The winning price is not the cheapest one, but the cheapest one that still makes money. So the tender price is built from the bottom up: start from the RAP (your real cost), then add head office overhead, a risk allowance and profit.
- RAP project cost Rp850 m
- Head office overhead Rp40 m
- Risk allowance Rp25 m
- Profit Rp85 m
Steps for building the tender price
- Take quantities off the drawings and specification (BOQ), or check the client’s BOQ.
- Build the RAP: real supplier prices, labour-contract rates and your crew’s productivity, plus site overhead.
- Add head office overhead (this project’s share of office costs), a risk allowance and profit.
- Spread those additions over each item’s unit price, because the offer is priced per item, not per component.
- Add up, add VAT, round, and fill in the bid summary.
- Compare with the owner’s estimate (HPS) if it is known.
The offer letter and its attachments
| Document | Contents |
|---|---|
| Offer letter | Package name, total price in figures and words, offer validity, completion period, signature and stamp |
| Bid summary | Total per section of work, VAT, grand total, rounded |
| Priced bill of quantities | Every item: code, description, unit, quantity, unit price, amount |
| Unit price analysis | If requested, especially for the main items |
| Programme and method statement | Planned S-curve and the order of work |
| Bid guarantee | If the tender documents require one |
Checking the price is reasonable
- On Indonesian government tenders, offers below 80% of the owner’s estimate (HPS) are clarified, and the performance guarantee is then based on the HPS, not the offer. A margin that thin is a big risk.
- Compare the price per m2 of building with similar projects you have done.
- Check items priced below their RAP: they lose money every time their quantity grows.
- Avoid unbalanced unit prices (far above or below the HPS); on government tenders such items can be clarified and capped.
Common mistakes
- Working the price out as the owner’s budget minus a percentage, instead of from your own RAP.
- Leaving out head office overhead and guarantee costs.
- Figures and words in the offer letter that do not match.
- An offer validity shorter than the tender documents ask for.
The full guide is in How to build a construction cost report that catches overruns early. It has a free template (Excel or Google Sheets) and a checker that reads your own workbook.
Ready to use the Komander agents on your projects?
When your workbook is complete, apply for a pilot: we help connect your project data to the Finance, Cost and Scheduler agents and review the first reports with you.
Send to melwani@komander.ai. Your workbook check result is included when there is one; the workbook itself is not sent.
Common questions
How do I work out a tender price?
Start from the RAP (real cost), add head office overhead, a risk allowance and profit, spread them over each item’s unit price, then add VAT.
What is a bid summary?
The total price per section of work, plus VAT, giving the offer total.
What happens if the offer is below 80% of the HPS?
On government tenders it is clarified for reasonableness, and the performance guarantee is based on the HPS.
References
- BPK Central Sulawesi: guarantees in government procurement (Indonesian): performance guarantee based on the HPS below 80%