Financial proposal

Financial proposal and tender pricing: BOQ, VAT and margin

The financial proposal is the number that wins or loses the contract, and the number you live with for the whole delivery period. This guide explains how to build the price from cost rather than from competitors, price the BOQ line by line, fold VAT, bonds and penalties into the margin, and write the offer letter committees expect.

Start your proposal

What does this service cover?

In Saudi government tenders the financial proposal consists of the BOQ priced on the tender's form, an offer letter with the total in figures and words including 15% VAT, and payment terms when requested. It is opened after the technical evaluation, and the award usually goes to the lowest technically compliant bid, or to the highest weighted score when the tender says so.

From cost to price in four layers

A competitive price is not the cheapest; it is the one that covers true cost and risk and leaves a reasonable profit:

  • Direct costs: materials, equipment and labour per BOQ line, from real supplier quotes.
  • Indirect costs: project management, offices, housing, transport, insurance, bank guarantee fees and permits, spread across lines or loaded on a preliminaries item.
  • Risk margin: potential delay penalties, material price swings, vague clauses and tight durations, typically 3% to 10%.
  • Profit: a rate set by your strategy for this specific tender.

BOQ pricing rules

Price the BOQ exactly as issued:

  • Never leave a line unpriced; an empty line reads as free or incomplete.
  • Unit rates govern variations, so price them to survive quantity changes.
  • Check the unit before the rate: linear metre is not square metre; month is not day.
  • Compute totals with formulas and double-check sums.
  • Add 15% VAT on the subtotal and write the grand total in figures and words.
  • Claim price preference if eligible: local SMEs get a 10% preference under the procurement law, and national products get preference under local content rules.

Payment terms and bonds inside the margin

Read the payment mechanism first: monthly certificates, milestone payments or payment on delivery. Longer collection cycles raise financing cost. Add the 5% performance bond and its fees, the bid bond cost and project insurance if required. These never appear in the BOQ but always appear in your profit.

The financial proposal in Ataa AI

From the analysed tender, Ataa AI builds a financial proposal with a matching BOQ, direct and indirect cost breakdown, payment schedule, financial terms and validity, with VAT and totals computed. Export to Excel to adjust rates with live formulas, then to PDF for the financial envelope.

What you get

  • ✓ BOQ matching the tender with unit rates and computed totals
  • ✓ Direct and indirect cost breakdown with a risk margin
  • ✓ Payment schedule and terms aligned with the tender
  • ✓ VAT and grand total in figures and words
  • ✓ Excel with live formulas plus PDF for upload
  • ✓ Complete financial proposal in minutes

How it works

  1. 1. Extract the BOQ

    Analyse the tender and confirm items, units and quantities.

  2. 2. Price from cost

    Generate the financial proposal, then adjust unit rates with supplier quotes in Excel.

  3. 3. Review and export

    Verify totals, VAT and the offer letter, then export the PDF for the financial envelope.

Pre-submission checklist

  • □ Every BOQ line priced with unit rate and total
  • □ Items, units and quantities unchanged from the tender
  • □ Indirect costs, bonds and insurance included in the margin
  • □ 15% VAT added on the subtotal
  • □ Grand total identical in the BOQ and the offer letter, in figures and words
  • □ Payment terms within what the tender allows

Frequently asked questions

Is the award always to the lowest price?

Usually to the lowest technically compliant bid. Some tenders use a weighted technical and financial score, stated explicitly in the criteria.

VAT in unit rates or on the total?

Price lines without VAT, add 15% on the subtotal and state the total including VAT, unless the tender form says otherwise.

What if my price is far below the entity's estimate?

Abnormally low bids may be queried or rejected. Make sure the price covers true cost and attach a justification if you have a clear cost advantage.

Can the price be changed after opening?

No. Post-opening clarifications never allow price changes; the bid is binding for its validity period and withdrawal forfeits the bond.