Assignment #2 Estimate Bid Price:

ASSIGNMENT REQUIREMENTS
This is a team assignment in which your team is required to price a job and submit a proposed tender for a
warehouse/office to your company management for approval.
The team assignment should be submitted with a team front assignment sheet, signed by all contributing
team members (see blackboard for proforma). To this is to be attached the proposed tender submission
and supporting calculations, stapled at the top LH corner. DO NOT bind the submission or put in fancy
covers or pockets. See Blackboard for further advice and proforma for the assignment front sheet.
The assignment will be posted on Blackboard in week 4 beginning Monday 2 September. Submission is due
as a hard copy by the end of week 6. Following submission you will prepare a presentation to your fellow
students in the tutorial in week 7. Note: Late submissions of the hard copy in week 6 will incurr daily late
penalty points.
A small amount of time will be made available to for Teamwork in week 4 tutorials. This will enable teams
to start organising themselves and at the end of the week 4 tutorial a team task sheet identifying each
students role, is to be signed by the team members and submitted. A limited amount of time will also be
made available in your tutorial in week 5 for teams to review individual team member contributions and
decide how to put it all together for the team submission in week 6.
To help with this assignment an Excel model will be supplied on blackboard:
2013Ass#2PricedBofQ_BidBlank.xlsx. This model will be issued to students after Assignment #1 has been
submitted.
The major tasks required to complete this Assignment #2 are as follows:
1. Review your Assignment #1 BofQ submission with the team.. Use the price list supplied to calculate
a cost price for the BofQ in todays dollars. (Refer Excel model sheet PricingBlank )
2. Add in a distribution of overheads, and a notional value for allowances, contingency and profit to
calculate a price and rate for each item on the BofQ. (Excel model sheet BofQBlank )
3. Create a cashflow of direct costs (excluding allowances, overhead, contingency & profit) and of
payments by the client using the facts given in these notes and the AS4000 contract terms. Produce
S curves of income and expense and a weekly cumulative cash flow graph for presentation to
your company management. (Excel model sheet CFBlank ).
Hint: You should set up your distribution to the BofQ rates items (on Excel model sheet BofQBlank )
of allowances, overheads, contingency& profit using percentage allocations and reference these in
the header. Then reference these BofQ values in the cashflow calculation to create the income
cashflow (and copy/paste values into your spread sheet for cashflow calculations). Having done
that, calculate the cashflow of expenses by setting the %s for overheads etc.at the top of the
spread sheet to zero. This will generate the cashflow of expenses excluding overheads etc. You
should then value paste the costs into your spread sheet for calculation and graphing of the
income and expenses; after allowing for payment lags.
4. Assemble a list of possible risks and determine from this list a reasonable estimate for allowances
for known risks and a contingency amount. This should be brainstormed by your whole team to get
the best ideas. Include these final values in the distribution in item 2. Use the cash flow in item 2 to
add an allowance for financing costs for the project through to completion.
5. Consider what assumptions you have made and what qualifications (stipulations) you would
impose upon your tender, or other comments you might include to market your company. This is
to be in the form of a draft one page letter to introduce your bid to the client.
6. Prepare a one page executive summary of your bid including risks, allowances, recommended
contingency, $ contribution to overheads and profit, assumptions and recommendations on how to
market the bid to the client. Also consider whether there are any cost savings or other proposals to
to be put to the client that might help win the tender.
7. Prepare a team presentation of the executive summary and draft tender submission letter.

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Assignment #2 Estimate Bid Price:

You are to prepare professional Excel models for the calculations for this priced Bill of Quantities.
Print out your results and all your calculation detail from the costing model for assignment submission as
printed sheets.
The assignment submission will consist of the following:
A (one page) bid executive summary summarising the bid costs, allowances, risks, contingency,
margin and cashflow and discussing options and recommendations for the bid submission. The
summary should also include a cumulative cash flow and S curves and indicate the maximum
finance required and finance costs.
A draft letter submitting your price (maximum one page) giving the price and breakdown, any
qualifications to the price, the completion date, and any additional reasons why your bid should be
accepted (apart from being the cheapest!).
A priced Bill of Quantities table for the project.
A cashflow table showing the schedule of contract payments.
The assignment is to be submitted by the deadline in both hard copy and electronic format.

Hard copy is to be delivered to the HES6175/HES5175 mailbox located on Level 7 of the ATC
building, near office ATC743
Electronic copies of all files, including supporting documents, to be uploaded by the team
coordinator via the assignment section of Blackboard before submission closing time.

There will be a team presentation to your tutorial group. This will be a final pre-bid meeting for the bid
team to present the proposed tender bid to the companys senior management and;
1. The team will select one member to present the main points of the proposed bid to a meeting with
the company management team (in the tutorial). Alternately aspects of the presentation can be
presented by different team members but one must lead the presentation.
2. For this presentation the team must supply one copy of the one page executive summary and one
page tender cover letter (copy both sides) to each of the other teams plus one each copies to the
lecturers.
3. There will be strict maximum of 4 minutes for the presentation and there will be no audio visual
aids allowed, just the printed one page summary & one page tender letter.
Each file and printout submitted for this assignment is to have in the header:

the assignment number, name and team number on the LHS (e.g. Assignment #2 Estimated Bid
Price Team #2.2)
The student number of the ones who developed the page in the document or Excel model on the
RHS (eg students799999 & 833333). No more than two students may contribute to creating a file.

Note: This assignment is to be all your own teams work. See the student notices regarding plagiarism and
unfair advantange. In particular, if you allow a student in another team to copy your work then both teams
risk being penalised by loosing some or all of their marks in addition to other consequences.

