BOQ vs schedule of rates vs lump sum
A lump sum price is one fixed amount for a defined scope. A bill of quantities prices measured quantities line by line, so the total follows from rates applied to quantities the client has measured. A schedule of rates fixes the rates but not the quantities, and the final sum follows from what is actually done. The difference that matters is who carries the risk that the quantity is wrong. Under a lump sum, you do. Under a schedule of rates, the client does. A bill of quantities sits between them, and exactly where depends on whether the contract makes the quantities binding or indicative.
What is each structure?
A lump sum contract fixes one price for the whole defined scope. You price the drawings and specification as a package, and if the work takes more material than you allowed, the difference is yours unless a variation or another clause moves it.
A bill of quantities is a measured list: each item, its unit and its quantity, against which you enter a rate. A schedule of rates gives the items and units but leaves the quantities open, which suits work whose extent is genuinely unknown when the contract is signed.
Who carries the risk in each?
Under a lump sum, the contractor carries both the quantity and the rate. This is why a lump sum tender with thin drawings is dangerous: you are guaranteeing a price for work whose extent you had to infer.
Under a schedule of rates, the contractor guarantees the rate only, and the client pays for the quantity that occurs. A bill of quantities depends on the contract: where quantities are remeasured, the risk sits closer to the client; where the bill is stated to be indicative and the lump sum governs, it sits with you despite the line by line appearance.
What changes in how you price?
Under a lump sum you price the scope and carry your own measurement, so the quantity survey is your risk and worth doing properly. Under a bill you price rates against someone else's measurement, which makes checking a sample of quantities against the drawings a cheap and high value exercise.
Under a schedule of rates the rate has to stand up across a range of quantities you cannot predict, so a rate that only works at volume is a trap: state the assumption, or price for the low volume case.
The three structures compared
| Structure | What you price | Quantity risk | Suits |
|---|---|---|---|
| Lump sum | One fixed amount for the defined scope | Contractor | Well defined scope, mature drawings |
| Bill of quantities | A rate against each measured item | Shared; depends on whether quantities are remeasured | Defined scope where the client wants comparable, itemised pricing |
| Schedule of rates | Rates only, quantities left open | Principal | Work of genuinely uncertain extent, term or maintenance contracts |
Common questions
What is the difference between a bill of quantities and a schedule of rates?
A bill of quantities states both the items and the measured quantities, so the tendered total follows from your rates applied to those quantities. A schedule of rates states the items and units but leaves quantities open, and payment follows the quantity actually carried out.
Is a bill of quantities a lump sum?
It depends on the contract. Some contracts use the bill to arrive at a lump sum that then governs, with the quantities treated as indicative; others remeasure against the bill as the work proceeds. Read the pricing clause rather than assuming from the format of the document.
Should you check the client's quantities?
Sample them against the drawings, always, and check the units in particular. Where the quantities are indicative and a lump sum governs, an error is yours to carry, which makes a few hours of checking the cheapest risk reduction available in the whole bid.
Can Elora Grid check a bill against the drawings?
Yes. Hand it the bill of quantities and the drawing set, and it returns each measured item matched to the drawing it was taken from, flagging units and quantities that do not agree, with every line cited to its source page. The rates and the commercial response stay with your estimator.