- A competitive price starts with costing each item, not with competitors' prices.
- Indirect costs, bonds and financing are often forgotten — and eat the margin.
- Price risk explicitly instead of inflating every item.
- Check the financial offer against the booklet for arithmetic errors and blank items.
Winning a tender at a price that doesn't cover cost isn't success — it's a problem postponed. Pricing too high takes you out of the race. Between the two lies a methodical approach that gives you a competitive price whose contents you fully understand. These are the steps we follow with our clients.
1. Understand the scope before opening the BOQ
Good pricing starts with reading the scope, specifications and drawings, not the numbers. Ask: what does each item really include? Supply, installation and testing? What finish level is required? What are the site conditions, working hours and access? Many losses come from an item understood differently from its intent.
2. Cost each item
For each main item, prepare a rate analysis showing its components:
- Materials: at current supplier quotes, including waste and transport.
- Labour: at realistic, not ideal, productivity, including accommodation, transport and visas where relevant.
- Equipment: hire or depreciation, plus operation and fuel.
- Subcontractors: written quotes with a clear scope for each.
3. Don't forget indirect costs
Indirect costs don't appear as BOQ items, but they are real: site supervision staff, temporary offices, insurance, permit fees, material testing, the cost of bid and performance bonds, and financing while waiting for interim payments. Calculate them, then spread them over the items in a considered way.
4. Price risk explicitly
Instead of adding a random percentage to every item, identify the actual risks: price volatility in particular materials, estimated quantities that may grow, or works in difficult locations. Estimate each risk's likelihood and impact and set a contingency for it. Then you know exactly how much of your price is contingency and how much is profit.
5. Set the margin as a management decision
Once the true cost is known, the margin becomes a conscious decision that weighs how important the project is to the company, the expected competition, team capacity and cash flow. That call belongs to management, not to the engineer who priced the items.
6. Check the financial offer before submission
Price the BOQ exactly as issued without changing items or units, leave no item blank, and check every quantity-times-rate and total. Confirm you've met the booklet's requirements on VAT and local content.
When you know what makes up your price item by item, you can lower it with confidence — or walk away with confidence.
After the results
Win or lose, compare your price with the bidders' published prices. Large gaps on particular items show where your estimate was high or low, and that learning sharpens your pricing next time.
FAQ
Should I price based on competitors' previous prices?
Use them for comparison and review only, not as a basis. Build the price on your actual cost, then compare the result with the market.
Which costs are most often forgotten?
Bank bond costs, financing while awaiting payments, testing, insurance, site supervision staff and temporary works.
What if a BOQ quantity looks wrong?
Raise a formal enquiry during the enquiry window and don't change the quantity yourself. You can account for the risk within your risk pricing.
Engineers and specialists in government tenders, technical office, MEP and central HVAC, with more than 15 years in the Saudi market.
