Common pricing mistakes in construction projects (and how to prevent them)

Pricing errors in construction don’t just reduce margins — they can derail entire projects. A single miscalculation in labour, materials, or overhead can mean the difference between a profitable job and a financial disaster.

The challenge is that many of these mistakes aren’t obvious until costs spiral out of control. Relying on outdated figures, rushed estimates, or incomplete data leads to inaccurate pricing, squeezing profits or making bids uncompetitive.

From missing scope items to hidden supplier exclusions, pricing mistakes take many forms. Here’s what to watch for — and how to avoid them.

1. Cost data pitfalls

Outdated or incomplete cost data leads to inaccurate pricing. Labour, materials, and overheads fluctuate frequently, and failing to validate figures against current market conditions can create significant cost gaps.

• Labour rates vary by location: A bricklayer in Birmingham won’t charge the same as one in London, yet many estimates use generic national rates.
• Material prices shift constantly: Copper pipe costs for plumbing can rise overnight, but if last year’s figures are used, margins disappear.
• Supplier price lists change: A subcontractor’s ‘standard rate’ might seem reasonable — until it turns out they’ve increased prices since the last tender.

Ignoring real-time cost data puts budgets at risk before work even begins.

2. Scope gaps

Missed details in scopes lead to cost overruns. A subcontractor’s price might look competitive — until the exclusions list reveals waste removal, access equipment, or temporary power weren’t included. If those gaps aren’t caught early, they turn into costly variations.

• Incomplete specifications: A mechanical package might include HVAC supply and installation but fail to mention ductwork insulation, leaving it out of the price.
• Ambiguous responsibilities: If fire stopping isn’t assigned to a specific trade, both the drywaller and M&E contractor might exclude it, creating a gap.
• Unclear interfaces: Without clear wording, the joinery contractor might assume the stone benchtop supplier will handle templating, causing delays when no one takes responsibility.

A structured scope-of-works library reduces these risks. Pre-configured templates ensure every package is properly defined before tenders go out, minimising disputes and unexpected costs.

3. Disjointed tender documentation

Incomplete or inconsistent tender documentation causes confusion, delays, and pricing discrepancies. When subcontractors interpret scope differently, the resulting quotes are impossible to compare, leaving quantity surveyors with mismatched figures and too many follow-up calls.

• Missing details: An electrical tender might specify ‘lighting supply and installation’ but fail to mention emergency lighting. Some subcontractors include it, others don’t, making direct comparison impossible.
• Conflicting instructions: If drawings specify aluminium window frames but the written scope calls for timber, bids reflect different assumptions, leading to misaligned pricing.
• Untracked addenda: A last-minute change to include stainless steel fixings might be sent via email. Some bidders update their quotes, others miss it, creating inconsistencies in the final submissions.

Structured price breakdowns remove ambiguity. Instead of subcontractors submitting quotes in different formats, predefined tender templates ensure pricing is clear and comparable.

A live procurement schedule keeps everyone aligned. When drawings, scope clarifications, or addenda are updated, subcontractors receive real-time notifications, ensuring all bids reflect the same information. That means fewer discrepancies, faster tender reviews, and no surprises when contracts are awarded.

4. Overlooked labour costs

Labour is one of the biggest costs in construction, yet it’s often miscalculated. Errors come from unrealistic productivity assumptions, workforce shortages, and site-specific constraints that slow progress.

• Assumed productivity vs. reality: A bricklayer might be expected to lay 500 bricks per day, but factoring in material handling, weather delays, and site logistics, daily output could drop to 350.
• Overtime premiums: A delayed programme often means extended shifts. Paying time-and-a-half or double time over multiple weeks can quickly erode margins.
• Limited local labour: Projects in high-demand areas like London often pull trades from other regions, adding travel costs and accommodation allowances that may not be included in estimates.

Site conditions also impact labour efficiency.

• Restricted access: An inner-city project with no storage space means constant deliveries, forcing trades to work around material shortages and delays.
• Working at height: Curtain walling on a high-rise requires more setup, safety checks, and coordination than ground-level installation.
• Night shifts: Rail station works often happen overnight to avoid service disruption, but lower visibility and fatigue reduce output.

