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Bidding PhaseIntermediate12 min read

Creating a Bid Calculation

How to build a solid calculation for public tenders – covering cost structure, markups, and review steps.

Steps Overview

  1. 1

    Identify Cost Types

    Capture all relevant cost types: direct costs, overhead, special costs, and imputed costs.

  2. 2

    Determine Unit Prices

    Calculate each unit price based on current material, labor, and equipment costs.

  3. 3

    Set Markups and Profit Margin

    Define markups for overhead, risk, and profit. Use industry-standard rates as guidance.

  4. 4

    Conduct Plausibility Check

    Compare the total price with similar projects and check unit prices for outliers.

  5. 5

    Create Documentation

    Document your calculation transparently for potential clarification by the contracting authority.

Creating a Bid Calculation

A solid calculation is the foundation of every successful public tender bid. It determines not only whether you win the contract but also whether it will be profitable.

Fundamentals

Public procurement calculations differ from private sector pricing. Contracting authorities can request clarification on unusually low or high prices. Your calculation must be transparent and market-appropriate.

Cost Types

A complete calculation covers:

Direct costs: Materials, labor, equipment, subcontractors Overhead: Site overhead, general business costs Markups: Risk (2-5%), profit (3-8%), potential discounts

Calculation Methods

  1. Markup calculation: Most common – percentage markups on direct costs
  2. Lump-sum calculation: Markups applied to total then distributed
  3. Contribution margin calculation: Strategic bids focusing on fixed cost coverage

Common Mistakes

  • Mixed calculations (intentionally skewing individual prices)
  • Missing subcontractor quotes
  • Outdated material prices
  • Forgotten ancillary costs (transport, disposal, site setup)

Practical Tips

  • Create calculation templates for recurring service types
  • Conduct post-calculations on completed projects
  • For construction tenders (VOB), special pricing rules apply
  • Use Patterno BID for automated position calculation in construction

Preparing for Clarification

Be prepared for price clarification requests by keeping calculation bases ready, explaining efficiency advantages, and demonstrating full cost coverage.

Related Guides

Bidding Phase

How to Write a Tender Bid

Bidding Phase

How to Read a Bill of Quantities

Special Topics

VOB Tender: Creating a Bid

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