How to Build a Tender Costing Sheet for Labour, Materials, Transport and Overheads

A pricing schedule tells the procuring institution what you'll charge. A costing sheet is the working document that tells you whether that price actually makes you money. Many South African SMMEs skip straight to the pricing schedule and reverse-engineer a number that feels competitive, which is exactly how bids end up winning the tender and losing the business. This article sets out how to build a costing sheet that separates every real cost category before you decide on a price.

Why a Separate Costing Sheet Matters

The pricing schedule in a tender document is a submission format, not a planning tool, it's usually just a table of line items and totals. A costing sheet sits behind it, breaking every line item down into its underlying cost drivers, so that when you enter a number into the pricing schedule, you know exactly what it needs to cover and what margin, if any, is left over.

Without this separation, it's easy to price a contract based on what a competitor charged last time, or what feels roughly right, without ever calculating whether the number covers your actual costs. That gap is where thin-margin and loss-making tenders come from, and it is one of the most common reasons a business can win several tenders in a row and still end up in financial difficulty.

The Five Cost Categories Every Sheet Should Separate

Building the Sheet, Line by Line

1. Start from the scope of work, not the pricing schedule — list every activity or deliverable the tender requires, even ones the pricing schedule doesn't ask you to price separately.
2. For each activity, cost labour, materials, and transport independently, using your own current supplier and wage rates rather than historical figures from a previous bid.
3. Apportion a realistic share of overheads to the contract based on its expected duration and scale, not a flat percentage copied from a different-sized job.
4. Add a contingency line for scope ambiguity or site conditions you can't fully verify before award — this is not padding, it's risk pricing.
5. Only after all of the above is added up, apply your target margin, and check the resulting total against what the market and the tender's likely budget can bear before finalising it.

Labour Costing in More Detail

Labour is usually the single largest and most misunderstood cost category on a services or construction tender. Beyond the basic wage rate, a complete labour cost includes statutory contributions such as UIF and the Skills Development Levy, workers' compensation contributions under COIDA, provision for overtime where the scope requires extended hours, and the time cost of supervision and site management, which is easy to forget because it does not directly touch the deliverable. A costing sheet that only reflects the basic hourly wage will consistently understate labour cost, sometimes by a significant margin once all the statutory add-ons and supervision time are properly accounted for.

Materials and Transport: The Volatility Problem

Materials and transport share a common risk: the price you calculate today may not be the price you actually pay when the materials are delivered or the fuel is bought, particularly on longer contracts or where there is a gap between submitting your bid and being awarded the work. Building a volatility buffer into materials pricing, and costing transport based on actual delivery frequency rather than a single estimated trip, protects your margin against the kind of price movement that erodes profitability on paper-thin bids. This is especially important for materials with long lead times, where the order has to be placed well ahead of when it is actually needed on site.

Overheads: The Category Most Often Left Out

Overheads are the cost category most likely to be omitted entirely from a costing sheet, because they do not attach neatly to any single activity in the scope of work. Head office rent, insurance, financing costs on working capital, and the administrative time spent on compliance and reporting are all real costs of running the contract, even though none of them show up as a direct line item in the bill of quantities. A costing sheet that ignores overheads will look profitable until the business's fixed costs catch up with it at the end of the financial year, often at the same time several other under-priced contracts are also drawing on the same limited cash reserves.

Risk and Margin: Making the Final Number Deliberate

Once labour, materials, transport, and overheads are properly costed, the last category is risk and margin, and it should be a deliberate decision, not whatever number happens to be left over after the other categories are subtracted from a competitive-feeling price. A contingency allowance for scope ambiguity or unverifiable site conditions is not the same as margin; it is a separate provision for the things that could genuinely go wrong before you have full visibility of the site or the client's actual requirements. Margin, by contrast, is your deliberate target return for taking on the contract, and it should be set consciously based on the risk profile of the specific job, not treated as an afterthought once every other number has already used up the available budget.

This distinction matters most when you are deciding whether to walk away from a tender. If your costing sheet shows that covering labour, materials, transport, overheads, and a reasonable contingency already consumes the entire achievable price, with nothing left for margin, that is a clear, evidence-based signal that the contract is not worth pursuing at that price, however attractive the contract value looks on the surface.

Keeping the Costing Sheet Current Across the Contract Life Cycle

A costing sheet is not a document you build once at bid stage and then discard. On multi-year contracts, wage rates, material prices, and fuel costs will all move over the life of the contract, sometimes faster than any price adjustment mechanism in the contract can fully compensate for. Revisiting your costing sheet periodically during execution, comparing actual costs against what you originally budgeted, tells you early whether the contract is drifting away from the margin you priced in, while there is still time to manage the situation, rather than discovering the erosion only when the final account is reconciled at the end of the contract.

Where the Costing Sheet Feeds Into Other Decisions

A properly built costing sheet does more than produce a price. It tells you which line items are most sensitive to error, usually materials with volatile pricing or labour on jobs with uncertain site conditions, so you know where to build in contingency. It also gives you the evidence to walk away from a contract where the achievable price, once real costs are accounted for, doesn't leave a viable margin, which is the subject of our companion article on financial red flags in tender documents.

For the specific mistakes that turn a correctly costed bid into a disqualified one, see our guide to common tender pricing mistakes. For multi-year contracts, also read our guide on price adjustment and escalation mechanisms.