In brief
- A low bid often means the tender left out costs that still fall due during the build, so the cash flow forecast must be read against the priced items, not the total.
- An unfunded work period appears when the money going out each month exceeds the money coming in, even though the contract total looks adequate.
- Ask for the priced bill, the programme and the payment terms together, then test the monthly cash movement against each one.
Contents
A low bid in Garowe usually means the tender left out costs that still fall due during the build, so the cash flow forecast must be read against the priced bill, the programme and the payment terms, not against the contract total alone. The total can look acceptable while a single month is already unfunded.
Where do cash flow forecasts and underbidding risks meet in Garowe?
They meet at the point where the forecast follows the tender total instead of the priced bill. A bidder who leaves out an allowance for plant hire, temporary works, water carting, security, or a supervisor's time still has to pay for those things on site, and the payments fall in specific months. The forecast then shows a comfortable contract value while the monthly outflow is short. Ask the bidder to hand over the priced bill of quantities next to the programme, so each line can be matched to the month it is spent. Walk a recent site the bidder completed and ask how the work was actually staffed and supplied. If the answer does not match the priced items, the gap is real.
Why do unfunded work periods appear even when the total price looks adequate?
An unfunded work period appears when spending in a month runs ahead of receipts, which happens when a bidder removes front-loaded or early-month items to cut the headline figure. Some works peak early: groundworks, carting water, setting up a batching area, moving plant. If those lines are thin, the first weeks draw cash the tender never priced. Retention and the timing of interim payments widen the same gap. Check the payment terms in the contract and ask what each interim valuation covers. Confirm the accepted rules for retention, measurement and certification with the client's engineer's office before signing, because those terms decide when money arrives.
How do you detect and close the gap before award?
Compare the monthly spend in the programme with the payments the contract allows in the same month. List the items that carry a real monthly cost and test each one against a priced line. Where a line is missing or thin, ask the bidder to price it in writing, then decide whether the bid still stands as the lowest. Confirm technical limits such as curing, cover or compaction against the project specification and the engineer, not against the bid. A bidder who cannot show the priced line behind a monthly outflow has not funded that month.
What to do next
Ask every shortlisted bidder for the priced bill, the programme, the payment terms and the retention rules in one package, then build the monthly cash flow from the priced lines. Mark each month where outflow exceeds the payment the contract allows. Send those months back to the bidder for a written priced response before award, and keep that response with the tender file.
Frequently asked questions
What is an unfunded work period?
It is a month where the cost of the work running on site exceeds the money the contract pays in that same month, even though the total contract price may look adequate.
What documents should a client request to test the forecast?
Ask for the priced bill of quantities, the construction programme, the payment terms and the retention rules together, so each priced line can be matched to the month it is spent.
Local reporting: this article is written for building work in Garowe and Puntland. Ground conditions, prices and rules differ between places; confirm the details for your own site.