook

Bidding for projects can be a risky business, particularly when the price will be set in advance. Bidding at a price that does not include each element of the work to be carried out will result in lower than expected profits or even a loss on the project. If your business intends to sub-contract some of the work to third parties and these activities are not accurately costed into the bid, this can also result in losses.

Natural stages

You should assist the project team on the financial aspects of the bid from an early stage. The bid document should include details of the service to be offered to the customer, key deadlines and a timeline for delivery.

Assuming that the project for which you are bidding is complex or it’s to be delivered over an extended time period, our Bid Budget Workbook breaks it down into natural stages or phases.

It includes a schedule for all staff and sub-contractors who will be involved in delivering the project and space for the total hours per person or level/type of person. You can use your management accounts and timesheet details from other similar projects to cost the time assumptions in the new bid.

If previous bid documents are being used to build a new one, check the previous project to see whether the scope of work is similar, whether additional costs were incurred and whether changes to the scope were required by the previous customer.

If the project will involve incurring external costs, other than sub-contractors, then obtain up to date quotes from suppliers to include in your project budget. Price these in your Bid Budget Workbook using your standard profit mark-ups.

It’s always good practice to build additional time or costs (usually around 15%) into project bids as a contingency against unforeseen circumstances.

Finalising

You should discuss the bid budget workbook with the project leader to check it for reasonableness and against the market.

If the budget appears to be too expensive, do not cut the overall price without considering which elements of the project can be altered or eliminated to compensate.

Ensure that the final contract includes a mechanism so that you can charge for changes in scope.