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Assignment #2 Estimate Bid Price:

Assignment #2 Estimated Bid Price:

Team Assignment

Bestware Developments Pty Ltd, a developer who is a new client to your company, has requested a firm
price tender for a proposed warehouse and office project in Struggleton, Melbourne. Bestware do a large
volume of work and your company is keen to impress them with a very professional tender.
The developer has provided drawings and the following specification and BofQ for the building works to
lock up stage. Lock Up stage includes earthworks, foundations, concrete slabs and carparks, steelwork,
precast concrete walls and roof cladding.
Project: Warehouse & Office for Bestware Developments Pty Ltd at Lot 105 Prince St, Sunset, Victoria 3007.
The project start date is 31 March 2014 and completion date is 29 September 2014.

The following items are to be treated as single line Prime Cost (PC) items in the BofQ and the client will
nominate the subcontractor for these works:
storm water piping from floor level to the boundary drains;
$35,460 for Warehouse and Office
240 volt single phase electrical and data to distribution board in office on common wall with
warehouse; $22,500
Roofing including metal deck, flashing, gutters and down pipes to ground level;
$85,000 for Warehouse and Office
plumbing to amenities from street connections; $18,750
Amenities, fixtures, lights, 240v power and tiling; $6,500
The finishing trades, painting and office fitout (except for ammenties) are not included and will be done
later by the company which leases the premises.
Your company policy for corporate overheads and profit is:
1. Add 6.5% for profit to the total estimate cost including overheads and Allowances and excluding PC
sums & margin.
2. Add contingency on the total excluding profit & PC sum & margin. Amount of contingency depends
on the project risks but generally is not to exceed 10%. For risks greater than 10% the company will
not bid, or will seek to qualify the tender submission.
3. Add 17.5% for overheads to the total direct cost and allowancessum( excluding PC sums & margin).
4. Add 8.5% margin to PC sums for overheads, incidentals and profit (called attendance and
incidentals in the BofQ)
A site visit and the Principles answers to questions has produced the following additional information:

The principle has cautioned that the BofQ pricing for PC sums must only contain the nominated
values and the PC sum attendance and incidentals percentage item can only contain the nominated
percentage of the PC items. He has also confirmed that the roller shutter door will not require
power.
Site slopes from rear to front (east to west) and is covered by scrubby bushes and rubbish
(estimated at about 18 CM). Topsoil (200mm deep) is to be excavated from the whole site area,
and carted to the local Council depot. The remainder is to be carted to spoil. (BofQ allows 15%
bulking factor for topsoil & clayey sand)

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Assignment #2 Estimate Bid Price:

The principle supplied a copy of soil tests taken in each of the four corners of the site for the
foundations design showing 200 mm of topsoil and then lightly consolidated clayey sand to 2
metres.
The site establishment will require a portaloo, a site office and crib room with temporary power
and footpath protection and temporary fencing to the street site boundary. The site office can use
the car parking area but will also need 75mm of of crushed rock hard standing and then have to be
moved to complete the carpark paving. The site office will also need a crossover timber protection
for the footpath. The truck parking apron and carpark crossover areas will need temporary 75mm
hardstanding during construction to allow easy construction access from the street. This will allow
the new cross over to be built at the end of the construction so it wont be damaged by
construction traffic.
Street access is good. Adequate turning for semi trailers. Restricted crane access on East boundary
due to existing buildings next door.
The principle has agreed that in ground concrete in the BOQ can include structural excavation,
forms, reinforcement, concrete placing and finishing but payment will only be for completed and
finished concrete quantities.
The Principle notes that it will only be able to pay within 30 days of receiving a certified payment
certificate.
The defects liability period on this contract is 26 weeks from contract completion.
The contract form is AS4000, retention is 10% and will be retained to the end of the defects liability
period of 26 weeks. See the attached extract from AS4000.

Other investigations:

A review of Bestwares reputation for paying on time ( in discussions down the pub), confirms that
payments are likely to be paid an average of 30 days after a certified payment certificate is
received. Some large clients in the industry can routinely take 60 days to pay so this is relatively
good.
It takes an average of 2 weeks for the companies supervisor to measure the work and submit a
progress claim to the client and it will take the clients manager a further 2 weeks to certify the
payment. Minimum four weekly claims are allowed.
The company prides itself on paying trade subcontractors and material suppliers within 14 days of
an invoice and invoices are generally received with in 7 days of material supply. As a result the
company has well established and reliable suppliers. Accounting advises that employees are paid
fortnightly and monthly and the average accrual period for expenses is 3 weeks.
Most subcontractors are small and submit weekly claims for payment.
The companys bank has recently become very risk adverse due to credit tightening. The company is
not prepared to mortgage its assets and will not be able to obtain a bank guarantee for retentions
on this contract.
The contactors interest rate on the outstanding cash flow is 9% on overdrafts and zero % on
positive balances.
The company has a standard model it uses for tender cashflows and this has been supplied for you
to use, along with historical prices and the BOQ supplied by the client. The BOQ has been loaded
into the company standard cashflow model for you by the company planner but the formulas and
set up need to be checked and the planned sequence of activities checked for inconsistencies.

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Assignment #2 Estimate Bid Price:

Specification for this tender: Refer to details in Assignment #1 and answers to questions
Drawings: Refer to drawing list in Assignment #1
Pricing rates sheet (based on prior tenders): included in Tab Pricingblank in model available to students.
Bill of Quantities: included in Tab BofQblank in model available to students.
Schedule for Cash Flow calculations: included in Tab CFblank in model available to students.
Payment Terms: extract from AS4000 General Conditions of Contract.

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