Estimating for Heavy Construction and Unit Price Bids

Hal Johnston

Faculty of Civil Engineering Department of Economics and Management CZECH TECHNICAL UNIVERSITY IN PRAGUE

Short Bio � Hal Johnston

◦ Professor (20 years)

� Construction Management Department � California State Polytechnic University (Cal Poly)

� San Luis Obispo, California, USA

◦ Professional Construction Experience (17 years) � Bechtel – EPC/CM � Morrison Knudson – Design Build/General/CM

� The Austin Company – Design Build � R.E. Bayley Construction – General Contractor

� Mason/Johnston General Contractors – General

◦ Education � B.S. in Building Theory and Practice – Washington State University

� Masters in Building Construction – University of Florida

◦ Other

� 2 books, many scholarly papers, given many professional seminars � Latest seminar for the ASCE – Atlanta (2 days)– Fundamentals of

Construction Estimating And ASCE – Panama (Panama Canal Authority – 10 days) Const. Estimating

Learning Outcomes for (Estimating for Heavy Construction and Unit Price Bids)

� The attendee will be able to: ◦ Discuss how heavy construction estimating is different from commercial estimating

◦ Describe a unit price bid ◦ Decide when and where the different types of estimates are used

◦ Illustrate the different parts of the unit price estimate and describe them

◦ Explain how the different types of cost play a role in heavy construction estimating

Session Outline

� Construction organizations (review) � Construction contracts (review) � Contract documents

◦ Standard specifications ◦ Standard specifications for DOTs

� Unit prices ◦ Unit bid items ◦ WSDOT Unit bid items ◦ Short in-class exercise

� Quality control / acceptance � Price adjustments

History of Project Delivery in US

� Legal Separation of Design and Construction ◦ The Miller Act (1935)

◦ Public contracting laws mandating separation of design from construction & contractor selection solely on cost

◦ Professional licensing requirements

Project Delivery Defined

A comprehensive process including planning, design, construction and other services, necessary for organizing, executing and completing a construction project.

� Three fundamental owner decisions

◦ Type of project delivery system ◦ Type of procurement method ◦ Type of contract format

Project Delivery Process Framework

Project Feasibility

Project Performance Criteria

Facility Owner’s Profile

Critical Owner Decisions

NOTE: Chart shows logic flow, not timing or sequence of steps, which vary depending on methods used.

Programming & Scope Definition

Project Delivery System

Selection

Procurement Method Selection

Team Selection

Contract Format Selection

Design & Construction

Operation & Maintenance

Project Financing

Confirm Project Scope and Program

Project Delivery

� Always 3 or 4 major parties involved in the project delivery process ◦ Owner (public or private) ◦ Designer (Engineer or Architect) ◦ Contractor ◦ Construction Management Firm (can also be one of these parties)

The Method Selected will:

� Determines the contractual relationships among the parties.

� Establishes when the parties become

engaged.

� Influences impact of changes and

modifications on project cost.

Project Delivery Types

� Design-bid-build (Lump Sum or Unit Price)

� Multi-prime (often under CM)

� Construction management-at-risk

� Construction Management agency

� Design-build (DB, EPC, etc.)

Procurement is the methodology used to buy

design and construction services.

Procurement Defined

Construction Contracts

� Method of award ◦ Competitively Bid

contracts � With designer doing

Project Supervision � With CM – agency � CM at Risk � Design Build

◦ Negotiated contracts � GMP � Design Build � Negotiated Lump

sum � CM at Risk

� Method of pricing ◦ Fixed-price

� Lump sum contract � Unit price contract

◦ Cost-plus � Cost plus percentage

of cost � Cost plus fixed fee � Cost plus fixed fee

with a targeted maximum cost

� Cost plus incentive fee

◦ Guaranteed Max Price

� GMP plus percentage of cost

� GMP plus fixed fee � GMP plus a fixed fee

plus share of savings - incentive

Procurement Options

� Sole Source/Direct Selection

� Negotiated procurement

� Competitive ◦ QBS – Qualification Based Selection

◦ BVS - Best Value Selection

◦ Low Bid

Market Penetration of Major Project Delivery Systems

Design-Bid-Build Contractual Relationship

Characteristics � Three linear phases: Design, bid and build

� Three prime players: Owner, designer, constructor

� Two separate contracts:

