Procurement & Bid Levelling Glossary

Procurement has a habit of hiding simple ideas behind abbreviations. Here are the terms that actually come up when comparing supplier quotations — defined in plain English, with the practical detail that matters when money is on the line.

Bid levelling & tendering

Bid levelling (levelling)

The category name in UK, Australian and New Zealand construction: adjusting competing quotes so they can be compared on identical terms — one common scope, standardised quantities and units, the same currency and tax basis, and every bidder's exclusions recorded. Only after levelling does the lowest number mean the lowest price. Full method in our bid levelling guide.

Apples-for-apples

The phrase estimators use for the goal of levelling: every bidder priced against the same scope, so the comparison is fair. Its opposite — comparing raw quote totals — is how the wrong bidder gets awarded.

Inclusions & exclusions

What each bidder has and hasn't priced. Exclusions are the single biggest source of post-award cost: the cheapest-looking quote is very often just the one that excluded the most. Levelling means capturing them explicitly, per bidder, before comparing totals.

Tender

A formal request for priced offers against a defined scope — and the returns that come back. Tender returns are exactly what a levelling exercise compares.

Trade package (package)

The unit of work a construction project is split into and awarded by: earthworks, joinery, electrical, mechanical. Level and award one package at a time; comparing across packages is meaningless.

Scope

The work or supply a price covers. Scope is what levelling puts on a common footing, and scope completeness — the share of the package a bidder actually priced — is the criterion that stops an exclusion-heavy quote winning on price alone.

Estimator · contract administrator · pre-construction · delivery team

Who does this work. The estimator prices and levels the returns; pre-construction owns the tender through to award; the contract administrator runs the package after award; the delivery team inherits whatever scope gaps were missed — which is why exclusions belong on the levelled sheet, not in someone's inbox.

Margin

The commercial outcome of levelling. Every item excluded by the winning bidder and not caught before award becomes a variation later, paid out of margin.

Sourcing documents

RFQ — Request for Quotation

What you send suppliers: the items, quantities, specs and commercial conditions you want priced. A tight RFQ is the cheapest quality-control you'll ever buy — vague RFQs come back as incomparable quotes.

RFP — Request for Proposal

Like an RFQ but for solutions rather than items: suppliers propose how as well as how much. Evaluated on approach and capability, not just price.

BOQ — Bill of Quantities

The construction tender's master item list: works and materials with units and quantities. In a comparison, the BOQ is the anchor every vendor's lines map onto.

BOM — Bill of Materials

Manufacturing's equivalent of the BOQ: the parts list for a product, usually anchored by part numbers rather than work descriptions.

Quotation / Offer

The supplier's priced response — legally, an offer you can accept within its validity period. Everything on it (price, validity, terms) is negotiable until accepted.

Comparing bids

Bid tabulation (comparison sheet)

One table, all vendors: each master item on a row, each vendor's unit rate and total in columns, plus summary rows (subtotals, tax, grand total, savings). The core deliverable of any quotation comparison — see our step-by-step guide or a live example.

Like-for-like (apples-to-apples) comparison

A comparison where every number sits on the same basis: same items, quantities, units, currency and tax treatment. Anything else is decoration, not comparison.

Normalisation

The work that makes like-for-like true: mapping item descriptions to one master list, converting units and currencies, aligning tax bases.

Weighted scoring / decision matrix

Score each vendor 0–100 per criterion (price, delivery, payment, scope, quality), multiply by weights, sum, rank. The standard way to defend a decision that isn't "cheapest wins" — full method in our weighted scoring guide.

Scope completeness

The share of requested items a vendor actually quoted. A vendor missing 10% of the scope isn't 10% cheaper — you'll buy the gap elsewhere, usually at worse prices.

Offer validity

How long the quoted price stands (e.g. "valid 30 days"). Short validity on a long evaluation is a risk: the price may be gone before you can award.

Lowest bidder / L1

The vendor with the lowest comparable total. "Comparable" is doing the heavy lifting — before normalisation, the apparent L1 is frequently wrong.

Money and terms

Lump sum vs rates

A lump sum is one price for a group of items or a whole package; a rate is a unit price applied to a measured quantity (m², tonne, each). When levelling, keep a lump sum on the section row rather than inventing rates to spread it across items — and always recompute line totals as rate × your quantity, not the bidder's.

Ex-VAT vs tax-inclusive

Whether a price contains tax. Rank vendors ex-tax; budget cash tax-inclusive; never mix the two in one column.

Advance payment

Money paid before delivery (e.g. "50% advance"). It's supplier financing provided by you — and your exposure if the supplier fails. Lower advance = better terms, other things equal.

Retention

A slice of payment (often 5–10%) held back until warranty or acceptance — protection against defects discovered after delivery.

Payment milestones

Payments tied to events (drawings approved, FAT passed, delivery, commissioning) rather than dates — aligns the supplier's cash flow with your risk curve.

Exchange-rate (FX) risk

The chance a foreign-currency price changes in your money between award and payment. How to handle it: our multi-currency guide.

Price escalation

A contract clause letting the price rise with an index (metals, energy, CPI). Watch for it in long-delivery quotes: the number on the quote may be a floor.

Delivery and logistics

Incoterms

Standardised trade terms defining who pays and who bears risk on each leg of delivery. The ones you'll meet most:

Never compare an EXW quote against a DDP quote on price alone — they're prices for different products.

Landed cost

Goods price + freight + insurance + customs duty + clearance fees + inland transport = what the goods actually cost at your door. The only fair basis for comparing quotes with different Incoterms.

Customs duty & HS code

Import tax assessed on the goods' customs value (typically CIF), at a rate set by the goods' HS (Harmonized System) classification code. Wrong HS code → wrong duty → wrong landed cost.

Lead time / delivery period

Order-to-delivery duration, usually quoted as a range ("4–6 months"). Compare against the project need date, not against the other vendors only.

FAT / SAT

Factory / Site Acceptance Test — inspection gates before shipping and after installation. Common payment-milestone anchors for equipment.

Suppliers and quality

Subcontractor

A firm contracted to deliver a trade package for the main contractor. In construction the quotes being levelled are usually subcontractor quotes; in manufacturing and trade the same exercise is run on supplier quotes — the method is identical.

OEM

Original Equipment Manufacturer — the company that actually makes the product, as opposed to a trader or assembler reselling it.

Tier-1 brand

Informal shorthand for the top set of global manufacturers in a category. In a comparison, brand tier is a scoring criterion, not a footnote.

Type-test certificate

Third-party proof that a product design passed the standard's full test regime. For electrical assemblies, the difference between certified and "similar to" is a real risk line.

Single-source risk

Dependence on one supplier with no practical alternative — worth flagging even when that supplier wins fairly.

Vendor prequalification

Screening suppliers (financials, references, certifications) before they may bid — moves quality control ahead of the price comparison.