Seven tender mistakes that quietly destroy margin

Most tender losses are visible immediately: somebody else scores more points or submits a lower price. The more expensive failures can remain hidden until after award. The contractor has won, the mobilisation clock is running and an innocent assumption in the estimate becomes a contractual obligation.

1. Pricing a schedule without reconciling the specification

The pricing workbook might contain one line for grass cutting while the specification separately requires edging, litter removal, blowing hard surfaces and collecting arisings. Pricing only the named line does not make the other obligations disappear.

Build a cross-reference between every operation in the specification and the price that recovers it. Anything without a commercial home is either missing from the price or being donated.

2. Treating a frequency as a complete workload

“Fortnightly” is not enough information. Eighteen visits, twenty visits and year-round fortnightly attendance are materially different. Weather clauses, performance standards and event requirements can also create additional visits even where an indicative schedule is supplied.

Convert every frequency into an explicit annual occurrence count and record the source. If documents conflict, raise a clarification.

3. Guessing missing quantities without labelling the assumption

Missing shrub-bed areas, hedge lengths and leaf-clearance boundaries are common. A reasonable estimate may be necessary, but it should be visible, measurable and stress-tested. A silent guess acquires false authority once it enters a spreadsheet.

Every estimate should distinguish what the buyer supplied, what you measured and what you assumed.

4. Ignoring mobilisation and working capital

New contracts consume cash before generating it. Machinery, uniforms, recruitment, training, systems, site familiarisation and stock may all be needed before the first invoice is paid. A profitable annual model can still create an impossible first 90 days.

Prepare a mobilisation budget and monthly cash-flow view alongside the annual profit estimate. Check payment terms, retention, performance deductions and whether invoices require approved records before processing.

5. Treating TUPE as a note for later

If staff may transfer, labour structure and cost cannot be finalised until the available information has been reviewed. Pay, hours, pension, holiday, absence, vehicles and location all matter. Even where employee liability information arrives late, the tender should carry an explicit risk and scenario rather than assuming the incoming workforce perfectly matches the proposed model.

TUPE is legally sensitive. Take appropriate professional advice; a commercial estimate should identify exposure, not pretend to replace legal review.

6. Forgetting inflation and contract-change mechanics

A fixed price across several years transfers wage, fuel and material inflation to the contractor. An indexation clause may help, but only if you understand when it applies, which index is used and whether increases are automatic.

Model each contract year. Check extension options, minimum wage changes, pension costs and whether the buyer can add or remove sites using rates that remain commercially sensible.

7. Applying markup when the business thinks in margin

A 10% markup on £90 of cost produces a £99 selling price and £9 profit—but that is a 9.1% margin, not 10%. The difference grows as the target increases. Decide which measure the business uses and calculate it consistently.

The practical control: an assumptions and risk register

Keep a live register beside the estimate. Record the issue, source document, commercial effect, action required, owner and whether the final price includes an allowance. Review it before submission and again at mobilisation.

The objective is not to remove all uncertainty. Tendering always contains judgement. The objective is to stop uncertainty hiding inside a confident-looking total.