� Owner to designer

� Owner to constructor

Responsibilities

Owner

Designer

Constructor

Program, finance, management

Prepares plans & specs, normal services

Prime and sub construction

Owner

Designer Contractor

Subcontractors

Sub Consultants

Design-Bid-Build Advantages

◦ Established way of doing things ◦ Suitable for competitive bidding ◦ A/E directly works for owner ◦ Extensive litigation has resulted in well established legal precedents

◦ No legal barriers in procurement and licensing ◦ Insurance and bonding are well defined

Design-Bid-Build Disadvantages

◦ Two contracts for owner to manage � Disagreements go through owner � Owner bears design adequacy risk

◦ All parties have different agendas/objectives ◦ Initial low bid might not result in final best value

◦ Bids over budget presents most difficulties in reducing costs / creates significant delay

◦ No constructor involvement in design ◦ Slowest project delivery ◦ Most litigious delivery process

Design-Bid-Build Unique attributes and challenges

� Utilization helps to avoid potential conflicts of interest

� Provides a check and balance between design and construction functions

� Owners less familiar with the design and construction process may benefit from Design-Bid-Build because it is so well understood throughout the building industry.

Primary Reasons for Choosing Design-Bid-Build

� Low first cost is the priority

� Project is simple

� Procurement laws restrict use of anything

else

� Owner wants to control design

� No need for value engineering or innovation

Influence vs. Cost Project delivery selection influences when contractor gets on board.

Contractor on-board early allows best opportunity to achieve objectives

MAJOR

INFLUENCE

RAPIDLY

DECREASING

INFLUENCE

LOW

INFLUENCE

High

Small

Large

Low

INFLUENCE

COST

Planning & Design Construction & Operations

Risk in Heavy Construction

� Equipment productivity � Labor productivity � How material may react differently in

different circumstances � Locations � Lower number of subcontractors on job,

higher risk to the General � Fuel costs � Soil Conditions (acting different than

expected)

How does Risk change the Estimate?

� Higher profits ◦ Commercial Profits – 1% to 5%

◦ Heavy Profits – 8% to 15%

� Less return on investments ◦ Large cost of equipment

� Contingencies for potential

escalation costs

Standard Specifications for DOT (Department of Transporation) Typically do not use MasterFormat 2004 � Generally use 9 Divisions

◦ General Requirements ◦ Earthwork ◦ Production from Quarry and Pit Sites and

Stockpiling ◦ Bases ◦ Surface Treatments and Pavements ◦ Structures ◦ Drainage Structures, Storm Sewers, Water

Mains, and Conduits ◦ Miscellaneous Construction ◦ Materials

Standard Specifications for most Commercial / Building Projects

� Typically used today is the MasterFormat 1995 edition, but a new edition has been published (2004)

� MASTERFORMAT 1995 EDITION Before November 2004, MasterFormat was composed of 16 primary divisions:

Division 1 — General Requirements

Division 2 — Site Construction

Division 3 — Concrete Division 4 — Masonry

Division 5 — Metals Division 6 — Wood and Plastics

Division 7 — Thermal and Moisture Protection

Division 8 — Doors and Windows Division 9 — Finishes

Division 10 — Specialties Division 11 — Equipment

Division 12 — Furnishings

Division 13 — Special Construction Division 14 — Conveying Systems

Division 15 — Mechanical Division 16 — Electrical

Standard Specifications for most Commercial / Building Projects � MASTERFORMAT 2004 EDITION After November 2004, MasterFormat was composed of 49

primary divisions: � The current MasterFormat Divisions are: Division 1 - 49

Divisions

MasterFormat 1995 MasterFormat 2004 Procurement and

Contracting Requirements Group Introductory Information 00 Procurement and Bidding Requirements Contracting Requirements

Contracting Requirements

Specifications Group General Requirements Subgroup

1 General Requirements 01 General Requirements

MasterFormat 1995 MasterFormat 2004

Facility Construction Subgroup

2 Site Construction 02 Existing Conditions

3 Concrete 03 Concrete

4 Masonry 04 Masonry

5 Metals 05 Metals

6 Wood and Plastics 06 Wood, Plastics, and Composites

7 Thermal and Moisture Protection

07 Thermal and Moisture Protection

8 Doors and Windows 08 Openings

Divisions

MasterFormat 1995 MasterFormat 2004

Facility Construction Subgroup (continued)

9 Finishes 09 Finishes

10 Specialties 10 Specialties

11 Equipment 11 Equipment

12 Furnishings 12 Furnishings

13 Special Construction 13 Special Construction

14 Conveying Systems 14 Conveying Equipment

15 – 19 Reserved

Divisions

MasterFormat 1995 MasterFormat 2004

Facility Services Subgroup

20 Reserved

13 Special Construction 21 Fire Suppression

15 Mechanical 22 Plumbing

15 Mechanical 23 Heating, Ventilating, and Air Conditioning

24 Reserved

Divisions

MasterFormat 1995 MasterFormat 2004

Facility Services Subgroup (continued)

