Markup and VAT Math for a Philippine Construction Bid
The last page of a bid is simple arithmetic done in the right order. Getting the order or the VAT base wrong changes the number a client sees.
Assemble the cost base
Add contingency
Apply profit
Decide whether your figure is a markup on cost or a margin on price:
Margin: Price = Subtotal 1 / (1 − margin%)
A 15% margin needs a ~17.6% markup on cost — they are not the same. State which you used.
Add VAT
VAT (12%) applies to the full contract price for a VAT-registered contractor. Zero-rated and exempt projects (certain government, BOI-registered, or export-oriented) are exceptions — confirm the project’s status.
Note on payments
| Deduction on each progress billing | Typical |
|---|---|
| Retention | 10% of work done, released at completion / after defects |
| Recoupment of advance / mobilisation | pro-rata against the advance paid |
| Creditable withholding tax (CWT) | 2% of the (VAT-exclusive) amount, withheld by the client |
| Expanded/again per contract | as specified |
These affect cashflow, not the bid total — but flag them in the quotation so the client’s payment expectations match yours.
EngEst Pro’s Bid Summary applies contingency, profit, and 12% VAT in the correct sequence and produces a formal quotation PDF with the cost breakdown, so the client sees exactly how the contract price is built.
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