Estimating a bathroom group for a fixed-price tender
A contractor is tendering for 30 identical bathrooms in a hotel refurbishment. Each bathroom has a WC, a basin, and a shower, with hot and cold supplies, a 32 mm waste, and a 100 mm soil connection. The drawings show 18 m of 15 mm copper, 12 m of 22 mm copper, and 14 m of 32 mm waste per bathroom. The contractor's estimator uses a price of 1.0 for a 'bathroom group' based on a previous job, adds 10% for waste, and applies a 15% overhead and profit margin. The client wants a fixed price, and the programme is 12 weeks. The estimator has not allowed for pressure testing, commissioning, or making good.
1. Identify the estimating errors and explain the risk to the contractor.
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The main errors are:
- Using a single 'bathroom group' price from a previous job without adjusting for the current specification, pipe lengths, or access conditions. The previous job may have had different fittings or easier access.
- Omitting pressure testing, commissioning, and making good. These are real costs: testing takes labour and equipment, commissioning takes time, and making good after chasing and drilling is significant in a refurbishment.
- A flat 10% waste allowance may be too low for copper, where offcuts and bends can waste more, or too high for pre-fabricated items.
- A 15% overhead and profit margin may not cover the risk of a fixed-price job with a 12-week programme. If the programme slips, the contractor absorbs the cost.
- No allowance for preliminaries such as site supervision, temporary water, or protection of finished work.
The risk is that the contractor wins the job at a price that does not cover the true cost, and makes a loss. In a fixed-price contract, the contractor cannot recover extra costs unless the client changes the scope.
2. Outline how the estimate should be rebuilt to give a reliable fixed price.
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The estimate should be rebuilt from first principles:
- Measure the pipework and fittings per bathroom from the drawings, and price each material with current supplier quotes, including a realistic waste allowance (typically 5-10% for copper, less for pre-fabricated).
- Add labour at agreed productivity rates, including time for chasing, fixing, and connecting.
- Add a separate item for pressure testing and commissioning, based on the number of tests and the time each takes.
- Add making good, including plastering, tiling, and decoration, or state that it is excluded.
- Add preliminaries: supervision, site facilities, protection, and cleaning.
- Add a risk allowance for programme slippage, access restrictions, and price fluctuations, or include a fluctuation clause.
- Apply overhead and profit as a percentage on the total cost, and check the result against a sanity check per bathroom.
The final price should be reviewed by a second person, and the assumptions should be stated in the tender so that any change can be priced as a variation.
3. What tender qualifications should the contractor include to protect against the risks identified?
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The contractor should include the following qualifications:
- A statement of the scope assumed, including what is excluded (for example, making good to decorations, or asbestos removal).
- A programme assumption, with a note that the price is based on 12 weeks and that extensions may attract additional cost.
- A price fluctuation clause if the contract period is long or materials are volatile.
- A note that the price assumes unrestricted access and normal working hours.
- A clarification that pressure testing and commissioning are included (or priced separately), so there is no dispute later.
- A caveat about existing services and hidden conditions, with a mechanism for valuing variations.
These qualifications turn unknown risks into priced or excluded items, which is the professional way to offer a fixed price.