Construction Engineering 221

Cost Estimating and Bidding

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
Construction

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

Construction

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

Construction

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

Construction

Important Estimating Principle

Become thoroughly
familiar with the bid
documents. Why?

Construction

Because.
Accurate quantity takeoff of material
Accurate quantity takeoff of labor
Determine general and project overhead
What equipment will be needed and when

Construction

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

Construction

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?

Construction

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

Construction

10

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 unitprice 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.

Construction

11

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

Construction

12

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

Construction

13

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.

Construction

14

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.
2.
3.
4.
5.
6.
7.
8.

Bonding capacity considerations

Location of project
Severity of contractual terms (contractor
responsibilities and liabilities)
Owner and their financial status
Who is the architect/engineer
Nature and size of project as it relates to company
experience and equipment
Labor conditions and supply
Completion date

Construction

15

The Bidding Period

Why is a reasonable bidding period
1.
2.
3.
4.

important?
An accurate bid requires adequate time
Too little time to bid results in contractors
either not bidding or bidding too high
Result of rushed or quick bids is NOT a
lower price
When unsure, contractors add
CONTINGENCY $$$$$$$ to their bid

Construction

16

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)

Construction

17

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

Construction

18

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

Construction

19