How to Complete a Tender Pricing Schedule

Types of Pricing Documents in Government Tenders

Different tenders use different pricing formats depending on the nature of the goods or services being procured. Understanding which format applies to your bid is critical.

• Bill of Quantities (BOQ): Used in construction and engineering tenders. Lists individual work items with quantities. You insert unit rates and extend to get item totals.
• Schedule of Rates: Similar to BOQ but without fixed quantities. Used for term contracts and maintenance work.
• Price Schedule / Itemised Price List: Used for goods and services. Lists items or line services with space for unit price and total.
• Lump Sum: A single all-inclusive price for the entire scope of work. Less common for government but used in some professional services tenders.
• SBD3.1 and SBD3.2: National Treasury standard pricing schedule forms for goods and services tenders respectively.

Understanding BOQ Pricing

In construction tenders, the BOQ is prepared by the client's quantity surveyor and sets out all work items in a standard format. Your task is to insert unit rates for each item. The BOQ is extended automatically — multiply your unit rate by the given quantity to get the item total.

Your unit rates must cover all costs: materials, labour, plant and equipment, subcontractors, overheads, and profit. Do not assume you can add these costs separately — if your unit rates do not include them, you will execute the contract at a loss.

Never leave items blank or insert zeros unless the item genuinely has no cost to you. Blank items or zero rates may be treated as a non-compliant bid.

VAT on Tender Pricing

Government tenders typically specify whether prices must be inclusive or exclusive of VAT. Read the pricing instructions carefully. Most government tenders require prices exclusive of VAT, with VAT stated separately.

If you are not VAT registered, you cannot add VAT to your prices. If you are VAT registered, you must include your VAT number and charge 15% VAT on your services (most government services attract VAT at the standard rate).

Errors on VAT treatment are extremely common and can result in your bid being disqualified or your contract becoming unprofitable after award.

Pricing Strategy and Competitive Intelligence

Before pricing a tender, research the market. For goods tenders, get at least three supplier quotes. For service tenders, understand the market rates for the relevant skills and resources. For construction, ensure your BOQ rates reflect current material and labour costs — these change frequently.

Factor in your overheads and a reasonable profit margin. New businesses often make the mistake of pricing at cost to win their first contract. This approach is unsustainable and can lead to business failure mid-contract, which results in blacklisting.

Consider the contract duration. Multi-year contracts should include escalation provisions. Check whether the tender allows for price adjustment and, if so, which index applies (e.g., CPI, PPI, SEIFSA indices for steel).

Common Pricing Mistakes That Lead to Disqualification

Administrative errors in pricing can invalidate your entire bid. Avoid these pitfalls:

• Altering the BOQ by adding, removing, or renaming items (submit the BOQ as issued)
• Failing to price all items — missing rates create a non-compliant bid
• Arithmetical errors — always check your extensions and totals
• Submitting prices in a currency other than South African Rand unless specifically permitted
• Including prices in the pricing schedule that contradict prices elsewhere in your bid
• Not signing the pricing schedule if a signature block is provided
• Submitting pricing in a format other than the one specified (e.g., Excel when PDF is required)

Frequently Asked Questions

Related Guides

• SBD Forms Explained
• Company Profile Template Guide
• Cash Flow Management for Tenders