Misjudging labour costs doesn’t just affect direct wages — it impacts programme schedules, subcontractor relationships, and overall project profitability.

5. Underestimated overhead

Overhead costs don’t show up on a subcontractor’s quote, but they still eat into margins. Many estimates focus on direct costs — materials, labour, and subcontractor fees — while overlooking the fixed and variable expenses that keep a project running. Misjudging overhead means profits disappear before work even starts.

• Equipment depreciation: Cranes, excavators, and scaffolding lose value with every use. If depreciation and maintenance aren’t factored in, project pricing won’t cover the real cost of keeping plant operational.
• Administrative expenses: Office rent, software licences, and office staff wages must be spread across all projects. A £15 million job might carry 30% of those costs, while a £5 million job covers 10%. If those allocations are off, project profitability is skewed.
• Insurance and compliance: Public liability, professional indemnity, and contract works insurance aren’t optional. If a project involves hazardous materials or high-risk trades, premiums increase. Construction (Design and Management) 2015 regulations also add compliance costs that must be accounted for.

Even a small miscalculation impacts margins. A contractor planning for a 5% overhead allocation but actually incurring 7% on a £10 million project is short by £200,000. Across multiple projects, miscalculated overhead stretches cash flow, delays payments, and erodes profitability.

6. Poor risk allowance

Risk isn’t theoretical — it’s a line item. Projects that rely on best-case scenarios without contingency pricing are exposed the moment conditions change. A wet autumn can push external works into winter, delaying follow-on trades. A late material shipment can force resequencing, adding labour costs. Without a buffer, these disruptions turn into budget overruns.

• Weather delays: The period from 2011 to 2020 was, on average, 9% wetter than 1961 to 1990. Roofing, cladding, and groundwork packages need allowances for lost days.
• Material lead times: Electrical switchgear, façade panels, and specialist joinery often arrive late. A 12-week delay on curtain walling in London forced a contractor to reshuffle site logistics, increasing prelims.
• Labour shortages: When subcontractors are stretched, programme changes mean paying premiums for weekend and overtime work. A Birmingham project compressed M&E installation into a shorter window, forcing extra shifts that eroded margin.

A structured risk assessment quantifies these exposures. A £20 million project should include 2-5% contingency for supply chain, labour, and programme risks. Without it, contractors carry the cost when timelines slip.

7. Contractual errors

Conflicting contract terms create financial and legal headaches. If subcontractor agreements don’t align with head contract obligations, contractors get caught covering gaps. Payment terms, retention percentages, and liability clauses often clash, creating disputes that delay progress and cost money.

• Retention mismatches: The head contract holds 5%, but a subcontractor’s terms cap retention at 2.5%. If not corrected, the contractor absorbs the difference.
• Payment terms misalignment: The head contract states 45-day payments, but subcontractors expect 30. Without proper flow-down provisions, cash flow issues arise.
• Liability conflicts: A subcontractor limits defect liability, but the main contract holds the contractor responsible. Without alignment, disputes over accountability follow.

Poorly defined change order processes add to the problem. If subcontractors act on verbal instructions without formal approval, costs escalate, and claims become difficult to challenge.

• Unapproved variations: A subcontractor completes additional works based on a verbal instruction. When payment is disputed, there’s no documentation supporting the claim.
• Scope adjustments without sign-off: An M&E contractor installs extra containment assumed to be included. Without written confirmation, the cost lands in dispute.
• Late notice submissions: Some contracts require variation claims within seven days. If a subcontractor submits after two weeks, the claim can be rejected outright.

Standardised contracts and clear approval workflows reduce risk. Every agreement should match head contract terms, include strict variation approval processes, and define payment terms that protect cash flow.

8. Supplier and subcontractor exclusions

Subcontractor quotes can appear competitive until the exclusions list is reviewed. Missing elements — whether scaffolding, out-of-hours labour, or delivery charges — often result in unexpected variations. If these gaps aren’t addressed before contract award, the costs fall back onto the contractor.

