A Methodology to Detect the Deviations of the Project's Budget Compared to Market Prices

Abstract

The budget of a project reflects the cost of the investment needed to build an infrastructure, install a system or acquire new materials or supplies. A well-formulated budget in accordance with market prices, allows contractors to prepare offers according to their technical, economic and financial characteristics. On the other hand, it avoids current philosophies that aim to get the contract at any price. Philosophies subsequently used to point out problems and claims during the execution of the project (contradictory prices, delays, etc.) in order to recover some or the entire economic bid carried out during the tendering. In this paper a simple and fast methodology is developed to check if the tendering price is in accordance with market prices, so that the economic viability of the project is not at risk. The application of the methodology on a sample of projects allows us to check the influence of the type of project (civil or building) on the characteristics of the budget. It also allows us to point out the insufficient economic endowment of the projects as the start of the subsequent problems during the execution of the work.

Abnormally Low Tenders in Non-pricing Criteria: the Need for Control

“…These rules are common practice in most of the public procurement sector and are also used in many procedures in the private sector [10][11][12].…”