There are two ways to price uncertainty into a tender. You can spread it invisibly across the rates, or you can name it as a line and explain it.
The first wins more tenders. The second builds a business that is still here in twenty years.
What hidden contingency does
When contingency is buried in the rates, three things follow, and none of them are good for the client.
The client cannot compare bids. Two tenders that differ by 8% may be pricing identical work with different risk assumptions, or genuinely different scope. The client cannot tell, so they optimize for the number they can see.
Nobody manages the risk. An unnamed risk has no owner and no mitigation plan. It just sits in the rates until it either does not happen — in which case the contractor keeps the money — or it does, in which case there is an argument.
The variation fight becomes inevitable. If the ground conditions turn out worse than assumed and the assumption was never written down, the conversation starts from scratch, usually with lawyers.
What we do instead
We show three things separately:
- The priced scope, with rates that reflect what the work costs to build.
- Named risks, each with an owner, a likelihood, a cost range, and who carries it under the contract.
- Assumptions and exclusions, in plain language — the ground conditions we assumed, the access we assumed, the approval durations we assumed.
That last section is often the most valuable page in the document, and it is usually the one that gets read last.
The cost of doing this
We lose tenders to competitors whose headline number is lower and whose risk register is empty. That is not a hypothetical, it happens several times a year, and it is genuinely frustrating to watch a project go to a bid we know is underpriced.
Some of those projects come back to us. A contractor who underpriced risk eventually has to recover it somewhere, and clients notice.
What we ask of clients
One thing: read the assumptions page before comparing the totals. If our number is higher than someone else’s, the difference is usually visible right there — either we assumed something more conservative, or we named something they left silent.
A tender comparison that only compares totals is not a comparison. It is a lottery with a spreadsheet attached.