Read the number with its conditions
Find the value in the original notice and read the corresponding procurement documents. Record whether it is an estimate, a range, a maximum or another stated measure. Check VAT, the initial term, extension options and whether the number covers one lot or a wider procurement.
The Cabinet Office's Procurement Act contract valuation guidance explains estimation for procurement purposes. Its general approach includes the maximum payable value and relevant options; estimation is inclusive of VAT. Framework valuation covers contracts that could be awarded under it. That context helps explain the headline number, but it does not tell you your firm's revenue or the pricing instructions for a particular bid.
Complete a value worksheet
| Record this | Why it changes the decision |
|---|---|
| Source and value basis | An estimate or ceiling may differ from committed spend. |
| VAT treatment | Compare amounts on the same basis before calculating. |
| Initial term and options | An extension is different from guaranteed work in the initial period. |
| Lots, suppliers and call-offs | A wider total may not belong to a single supplier. |
| Delivery and external costs | Licence, hosting, partner and support costs reduce the amount available for your work. |
| Payment and acceptance | Milestones and review periods affect cash timing. |
Example 1: four years does not mean four equal years
Invented example: documents explicitly state £240,000 excluding VAT for an initial two-year service with two optional one-year extensions. Dividing by four produces £60,000 per year only under an even-spend, fully-extended scenario. It is not a reliable first-year budget or a promise that all extensions will happen.
Ask how much relates to implementation, recurring support and optional work. Model the initial period separately. Do not remove VAT from a number already labelled as excluding VAT, or apply a tax rate without confirming the basis. Follow the actual pricing schedule.
Example 2: a framework ceiling is not a supplier forecast
Invented example: a framework has an advertised maximum of £4 million and appoints eight suppliers. Dividing the total by eight gives £500,000 arithmetically, but provides no evidence that any supplier will receive that amount.
Read the call-off mechanism, permitted buyers, term, lot structure and any stated commitment. If the documents do not guarantee work, do not turn the ceiling into a guaranteed pipeline figure. Include the effort of competing for later work in your commercial assessment.
Translate scope into a viable delivery model
Estimate your delivery effort and costs before deciding the value is attractive. For a digital project, separate discovery, build, migration, assurance, licences and ongoing support. Keep contingency assumptions visible. A large total can support a poor commercial result if it contains years of expensive obligations.
Use a range where information is incomplete, and identify the question that would narrow it. For example, the number of migrated documents or the support coverage can affect cost more than the website's headline page count.
Decide what needs clarification
Ask the buyer to reconcile conflicting figures through the stated clarification route. Keep valuation for procurement classification separate from your own revenue and delivery model. This guide is an initial commercial reading aid; the applicable regime and the competition's documents govern the procurement.
Take the resulting assumptions into the bid/no-bid checklist. Record the scope you believe you can deliver, the evidence behind it and the uncertainty you still need to resolve.
Keep working through the decision
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