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How to Price a Construction Tender (NRM 2)
How do I price a tender on an NRM 2 bill so that every cost is counted only once?
Key in the client's NRM 2 bill, price each measured line net, then add your own risk (3% in the example) and overheads and profit (5% each) as markups. Apply the United Kingdom regional template, delete the two client-side lines (Design Development Risk and VAT), reuse Construction Contingency for your risk, and replace the 13% preliminaries placeholder with the percentage that gives your programme-based figure. The Grand Total, about £3.6 million without VAT, is the tender sum. The app's NRM check knows NRM 1 groups, not NRM 2, and its pound cost base is a repriced international catalogue, so check measurement and rates yourself.
We price a UK construction tender in OpenConstructionERP, starting with the bill of quantities and working through to the tender sum. The example follows an NRM 2 structure and includes measured work, subcontract quotes, preliminaries, risk, overheads and profit.
You will produce
A tender build-up where dry lining of £204,910 net becomes £232,163.03 with 3% risk and 5% overheads and profit, and a tender sum of about £3.6 million without VAT.
Sources
- NRM 2 (RICS)
Transcript
0:00 The rules
If you price preliminaries into the rates and as a line, the dry lining goes out over £26,000 too high. That can lose the job. By the end, you'll price a tender with every cost counted once. Meet Tandlewick Construction's estimator and its site manager, with the contracts manager from Haughmoor Groundworks. The client's bill has just arrived. The client's QS measured Tallowgate Works to NRM 2, the RICS rules for bills of quantities. NRM 2 has 41 work sections, starting with preliminaries. A bill also carries provisional sums, risks and dayworks. The estimator prices every measured line net first. Here's the dry lining, built line by line. Partitions: 1,480 m² at £55.00 a square metre is £81,400. Linings, ceilings and shaft walls follow the same way. The four lines come to £204,910 net: the estimator's dry lining allowance. The 64 doorsets, at £760 each, add £48,640. Now the layers on the dry lining. The estimator's own risk first: 3%. Then overheads and profit, 5% each, on top. That's £204,910 of net cost. It carries £232,163.03 into the tender. Preliminaries aren't a percentage on one trade. The estimator prices them once, for the whole job, from the programme.
1:56 Open the bill
In OpenConstructionERP, open Tallowgate Works and its Bill of Quantities. The estimator has keyed in the client's bill. This is the tender build-up, not yet the priced bill that goes back to the client. Each section follows the client's bill. Open the dry lining. Partitions: 1,480 m² at £55.00, so £81,400. The linings, ceilings and shaft walls sit beside it. Every other trade is one line, holding the quote the estimator carries.
2:31 The markups
Below the lines sit the markups. Click Apply Regional Template and pick United Kingdom. Six lines arrive: preliminaries 13%, overheads 5%, profit 5%, two risk lines at 3%, and VAT at 20%. That 13% is a placeholder, not a price. This template follows a client's cost plan, so two lines go. Delete Design Development Risk. That line belongs in a client's budget, not your price. Delete VAT too: price the tender without it, and say so on the form of tender. The other risk row, which the app calls Construction Contingency, is a client allowance too. Reuse it for your own risk, set from your risk register. The estimator's stays at 3%. Then change the 13%. The row only takes a percentage, so type the one that gives the preliminaries priced from the programme. The markups panel's Grand Total is now the tender sum: about £3.6 million, without VAT. That's the figure for the form of tender. Before it goes, check the lines add up to it. Three things the app leaves to you. Its NRM check knows NRM 1 cost-plan groups, not NRM 2, so check the measurement yourself. Its pound cost base is an international catalogue repriced, not UK market rates. And this is your build-up. Before you return the priced bill, check where the client's bill wants each layer. Where it has a risks section, price your transferred risks there.
4:17 Get it right
Three mistakes we see. One: preliminaries counted twice, in the rates and again as a line. On the dry lining alone, that's £26,638.30 too much. Two: risk counted twice, padded into the rates and added again as a line. That's another £6,147.30. Three: carrying a quote without checking its scope. One that skips the shaft walls leaves £23,660 unpriced. Pro tip. Take one page to the tender adjudication: net cost, preliminaries, risk, overheads, profit, and the total without VAT. Change the price on that page, not by nudging rates. Pause the video. Take the doorsets: £48,640 net. Risk at 3%, then overheads and profit at 10%. What goes into the tender? £55,109.12. No preliminaries here: they're priced once for the job. Here's your checklist. It's also in the description, to download. OpenConstructionERP is free and open source, and it runs on your own server. No subscription, no per-seat licence. Next time: the estimator lets the dry lining package. Three bids come in, and one is missing a line.
