When it comes to the pricing of Prelims or oncost expenses, much thought is to be applied to determining the extent of this allowance when tendering. Preliminaries and General by virtue of its scope and broad definition can easily contribute or result in huge losses if not correctly understood or determined at the tender stage.
There are many schools of thought on this subject, and all of them follow some sort of predefined checklist to ensure that all aspects are accounted for. When pricing preliminaries always start with your supervision, site establishment, methodology of construction, access restrictions, plant and programme requirements, doing this will determine the basic plan of construction and reveal all the obvious elements to price. In getting the preliminaries correct, careful attention to detail is required. Reading through the specifications and guidelines might show obligations to allow for in your preliminaries.
Once all of these variables are established, the information needs to be priced in a logical manner which allows quick and logical calculation adjustments.For example, if you change the price of diesel in a certain cell then in an instant all the preliminaries should be adjusted taking into account the effect of all other diesel related calculations.
In order to build such a spreadsheet takes years of experience and understanding of Excel and pricing. We do however offer a solution in this regard that is we have included such a template as part of the Tendering package. This template (view template) simplyfies the entire process and also calculates the cashflow in terms of Fixed, Value and Time related costs as required by the FIDIC Contract. All of the following categories are completely linked, priced and tabled in a logical manner.
- Salaries (Management & supervision per category)
- Establishment (offices, telephones, infrastructure, etc)
- Plant (Plant utilization, fuel consumption and operators)
- Financial (Bonds, insurance, etc)
Completing this template certainly provides more science in calculating P&G's and will leave you assured that the price accounted for meets your obligations. All contractors use some sort of process in establishing their P&G's and this template document certainly provide a tried and tested solution in reducing this risk when tendering. Refer to the Tendering / Estimating Package.