Education Infrastructure Service (EIS)
Contract Works Price Analysis Guide
Purpose
This guide details the process for the conducting price analysis for Contract Works open tenders.
The objectives of price analysis are to:

provide assurance that tender pricing is accurate and realistic

obtain a single price for each tender that accurately reflects the likely value of a resulting
Contract

provide a valid means for comparing tender prices and determining relative value for
money

contribute toward the selection of a preferred Tenderer that represents the best value for
money.
Definitions are provided at the back of this guide.
Contract Works Price Analysis Process
Prior to Approach the Market
1.
Analyse the Contract Works in order to:

estimate the Increase Variation % (between 5-10%)

determine whether to set Provisional Sums (and if so, define the scope of each and
assign a value to each)
2.
Detail the Increase Variation % and Provisional Sums in the Procurement Plan (to be approved
prior to approach to market)
3.
Complete the Contract the Contract Works Price Analysis Workbook to meet the Requirements of
the procurement including detailing Provisional Sums if applicable (do not detail the Increase
Variation % in the RFT or Works Price Schedule Template). The Contract Works Price Schedule
Template sets out the Price information to be provided by Tenderers:
4.

Preliminary & General costs

Trade Summary costs

Contractors Margin %

% On Onsite Overheads (for cost increase variations)

% On Offsite Overheads (for cost increase variations)

% From Onsite Overheads (for cost decrease variations)

% From Offsite Overheads (for cost decrease variations)
Include the Contract Works Price Schedule as an attachment to the Tender Notice
Following Deadline for Responses
5.
Analyse each Tenderer’s tags to determine Tag Premiums. Analysis should:

take into account how a Tender’s tags may be reflected in their proposed Preliminary &
General and/or Trade Summary costs

be on the basis of not including Contractors Margin
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6.
For each Proposal, enter the following information into the Contract Works Price Analysis
Workbook:
Information
Preliminary & General (total)
Trade Summary (total)
% On Onsite Overheads
% On Offsite Overheads
Contractors Margin %
Increase Variation%
Provisional Sums (total)
Tag Premiums (total)
7.
Source
Tenders
Tenders
Tenders
Tenders
Tenders
Procurement Plan
Procurement Plan
From analysis of Tenderer’s Tags
The Contract Works Price Analysis Workbook will calculate the Adjusted Price which is then
transferred to the School Property Procurement Evaluation Workbook for calculation of the Price
Score.
Calculation
The Adjusted Price for each Proposal is calculated in the Contract Works Price Analysis Workbook as
follows:
Step One:
Provisional Sums +
Preliminary & General +
Trade Summary +
Tag Premiums
Subtotal
Step Two:
Sub Total x
Increase Variation %
Increase Variation Amount
Step three;
(Increase Variation Amount x % On Onsite Overheads) +
(Increase Variation Amount x % On Offsite Overheads)
Variation Charge
Step Four:
(Subtotal + Variation Charge) x
Contractors Margin %
Contractors Margin Amount
Step Five
Subtotal +
Variation Charge +
Contractors Margin Amount
Adjusted Price
Step Six
Transfer Adjusted Prices to the School Property Evaluation Workbook for calculation
of the Price Score
Notes


Lowest Adjusted Price is determined from amongst only those Proposals that have been
short-listed as being “conforming” (acceptable from evaluation of non-Price criteria).
The RFT must make it clear that Provisional Sums and Variation Charges do not include
Contractors Margin which is applied separately as part of the Adjusted Price calculation.
Abbreviations and Definitions
Adjusted Price
Price used for scoring responses
Contractor’s Margin
Tenderer’s proposed profit margin
Tag Premiums
Amounts assigned by the Principal to the price for a Tenderer’s Tag that
the Principal considers alter the risks, benefits and/or cost of the Contract
Works
Variation Charges
(% On Onsite Overheads and % On Offsite Overheads) Tenderer’s
proposed percentage charges for onsite and offsite overheads in the
event of Contract variations that result in increase contract value following
commencement
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Preliminary and General
Breakdown of costs to be incurred before commencement or that are not
directly attributable to an individual trade
Provisional Sums
Amounts estimated by the Principal for elements of the project that would
be difficult for Tenderers to price accurately (e.g. ground works). The
setting of Provisional Sums allows for a like for like evaluation of
responses. The use of Provisional Sums is optional
Increase Variation %
An estimate made by the Principal of the percentage by which the
Contract value may increase after commencement, typically between 510%
RFT
Request for Tenders
Trade Summary
A breakdown of costs by individual trade
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