13 Special Construction 25 Integrated Automation

16 Electrical 26 Electrical

13 Special Construction 27 Communications

13 Special Construction 28 Electronic Safety and Security

29 Reserved

Divisions

MasterFormat 1995 MasterFormat 2004

Site and Infrastructure Subgroup

30 Reserved

2 Site Construction 31 Earthwork

2 Site Construction 32 Exterior Improvements

2 Site Construction 33 Utilities

2 Site Construction 34 Transportation

2 Site Construction 35 Waterway and Marine

36-39 Reserved

Divisions

Division 31 - EARTHWORK

MasterFormat 2004 � 31 00 00 EARTHWORK

� 31 10 00 SITE CLEARING � 31 20 00 EARTH MOVING

� 31 30 00 EARTHWORK METHODS � 31 40 00 SHORING AND UNDERPINNING

� 31 50 00 EXCAVATION SUPPORT AND PROTECTION � 31 60 00 SPECIAL FOUNDATIONS AND LOAD-BEARING

ELEMENTS � 31 70 00 TUNNELING AND MINING � 31 80 00 Reserved

� 31 90 00 Reserved

MasterFormat 1995 MasterFormat 2004

Process Equipment Subgroup

11 Equipment 40 Process Integration

11 Equipment 41 Material Processing and Handling Equipment

11 Equipment 42 Process Heating, Cooling and Drying Equipment

11 Equipment 43 Process Gas and Liquid Handling, Purification and Storage

Equipment

Divisions

MasterFormat 1995 MasterFormat 2004

Process Equipment Subgroup (continued)

11 Equipment 44 Pollution Control Equipment

11 Equipment 45 Industry-Specific Manufacturing Equipment

46-47 Reserved

16 Electrical / 13 Special Construction

48 Electrical Power Generation

49 Reserved

Divisions

Unit Prices

� Standard Units ◦ Defined in Standard Specifications

Unit Bid Items / Bid 03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E R PAGE 7 04/23/08 04/27/08 ----------------------------------------------------------------------------------------------------------------------------------- ITEM ITEM UNIT OF ESTIMATED NO. CODE ITEM DESCRIPTION MEASURE QUANTITY BID AMOUNT ----------------------------------------------------------------------------------------------------------------------------------- 1 074016 CONSTRUCTION SITE MANAGEMENT LS 1 10,000.00 10,000.00 2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 1,000.00 1,000.00 3 074032 TEMPORARY CONC WASHOUT FACILITY EA 1 1,500.00 1,500.00 4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 3,000.00 3,000.00 5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 150,000.00 150,000.00 6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS 1 20,000.00 20,000.00 7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 6.00 39,120.00 8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840 10.00 8,400.00 9 011868 REMOVE PRECAST CONC POST SUPPORT EA 2 2,500.00 5,000.00 10 (S) 153103 COLD PLANE ASPHALT CONC PAVEMENT SQYD 550 30.00 16,500.00 11 160101 CLEARING AND GRUBBING LS 1 10,000.00 10,000.00 12 190101 ROADWAY EXCAVATION CY 450 125.00 56,250.00 13 193006 STRUCTURE BACKFILL (SLURRY CEMENT) CY 45 250.00 1,250.00 14 260201 CLASS 2 AGGREGATE BASE CY 23 250.00 5,750.00 15 390132 HOT MIX ASPHALT (TYPE A) TON 550 100.00 55,000.00 16 394077 PLACE HOT MIX ASPHALT DIKE (TYPE F) LF 1,410 5.00 7,050.00 17 394090 PLACE HOT MIX ASPHALT (MISC AREA) SQYD 2,380 35.00

03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E

R PAGE 7

04/23/08 04/27/08 --------------------------------------------------------------------------------------------

---------------- ITEM NO. ITEM

UNIT OF

CODE DESCRIPTION MEASURE

------------------------------------------------------------------------------------------------------------

ESTIMATED UNIT

BID QUANTITY PRICE

AMOUNT --------------------------------------------------------------------------------------------

----------------

2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 $

1,000.00 $ 1,000.00 _______________________________________________________

_____

4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 $ 3,000.00

$ 3,000.00 _______________________________________________________

______

5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 $ 150,000.00

$ 150,000.00 _____________________________________________________________

7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 $ 6.00

LS 1 $ 98,000.00 $ 98,000.00 TOTAL $ 980,685.00

UNIT OF ESTIMATED UNIT BID MEASURE QUANTITY PRICE AMOUNT ------------------------------------------------------------------------------

