Using a BOQ is a standard practice in construction projects, since it brings many advantages during the tendering process:
- Simplicity: A BOQ standardizes the offers of bidding contractors, making them easier to analyze and compare. Offers with different items for the same project are much more difficult to compare.
- Fairness: The scope and quantities of work are determined by a neutral party, which means that contractors compete under equal conditions. Hiring one of the contractors to produce the BOQ would not be fair, since that contractor gains an advantage in terms of information and time.
- Speed: The bidding contractors can prepare their offers faster when a BOQ is available. Otherwise, each contractor would have to break down the project by items, and calculate the work quantities of each item.
- Accuracy: Since the work quantities and measurements units are predetermined, calculation errors are less likely.
Contractors compete with each other during the tendering process, but the lowest bid will not necessarily win. Before tendering, the cost consultant calculates a project budget on behalf of the project owner. This budget is not shared with contractors, and it serves as a reference when comparing their offers. A bidding contractor may be disqualified for presenting an offer with an unreasonably low price (lowballing).
A BOQ can also help detect possible errors in contractors bids through comparison. For example, if one contractor prices a specific item much higher or lower than other participants, a calculation error is likely.
- This often occurs when there are differences in measurement units.
- For instance, if a roof installation is priced per square foot and a contractor calculates the price per square meter, the price will become 10.76 times higher than intended.
- Errors like these are unlikely when working with qualified contractors. However, the BOQ makes these errors evident when they occur.
- If the BOQ itself has an error, it will generally be noticed by one of the contractors. In this case, the BOQ is returned to the client for correction, and sent again to all bidders.
As previously mentioned, the BOQ is still useful after choosing the contractor and starting construction. Building projects normally have an upfront payment, interim payments and a final account. Since the BOQ has an itemized list of project activities, it can be used for a quick calculation of interim payments based on the completed work.
The BOQ is also a useful planning tool, since it can be used to estimate how the project costs will be distributed over time. Typically, the project schedule uses a Gantt chart where the scope is also broken down by areas. Cost information from the BOQ can be combined with time information from the Gantt chart, to create a cost schedule. The project owner and the contractor can use this to plan expenses, making sure the funds are available when needed, avoiding project delays.
If there are any change orders during the construction process, the BOQ can also be used to calculate their cost. Since all work activities are already itemized, the cost of a change order can be calculated from the additional work quantities and the existing unit prices.