Priced bill of quantities
A bill of quantities is a document prepared by the client's cost consultant that provides measured quantities of the items of work necessary to construct a development. These items of work are described by the drawings and specifications in the tender documentation. The quantities may be measured in number, length, area, volume, weight or time.
An unpriced bill of quantities (sometimes referred to as the tender pricing document) is issued to tenderers, who will then estimate their price for each item. This priced bill of quantities constitutes the tenderer's complete offer. It is the unpriced bill of quantities, but with the tenderer’s rates, costs and totals added.
The preparation, by the client’s consultants, of an unpriced bill of quantities assists tenderers in the calculation of construction costs for their tender, and, as it means all tendering contractors will be pricing the same quantities (rather than taking-off quantities from the drawings and specifications themselves), it provides a fair and accurate system for tendering. It also makes it possible to compare both the overall price and individual items directly with other tenderers’ offers, allowing a detailed assessment of which aspects of a tender may offer good or poor value. This information can assist with tender negotiations.
The priced bill of quantities will also:
- Assist with the agreement of the contract sum with the successful tenderer.
- Provide a schedule of rates assisting with the valuation of variations.
- Provide a basis for the valuation of interim payments.
- Provide a basis for the preparation of the final account.
It is very important that bills of quantities are prepared according to a standard, widely recognised methodology. This helps avoid any ambiguities or misunderstandings and so helps avoid disputes arising through different interpretations of what has been priced. In the UK, bills of quantities for general construction works will most commonly be prepared in accordance with the Standard Method of Measurement 7th Edition (SMM7) or the New Rules of Measurement, which became operative on 1 January 2013 and replaced SMM7 on 1st July 2013.
Bills of quantities are most useful to the contractor when they are prepared in work sections that reflect likely sub-contract packages. This makes it easier for the contractor to obtain prices from sub-contractors and is more likely to result in an accurate and competitive price.
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