A common cause leading to an inappropriate contract price either too high or too low is the uncertainty or errors in quantities when tendering without Bills of Quantities.
The use of Bills of Quantities (BQ) for tendering and contracting eliminates this risk and promotes the formulation of a reasonable contract price.
The Quantity Surveyor appointed by the Employer will measure the works and prepare the Bills of Quantities which are translation of the design team's drawings and specification into words and quantities prepared in accordance with the rules of the Standard Method of Measurement.
The Bills of Quantities are issued to each contractor tendering for pricing. This enables each tenderer to estimate his price on exactly the same basis as his competitors for the project.
The quantities prepared by the Quantity Surveyor will form part of the contract. Should the actual quantities required differ from those in the contract bills, the contract sum will be adjusted accordingly. This allows the contractors to tender and compete purely on their pricing without the risk of inaccurate quantities.
As all contractors tendering will be pricing the same Bills of Quantities, the unit rates between different tenders are therefore directly comparable which is invaluable for the analysis of the tenders.
The priced Bills of Quantities provide a standardised detailed build-up of the contract price and a comprehensive set of unit rates of all items in the works. They constitute a highly useful instrument for the post-contract financial management of the project for interim payments, valuation of variations and settlement of the Final Account with the contractor.
The details contained in the Bills of Quantities will reduce the amount of items requiring negotiations when variations to the works occur hence reducing the probability of post-contract disagreements between the contractor and the Employer.
With the Bills of Quantities prepared by the Quantity Surveyor appointed by the Employer, wasteful duplication of quantities measurements by different contractors tendering will be avoided. This will reduce the contractors' overhead costs in tendering and the resulting cost economy will eventually pass to the Employers.
Bills of Quantities can be adapted for use for different types of contracts such as lump sum contracts, design and build contracts, management contracts, fast track contracts, etc. providing similar benefits.