Heavy Estimates take on two styles:

� Detail Estimates for Lump Sum Contracts and Subcontracts

� Unit Price Estimates for DOT and

other Unit Price Contracts

Remember that Heavy/Civil Contractors may act as

Subcontractors on many projects

A Heavy Civil Detail Estimate looks much like a Detail Estimate for a Commercial Project

� Major Differences ◦ Larger labor component

◦ Larger equipment component

◦ Very few Subcontractors

◦ More self performed work

◦ Not as many activities or work items

◦ Work items are often quantified by the agency for Unit Price Estimates

Structure of a Lump Sum Estimate and Bid

� Summary Sheet Headings ◦ Description ◦ Labor ◦ Material (often called Permanent Materials) ◦ Consumables / Expendables (often called Expendable Materials)

◦ Subcontractors ◦ Equipment Operating Costs or Expense ◦ Repair Costs (Labor item) ◦ Rental Costs or Company Equipment Costs ◦ Total

Typical Lump Sum Bid

Description Labor Materials Expendables Subs Equip Operating

Costs

Repairs Rent Total

Direct Costs

Jobsite

Indirect

Costs

End of Bid

Items

Total Bid

Typical Unit Price Bid 03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E R PAGE 7

04/23/08 04/27/08

----------------------------------------------------------------------------------------------------------------------------------- ITEM ITEM UNIT OF ESTIMATED

NO. CODE ITEM DESCRIPTION MEASURE QUANTITY BID AMOUNT -----------------------------------------------------------------------------------------------------------------------------------

1 074016 CONSTRUCTION SITE MANAGEMENT LS 1 10,000.00 10,000.00

2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 1,000.00 1,000.00

3 074032 TEMPORARY CONC WASHOUT FACILITY EA 1 1,500.00 1,500.00 4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 3,000.00 3,000.00

5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 150,000.00 150,000.00

6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS 1 20,000.00 20,000.00 7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 6.00 39,120.00

8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840 10.00 8,400.00 9 011868 REMOVE PRECAST CONC POST SUPPORT EA 2 2,500.00 5,000.00

10 (S) 153103 COLD PLANE ASPHALT CONC PAVEMENT SQYD 550 30.00 16,500.00

11 160101 CLEARING AND GRUBBING LS 1 10,000.00 10,000.00 12 190101 ROADWAY EXCAVATION CY 450 125.00 56,250.00

13 193006 STRUCTURE BACKFILL (SLURRY CEMENT) CY 45 250.00 1,250.00 14 260201 CLASS 2 AGGREGATE BASE CY 23 250.00 5,750.00

15 390132 HOT MIX ASPHALT (TYPE A) TON 550 100.00 55,000.00

16 394077 PLACE HOT MIX ASPHALT DIKE (TYPE F) LF 1,410 5.00 7,050.00 17 394090 PLACE HOT MIX ASPHALT (MISC AREA) SQYD 2,380 35.00 83,300.00

18 (F) 510502 MINOR CONCRETE (MINOR STRUCTURE) CY 4.9 10,000.00 49,000.00 19 011869 PRECAST CONC POST SUPPORT (8 FOOT) EA 24 1,500.00 36,000.00

20 011870 PRECAST CONC POST SUPPORT (6 FOOT) EA 32 1,500.00 48,000.00

21 (SF) 750001 MISCELLANEOUS IRON AND STEEL LB 916 5.00 4,580.00 22 820108 DELINEATOR (CLASS 2) EA 69 40.00 2,760.00

23 820151 OBJECT MARKER (TYPE L-1) EA 4 50.00 200.00 24 (S) 832002 METAL BEAM GUARD RAILING (STEEL) LF 6,690 27.50 183,975.00

25 832008 METAL BEAM GUARD RAILING (ELEMENT) LF 10 20.00 8,200.00

26 (S) 839541 TRANSITION RAILING (TYPE WB) EA 10 5,000.00 50,000.00 27 (S) 839552 TERMINAL SECTION (TYPE C) EA 5 150.00 750.00

28 (S) 839581 END ANCHOR ASSEMBLY (TYPE SFT) EA 5 1,000.00 5,000.00 29 (S) 839585 ALTERNATIVE FLARED TERMINAL SYSTEM EA 3 3,000.00 9,000.00

30 (S) 840656 PAINT TRAFFIC STRIPE (2-COAT) LF 350 6.00 2,100.00

31 999990 MOBILIZATION LS 1 98,000.00 98,000.00 TOTAL 980,685.00

Typical Lump Sum Bid

Typical Unit Price Bid

Major Difference: Distribution of Indirect Cost into Unit Prices

� In-directs are totaled � Each big item is calculated as a

percentage of the total direct costs � Using this percentage, we multiply the

total direct costs by each percentage � That number is than added to the base

direct cost to come up with a total. � It is divided by the quantity to generate a

unit price

How do we do this Distribution of In-

directs?

