How to Price a Construction Job in Tanzania Without Losing Money

To price a construction job in Tanzania, add up five things: materials (measured from the drawings and priced at current delivered rates), labour, equipment and transport, a share of your company overheads, and a contingency for things that go wrong. Then add your profit, usually 10 to 15 percent on small and medium jobs, and VAT if you are registered. The most common mistake is pricing per square metre from memory and forgetting overheads, so the company stays busy all year and still has no money.

Pricing is the part of the business most contractors learn the hard way. Here is the method we would teach a new estimator.

Why do so many contractors underprice?

Three reasons come up again and again. They copy a rate per square metre that someone else quoted, without knowing what it included. They price to beat the competition instead of to cover their costs. And they forget the costs that do not appear on site: the office, the vehicle, the accountant, the weeks spent chasing payments.

A quote is a promise. If it is wrong, you keep the promise and pay the difference yourself.

Step 1: Understand exactly what you are pricing

Get the drawings, the specifications and, ideally, a bill of quantities. Visit the site. Note the soil, access, water, power and how far materials must come. Clarify what is included: Is it a shell or fully finished? Who pays for the permit, the water connection, the electrical fittings? Write the scope down.

If you are new to drawings, our guide on how to read house drawings is a good starting point.

Step 2: Measure quantities

Measure every element from the drawings: excavation, concrete, steel, blocks, plaster, roofing, finishes. If the client has a BOQ, still check the main quantities yourself; mistakes in BOQs are common. Add a waste allowance:

Step 3: Price materials at today's delivered rates

Call suppliers for current prices, delivered to that site. Cement, steel and iron sheets can change price within a month, so do not use last year's list. Check our building materials prices as a rough guide, then confirm with suppliers. For long jobs, state in your quote how long the price is valid, and agree how big price changes will be handled.

Step 4: Price labour

Labour can be priced per day (number of workers times days times rate) or per unit of work (per m² of blockwork, per m³ of concrete, per m² of plaster). Use rates you actually pay your crews, including the foreman, and add statutory costs for employed staff such as NSSF contributions and workers' compensation. On a typical house, labour is often 25 to 35 percent of the building cost.

Step 5: Add equipment, transport and site costs

These are easy to forget:

• Mixer, vibrator and scaffolding (owned or hired).
• Transport of materials and workers.
• Water and power for construction.
• Watchman and site security.
• Site board, temporary store, toilet.
• Setting out, soil tests and concrete cube tests where needed.

Step 6: Add overheads

Overheads are the costs of running the company that are not tied to one site: office rent, management salaries, vehicles, phone and internet, accountant, insurance, registration fees and marketing. Add them up for a year, divide by the turnover you expect, and you get a percentage to add to every job. For small and medium contractors this is often 8 to 15 percent.

Step 7: Add contingency and profit

Contingency covers the unknowns: bad soil, rain delays, a price rise. Five to ten percent is common on building work, more on renovations where you cannot see inside the walls. Profit is separate. It is what the company earns for taking the risk and doing the work, and it funds growth.

A worked example

Here is a simplified example for building a single-storey house shell. All figures are illustrative 2026 examples, not real prices.

Notice how far the final price is from the direct cost. A contractor who quoted TSh 75 million because "materials and labour come to 70" would lose money on this job without any mistake on site.

How should you present the quote?

Clients compare quotes, so make yours easy to read and hard to misunderstand:

• List what is included and what is excluded.
• Break the price into stages that match the payment schedule.
• State how long the price is valid.
• Explain how variations will be priced.
• Attach the drawings revision you priced from.

Then put it in a proper contract. Our construction contract checklist covers what to include.

What about pricing per square metre?

Rates per m² are useful to give a client an early idea of cost, and to check your detailed estimate. They should not replace one. A house with a complicated roof, a sloping plot or imported finishes costs much more per m² than a simple box. Our post on the cost of building a house in Tanzania shows typical ranges and what moves them.

Frequently asked questions

What profit margin should a contractor add?

Ten to fifteen percent is common on small and medium private jobs. Competitive tenders often run lower, and specialist or high-risk work higher.

Should I include VAT in my price?

If your company is VAT-registered with TRA, you must charge VAT at 18 percent. Show it as a separate line so the client sees it clearly.

How do I handle rising material prices?

Keep quotes valid for a short period, buy key materials early when the client pays an advance, and include a clause on how large price changes will be shared.

Is it okay to quote lower than competitors?

Only if your costs really are lower. Find out why the others are higher before you cut. Often they have priced something you missed.

Get a detailed quote

Vika Construction prices every project from the drawings and site, with a clear breakdown. Contact us or read about our services.