How to Calculate the Tender Base Budget Without Errors

1. What the tender base budget is and why it matters

The tender base budget (PBL in Spanish) is the maximum spending limit the contracting body is willing to commit to for the execution of the contract. It is the figure against which tenderers formulate their financial bid and the reference for assessing abnormally low tenders. Its correct determination is one of the essential elements of the file.

Beyond the financial dimension, the PBL fulfils a safeguard function: it evidences that the contracting body has studied the real cost of the contract and has not set an arbitrary figure. That is why article 100.2 LCSP requires it to be adequately broken down and that the breakdown appears in the file.

2. Base budget, estimated value and tender amount

These three concepts are frequently confused and have different functions:

Tender base budget (art. 100 LCSP): maximum contract amount with VAT itemised. Used for tenderers to bid and to control abnormally low tenders.

Estimated contract value (art. 101 LCSP): total amount excluding VAT taking into account the maximum possible duration, all envisaged extensions, potential modifications and lots. Determines the applicable procedure, the harmonised thresholds and OJEU publication.

Award amount: the final figure at which the contract is awarded after the successful bidder's offer. Always equal to or lower than the PBL.

3. Regulatory framework: arts. 100 and 101 LCSP

Article 100 LCSP regulates the tender base budget. Three paragraphs deserve special attention. Paragraph 1 requires VAT to be itemised. Paragraph 2 requires an adequate breakdown by components. Paragraph 3, introduced by LCSP 2017, requires contracting bodies to ensure the budget is adequate to market prices.

Article 101 regulates the estimated contract value. Its correct calculation is critical because it determines whether the contract must be published in the OJEU (harmonised thresholds) and which procedure applies. An error here can invalidate the entire file.

4. Mandatory breakdown components (art. 100.2)

Article 100.2 LCSP requires the breakdown to include, as a minimum:

Direct costs: those imputed directly to the service (direct labour, materials, amortisation of dedicated equipment). In personnel-intensive services this is the main component.

Indirect costs: those that cannot be assigned directly but are necessary (supervision, quality control, activity insurance, training).

Structural overheads: the running costs of the organisation imputable to the contract (management, administration, offices). Typically between 13% and 17% of the sum of direct and indirect costs.

Business profit: the business margin. In works, the General Regulation sets indicatively 6% on the material execution budget. In services and supplies, practice places it between 5% and 10%.

5. Step-by-step calculation for service contracts

In services, the wage cost typically represents 70–85% of the PBL. The correct methodology starts from the applicable collective agreement for the sector and professional category, calculates the total employer cost per hour and multiplies it by the estimated hours.

The economic Report must reflect this calculation explicitly, with hours, hourly cost per category and reference to the applicable agreement. Without this traceability, the specification is appealable.

6. Step-by-step calculation for supply contracts

In supplies the dominant component is the unit price of the good. The usual methodology:

Step 1: Consult at least three market prices (recent quotes, catalogues, the State Procurement Platform, history of awarded contracts).

Step 2: Calculate direct cost (product + transport + delivery + installation if applicable).

Step 3: Add indirect costs (extended warranty, initial maintenance, user training if any).

Step 4: Apply overheads and business profit at the usual percentages and, finally, VAT.

7. Step-by-step calculation for works contracts

For works the PBL derives from the technical project and follows the classical structure of the General Regulation of the LCAP (RD 1098/2001):

Material execution budget (PEM): measurements at unit prices per the project price tables.

Overheads (13% of PEM) + Business profit (6% of PEM) = PBL excluding VAT.

VAT is then added (21% standard, 10% for certain social housing works) to obtain the total PBL.

The technical project, with its measurements and price tables, is the document that gives traceability to the calculation and meets the breakdown requirement of art. 100.2 LCSP.

8. Wage cost and collective agreement: the most audited component

Additional provision 24 of LCSP, together with the consolidated case law of the TACRC, require the PBL to respect as a minimum the remuneration under the applicable sectoral collective agreement. This is the check that generates the most appeals in personnel-intensive services: cleaning, security, caretaking, home care, gardening.

9. Common errors that trigger appeals

Error 1: Total absence of breakdown — specifications stating "EUR 15,000 + VAT" with no further explanation. Direct infringement of art. 100.2.

Error 2: Confusing estimated value and tender base budget in the official platform publication.

Error 3: Wage cost below agreement. Particularly when a PBL from previous years is reused without updating wage tables.

Error 4: Failing to include employer Social Security costs in the hourly cost (only the worker's gross salary is computed).

Error 5: Forgetting to consider envisaged extensions and modifications when calculating the estimated value. If the harmonised threshold is exceeded, the procedure should have been published in the OJEU.

These five errors explain most appeals upheld on PBL grounds. All are detectable with a checklist before file approval, and many can be identified by automated validation systems.

10. How to automate the calculation with AI (without losing technical responsibility)

PBL calculation is repetitive, rule-based and highly susceptible to careless errors. It is therefore an ideal use case for automated assistance: the officer provides judgement and responsibility; the system performs the mechanical verifications that free up time.

Specialised generative AI tools such as LicitadIA draft the economic Report with the full breakdown up to date with the current agreement, ready for technical review. Final legal and technical responsibility remains with the signatory, but time spent on mechanical calculations drops drastically. For further reading, see our guide on common errors in procurement specifications, or request a demo with your own contracts.

Frequently asked questions