What to include in Subcontractor pricing documentation

In our article Subcontractor scope of works ​we mentioned how important subcontractors were to the success of construction projects. We discussed how some construction projects failed because the wrong subcontractor was selected. Problems with subcontractors often begin during the pricing and selection process. 

We discussed how critical it was that subcontractors had an accurate scope of works to price. This ensures that every subcontractor prices the same thing so that it's easy to adjudicate and compare the various subcontractor's prices.

An accurate scope of works also ensures that subcontractors price the work required, thus avoiding potential variation claims and change orders later. It means that the subcontractors doesn't price stuff that they aren't expected to do.

In this article we consider what to include in the pricing documentation, or instruction to price, to ensure that the subcontractor understands the terms and conditions of the subcontract document, and that they cannot claim for project conditions they were unaware of.

Subcontractor pricing documentation

• Avoid cutting and pasting from previous projects, or directly from your contract document, without checking the information is relevant and correct.
• Provide sufficient time for the Subcontractor to price the work properly.
• Keep documentation simple.
• Ensure all Subcontractors get the same information.
• Check the documentation.
• Confirm verbal discussions in writing.
• There must be a clear scope of work.
• Applicable drawings and specifications must be included.
• Include the contract schedule or milestone dates.
• Terms of the contract must be included, for example:

             •payment terms,
             •retainage money,
             •surety requirements,
             •warranties,
             •insurances.

• Special project conditions, for example:

             •labour rates,
             •working times,
             •interaction with others.
             •Particular rules, hazards, etc.

• Safety requirements of the project.
• A list of the documents making-up the pricing documentation.
• Clearly state what the Contractor will supply and what the Subcontractor must supply.
• Explain how the Subcontractor should breakdown their price – lump sum, schedule of rates, overheads, etc.
• Detail what must be included with the price submission – construction schedule, insurances, details of staffing.
• When you want the price and who it must go to.
• The project location.
• Quality requirements – including testing, documents, inspections and commissioning.

Conclusion

Remember anything you require the Subcontractor to do which is not in these documents could give rise to a variation claim or change order later. So check the documentation and scope of works you ask subcontractors to price to ensure you've included everything you expect your subcontractors to execute, and the project conditions they must comply with. Forgetting something could be very expensive later.

​In our next article we discuss what to include in subcontractor documentation.

Other useful articles
choosing a subcontractor
​An introduction to construction variation claims for construction project managers Video 5 - Types of claims
How can clients ensure their projects meet their expectations?

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