Construction Engineering 221

Cost Estimating and Bidding

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RPQs
1. Lump-sum and unit-price estimates are forms of
fixed-price estimates.
A = True B = False

2. The bidding climate refers to the anticipated
weather conditions during the duration of a project.
A = True B = False

3. An employee of a contractor pays $450 per month
for his/her portion of the medical insurance. This is
an example of a contractors indirect labor costs.
A = True B = False
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RPQ #1
1. Lump-sum and unit-price estimates are
forms of fixed-price estimates.
A = True B = False

The correct answer is A = True



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RPQ #2
2. The bidding climate refers to the
anticipated weather conditions during the
duration of a project.
A = True B = False

The correct answer is B = False



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RPQ #3
3. An employee of a contractor pays $450 per
month for his/her portion of the medical
insurance. This is an example of a
contractors indirect labor costs.
A = True B = False

The correct answer is B = False


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Important Estimating Principle


Become thoroughly
familiar with the bid
documents. Why?
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Because.
Accurate quantity takeoff of material
Accurate quantity takeoff of labor
Determine general and project overhead
What equipment will be needed and when

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More Reasons
Begin the formation of a project schedule
Determine how project will be managed
Develop a list of questions (get answers)
Begin a relationship with owner/AE
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What Must Happen
In the arena of competitive bidding for a
contractor to stay in business?

AND

In the arena of negotiated bidding what must
happen in order to continue to attract
clients to the negotiated process?
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Estimating Is Very Important
In the competitive arena
Need to be low bidder on sufficient number
of projects to maintain a revenue base
And realize a reasonable profit to stay in
business.

In the negotiated arena
Reliable advanced cost information that will
become the project cost
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Fixed-Price Estimate Forms
Lump-Sum Estimates
Building construction
Nature of work and quantities will defined
Great for owner financing and risk
Unit-Price Estimates
What type of construction is normally bid using unit-
price estimates?
Nature of work is still well defined
Quantities of material or work items not precise
Who first determines quantities of work items?
Quantities shown for each work item.
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Estimate Foundation
What is the term use to describe a
complete listing of all the materials
and items of work that will be required
for a project? (foundation to a good
estimate)
Quantity survey or quantity take-off

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Bidding Procedures
Private procedures (rules and regulations)
normally established by owner and AE

Public procedures follow various
procurement statutes developed by federal,
state, county and municipal governments

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QUESTION ?
Why do we have public bidding
statutes (laws)?
Public bidding statutes are designed to
protect the public interest, not that of the
contractor or AE. Their essential purpose is
to protect public funds; prevent fraud,
collusion, and favoritism; and obtain quality
construction at reasonable and fair prices.
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Decision to Bid
The decision to bid by the contractor depends on
the bidding climate.
What is meant by Bidding Climate?
The bidding climate is the affected by:
1. Bonding capacity considerations
2. Location of project
3. Severity of contractual terms (contractor
responsibilities and liabilities)
4. Owner and their financial status
5. Who is the architect/engineer
6. Nature and size of project as it relates to company
experience and equipment
7. Labor conditions and supply
8. Completion date

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The Bidding Period
Why is a reasonable bidding period
important?
1. An accurate bid requires adequate time
2. Too little time to bid results in contractors
either not bidding or bidding too high
3. Result of rushed or quick bids is NOT a
lower price
4. When unsure, contractors add
CONTINGENCY $$$$$$$ to their bid
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Preparing a Bid
Preliminary Considerations
Become familiar with
Instruction to bidders
Proposal form
Alternates
General and supplementary/special conditions
Drawing and specifications (addenda)
Form of the contract
Prebid meeting (in-house)
Prebid meeting (with owner)
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Preparing a Bid (cont.)
Jobsite visit
Observe job site specific conditions that must
be covered in the bid (site access, logistics)
Bid invitations
Quantity surveys (take-offs)
Unit-price project (AEs #s vs contractors)
Experience needed to do quantity surveys?
General contractors cost estimate of own
work
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Bid Components
Material Costs anything that becomes a
part of the finished structure
Material Allowance What is it? Example?
Direct Labor costs
Basic wage rates of the labor categories
Production rate that applies to the work type
The largest areas of uncertainty
Where is the most reliable labor productivity
information to found?
HISTORICAL COST DATA