Reading a
construction quotation.

A client collecting three quotations for the same building will often get three numbers that are nowhere near each other. The instinct is to assume the highest is greedy and the lowest is efficient. Usually the truth is duller and more useful: they have priced different scopes, and nobody has said so.

Why quotes differ

1. Different scope One price covers the structure only. Another includes plaster, flooring, doors and paint. Both are honest readings of a brief that did not say.
2. Different specification Vitrified tile and ceramic tile are both flooring. So are two brands of sanitaryware separated by a factor of four. Unless the specification names them, each contractor prices what they usually use.
3. Different quantities Without a drawing set, quantities are estimated. Two estimators working from the same sketch will not arrive at the same steel tonnage.
4. Different assumptions about site Access for a transit mixer, distance to the nearest ready-mix plant, whether the ground needs shoring, whether power and water are available. These change real costs and are rarely written down.
5. Different treatment of risk A contractor who has built this type before prices the unknowns lower because there are fewer of them. That is a genuinely better price, not a cheaper one.

The exclusions to look for

The most useful question about any quotation is what it excludes. These are the items most often outside a price and most often assumed to be inside it.

• Statutory approvals, plan sanction fees and the liaison work that goes with them.
• Soil investigation, and any foundation change the soil report causes.
• Structural design and drawings, if not already done.
• Temporary electricity and water connections for construction.
• Site levelling, clearing, shoring and dewatering.
• Compound wall, gate, external development, landscaping and driveway.
• Underground and overhead water tanks, and the pump and plumbing to connect them.
• Lift, DG set, transformer and their civil work - often quoted by others entirely.
• Fire fighting and detection, where the building requires it.
• Sanitaryware, CP fittings, electrical fittings and fixtures, which are frequently left as a provisional sum.
• Cube testing and material test certificates.
• GST, which may or may not be in the figure shown.

None of these are unreasonable exclusions. The problem is only ever a client who did not know they were excluded, and who has already committed the budget.

Rates that are not comparable

A per-square-foot rate is the most commonly quoted and the least comparable number in construction. Before it means anything, three things have to be equal.

1. Which area Carpet area, built-up area and super built-up area are different numbers for the same building. A rate against super built-up is a lower rate for identical work.
2. Which scope Structure only, or structure and finishing. The difference is very large.
3. Which specification The finishing specification can move the finishing cost by a multiple with no change to the structure at all.

This is why an item rate schedule is worth asking for even when the quotation is offered as a single figure. It makes the comparison possible and it shows what was assumed.

Questions that make quotes comparable

• What is the exact scope, item by item, and what is excluded?
• Which area definition is the rate against?
• What specification did you price for flooring, doors, windows, sanitaryware and paint?
• Are quantities measured from drawings or estimated? If estimated, from what?
• How will variations be priced, and at what rate?
• Is GST included in this figure?
• What material testing is included, and who pays for it?
• What is the payment schedule tied to?

Sent to every contractor at once, these questions do more to equalise quotations than any amount of negotiating. They also tell you something about each contractor by how readily the answers come.

The lowest quote

A quotation can be lower for good reasons or bad ones, and the two look identical on paper.

Good reasons: the contractor has built this type before and carries fewer unknowns, has better material rates through volume, or has resources already working nearby. That is a real saving and it stays saved.

Bad reasons: work has been left out that will have to happen anyway, a lower specification has been priced quietly, quantities have been understated, or the number is low deliberately and will be recovered through variations once the job is committed and changing contractor is no longer practical.

The way to tell them apart is to ask what is excluded and to compare item rates rather than totals. A contractor who is lower for a good reason can explain which item is lower and why. One who cannot is worth more questions before, not after.