Construction Engineering 221 Cost Estimating and Bidding.

Construction Engineering 221

Cost Estimating and Bidding

Construction Engineering 221 2

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 contractor’s indirect labor costs.A = True B = False


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


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


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 contractor’s indirect labor costs.A = True B = False

The correct answer is B = False


Important Estimating Principle

Become thoroughly familiar with the bid documents. Why?


Because…….

Accurate quantity takeoff of material

Accurate quantity takeoff of labor

Determine general and project overhead

What equipment will be needed and when


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


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?


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”


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.


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


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


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.


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 considerations2. Location of project3. Severity of contractual terms (contractor

responsibilities and liabilities)4. Owner and their financial status5. Who is the architect/engineer6. Nature and size of project as it relates to

company experience and equipment7. Labor conditions and supply8. Completion date


The Bidding Period

Why is a reasonable bidding period important?

1. An accurate bid requires adequate time2. 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


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)


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 (AE’s #’s vs contractors) Experience needed to do quantity

surveys? General contractor’s cost estimate of own

work


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 Engineering 221 Cost Estimating and Bidding.

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Transcript of Construction Engineering 221 Cost Estimating and Bidding.