Tendering is accepted as an essential part of the construction industry, yet, in our experience, the process is riddled with inefficiencies that ultimately increase client costs. For contractors, tendering is not just a bid for work; it’s a significant financial and resource commitment where considerable effort is wasted on outdated, uncoordinated, and unnecessarily expensive processes.
This article answers the question, How Much Does It Cost to Tender a Construction Project?, dives into industry statistics around the cost of tendering and shares a recent experience the Evolution5 team had.
An article published by Construction News in 2015 revealed startling statistics about the cost of tendering.
The article drew from the findings of a study by Professor Will Hughes of the University of Reading in 2014 on 179 firms, which revealed:
*Based on firms winning one in every five projects
Respondents to the research expressed that tenders were often won or lost based on the Employer and their Quantity Surveyor referring only to the tender sum rather than seeing the value in the tender submission.
The cost of bidding is particularly alarming when considered against the level of contractor profit margin shown in the following illustration which shows the bid costs recorded in 2015.
Source: Marketing Works and University of Reading via Construction News
Information on the present-day cost of tendering does not appear to be readily available. However, even by basing our assumptions on this historic data, the costs remain significant.
To illustrate that, let’s examine a recent tender submitted by Evolution5 and the challenges encountered throughout the process.
Evolution5 was recently invited to tender for a project estimated at £3 million. It was a project we had been tracking for some time and appeared to be well-matched to our skills and experience.
Here’s what the tender process involved, including the cost of going through the process.
Initial Review
Meetings and Reviews
Preparing a Bill of Quantities (BQ)
Importance of BQs explained:
A point to note here is that BQs are rarely provided these days. This project was being procured as Design & Build. In this example, the Tender Sum Analysis pricing schedule was provided in the standard format based on NRM1 headings.
For those unfamiliar with this terminology, an example is that the superstructure may have been listed as 1nr steel frame. Clearly, it’s not possible to create an accurate price for our tender response based on such vague information.
To provide an accurate tender price, each tenderer would have to undertake pricing activities via BQs.
A BQ for a contract of this size would likely cost around £5,000, meaning that £25,000-£30,000 has been spent on multiple BQs rather than the Client investing in a single BQ and sharing it with all tenderers.
Clients may be nervous about providing detailed quantities in case they are later found inaccurate. However, as a matter of due diligence, contractors double-check the quantities as part of the pricing process and price according to their findings.
Referring to our steel frame example, if the Client’s BQ quantifies 400 tonnes of steel, but the contractor establishes 480 tonnes is required, this can be reflected in their tender letter as a clarification.
This is a win/win situation as tenderers can price more accurately, giving clients greater confidence in the responses they receive.
Engagement with Subcontractors
Final Submission
*Required documents:
This lengthy process involves multiple stakeholders, both from within our team and our external supply chain. The tender team included:
Unless you are engaging a large contracting firm with the luxury of a Bid Team responsible for the end-to-end process, necessitating minimal input from the operational teams, the reality is that tenders are handled over and above the “day job”.
Developing a robust bid that satisfies the Client’s requirements and meets strict deadlines must be managed as a project. Each of the members of the team played a vital role in compiling the bid response, from pricing to project experience, buildability knowledge, and administrative support.
| Role/Resource | Hours | Cost (£) |
| External BQ | N/A | 3,600.00 |
| Consultants* | 192:40 | 13,486.20 |
| Administrator | 27:00 | 810.00 |
| Directors | 42:00 | 5,040.00 |
| Salaries (Consultants)** | 192:40 | 8,669.70 |
| Total Cost | 31,605.59 |
*Non-chargeable fees as consultants are working on internal activities
**Blended cost of consultants’ salary and benefits
This equates to 0.87% of the submitted tender price, significantly higher than the 2015 industry average of 0.57%. If Evolution5 were to win just one in four tenders, the cost recovered per successful project would be £126,422.36—or 3.5% of the project value—requiring exceptionally high profit margins to break even.
As discussed in recent videos, inefficiencies in the tendering process are widespread. Contractors face challenges such as:
We were recently involved in a tender process. From the start of our involvement, we came up against significant inefficiencies along with, what can only be described as a lack of professionalism in the tendering process. Eventually, we decided to withdraw from the process, but not until we had invested significant time and resources.
This decision wasn’t taken lightly – we were well suited to the project but the problems encountered in the tender process highlight not only the flaws in the system but also the wasted time and resources that contractors endure when faced with poorly managed tendering exercises.
These inefficiencies waste time and money, with the financial burden ultimately falling on clients. Every pound spent on unsuccessful tenders or wasted effort is wrapped up in contractors’ overheads and profit margins, driving up project costs for everyone.
Evolution5 founder Jamie Barrett has spoken widely about the need to change. To address these issues, the industry must explore more collaborative and efficient approaches, including:
At Evolution5, we advocate for smarter tendering strategies that reduce waste, improve efficiency, and deliver real value to clients. Whether through consultancy services or collaborative contracting approaches, we’re committed to driving positive change in the construction industry.
Tendering shouldn’t be a race to the bottom. By adopting more collaborative processes, the construction industry can reduce costs, deliver better outcomes, and ensure fairness for all parties involved.
If you’d like to discuss a potential project and are ready to explore smarter approaches to tendering, get in touch. Call the office or request a call back via the button below.
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