• Scaffolding exclusions: M&E, façade, and roofing contractors frequently omit scaffolding, assuming it's provided by others. If no one owns it, delays and additional hire costs follow.
• Out-of-hours work not included: Projects in retail, healthcare, or transport hubs often require night or weekend shifts. If subcontractors price for standard hours only, premium labour rates become an unplanned cost.
• Freight and offloading missing: Large materials like steelwork, modular MEP units, or façade panels may be priced for supply only. If delivery, cranage, or site handling aren’t covered, those costs land as variations.
• Waste disposal left out: Drywall, tiling, and carpentry trades often exclude waste removal. Without clear contract terms, the main contractor absorbs this cost.
• Testing and commissioning overlooked: Fire alarms, sprinklers, and HVAC systems require independent testing. If not explicitly included in the subcontract, additional fees arise at project closeout.

Ambiguous exclusions create commercial risk. If containment isn’t included in an M&E package, does the electrical contractor absorb it, or does it become a variation? If a painter omits surface prep, who covers the cost — the drywaller or the contractor? These gaps cause disputes, disrupt programmes, and impact margins.

A structured procurement process ensures clarity. Predefined scopes-of-work, clear inclusions, and explicit exclusions prevent costly assumptions. When every package is fully detailed, subcontractor pricing is accurate, and cost certainty is maintained.

9. Missed market fluctuations

Construction pricing is never fixed. Material costs, supplier rates, and currency exchange shift constantly, but many teams still price projects using figures that are months out of date. That gap between estimate and reality can mean absorbing unexpected costs or scrambling for budget adjustments mid-project.

• Supplier pricing can move fast. Structural steel, for example, has had an extremely volatile decade, with some quarterly price fluctuations hitting 50%. A contractor using outdated rates would have underpriced tenders or lost margin covering the difference.
• Material shortages add another challenge. British Gypsum plasterboard became harder to source in late 2024, delaying fit-outs and forcing projects to pay premiums for available stock. Without planning, procurement bottlenecks derail schedules and budgets.
• Exchange rates impact imported goods. The GBP/EUR rate dropped from 1.17 to 1.13 between October 2024 and February 2025, increasing costs for electrical switchgear and façade components sourced from Europe. Contractors tied to fixed-price contracts without allowances for currency shifts carried the loss.

A live procurement schedule tracks cost changes as they happen, ensuring pricing reflects current market conditions. Real-time analytics highlight trends, helping commercial teams adjust forecasts before overruns hit.

Moving forward with confidence

Fixing pricing mistakes mid-project is costly and time-consuming. A miscalculated labour rate, missing scope item, or overlooked subcontractor exclusion can trigger disputes, programme delays, and unplanned costs. The earlier these risks are addressed, the easier they are to control.

A procurement solution keeps pricing accurate by ensuring cost data is current, scopes are complete, and subcontractor terms align with contract obligations. Automated workflows and structured tendering eliminate manual errors, making it easier to compare quotes, track cost movements, and flag discrepancies before contracts are signed.

• Live cost tracking: Up-to-date procurement schedules prevent outdated pricing from slipping into estimates
• Standardised scopes: Pre-configured templates ensure every package includes the right inclusions, exclusions, and responsibilities
• Contract consistency: Automated checks align subcontractor terms with head contracts to avoid retention, payment, and liability conflicts

Small pricing errors add up. The right procurement tools stop them from eroding margin. Book a demo to see how.

FAQs about construction pricing mistakes

Who pays for pricing mistakes when scopes are unclear?

It depends on contract terms, but unclear scope often leaves the contractor exposed. If subcontractor exclusions aren’t caught early — like waste removal missing from a demolition package — the main contractor either absorbs the cost or negotiates a variation. Under JCT, unclear employer requirements can shift cost liability, while in a design and build contract, the contractor owns the risk. Tight scopes and structured procurement processes prevent these disputes before they arise.

Is it worth using external consultants to avoid mistakes?

It depends on project scale, contract complexity, and internal expertise. For high-value or high-risk projects, an external cost consultant can flag gaps early, especially under NEC contracts with target cost mechanisms. A QS firm might provide independent cost checks, but relying on third-party reviews for every tender slows procurement. A more effective approach is standardising tender workflows and using real-time procurement tracking to ensure consistency without constant external oversight.