� First the In-directs and end of bid items are totaled.

� A total of direct costs is also established with a total

� A column of each bid item direct cost is made into a % of the total direct costs.

� This % is then multiplied by the total indirect cost

� This % of the indirect costs is than added to the direct costs

The Result is: Example of Bid Item

Item No. Description 390132 HOT MIX ASPHALT (TYPE A) Unit Quantity Unit Price Total TON 550 $ 100.00 $ 55,000.00

Specification are reviewed for the Item No., what is included in each

work items and how the item will be paid for.

The Pay Quantity vs. Bid Quantity

� Bid quantity - ◦ Defined as a quantity of individual units of work that represents the owner’s engineer’s estimate of the number of units of that type work included in the contract.

� Pay quantity - ◦ Defined as the quantity that is calculated when the work is completed and will be paid for by the owner

Work quantity

� Is also defined as the quantity of projected work at time of bid

� Is the calculated quantity by the

contractor when checking engineer’s quantity

� May or may not equal the engineer’s quantity

Relationship of the work quantity to the Bid Item

� It is generally thought by the engineer to be equal.

� This is not always true as many

contractors have found out – sometimes by surprise

Indirect Cost : Lump Sum vs. Unit Price

� When bidding a lump sum, the quantities are not given and certified by the owner. The contractor is responsible for quantity determination. The owner will pay the lump sum bid amount plus any changes.

� When bidding a unit price contract, the engineer is giving the contractor the quantities and will pay the contractor the in-place quantities. Provisions are made when quantities get substantially out of balance.

Indirect Costs from Commercial compared to Heavy

� Major Differences are: ◦ Mobilization costs and items are substantially different. Plant and equipment of large heavy projects.

◦ Temporary access / roads etc. can be very different

◦ Temporary power on a commercial project is much different.

◦ Surveying requirements can be much different from commercial to heavy construction.

Is there any Strategy to Distribution of Indirect Project Costs?

� To protect out of pocket expenses because of inaccurate bid quantities

� To favor work performed early in the

schedule to create positive cash flows on project

� Other strategies

Unbalancing the Bid

� What words should we be watchful in bidding documents? ◦ “grossly unbalanced”

◦ “substantially unbalanced”

What Happens if there are Inaccurate Bid Quantities?

� First on a Balanced Bid ◦ Most DOT specifications allow for change if

quantities are grossly inaccurate. If there is no provision, the contractor could have the wrong equipment, too much equipment etc.

� Next on an Unbalanced Bid ◦ Contractor plays the risk of being determined as

non responsive and bid being rejected. ◦ Owner could be paying a premium on the work.

What Happens if there are Inaccurate Bid Quantities on

a Balanced Bid?

�Most DOT specifications allow for change if quantities are grossly inaccurate. If there is no provision, the contractor could have the wrong equipment, too much equipment, etc.

What Happens if there are Inaccurate Bid Quantities on

a Unbalanced Bid?

�Contractor plays the risk of being determined as non responsive and bid being rejected.

�Owner could be paying a premium on the work.

Rejection Can be the Consequences of Unbalanced

Bid.

Owner will use the term:

Non-responsive

How can an Owner tell or why

would they even

question the

Contractor’s Unit Prices?

03-0E2004 BID245 03-SIE-49-2 S U M M A R Y O F R E M A I N I N G B I D D E R S PAGE 9 04/23/08 04/27/08 |------------------------------ |------------------------------- ITEM| SIXTH | SEVENTH | BID AMOUNT | BID AMOUNT |------------------------------ |------------------------------- 1 | 8,000.00 8000.00 | 650.00 650.00 2 | 1,500.00 1500.00 735.00 735.00 3 | 2,000.00 2000.00 | 2,300.00 2300.00 4 | 3,200.00 3200.00 | 1,540.00 1540.00 5 | 146,000.00 146000.00 | 112,777.24 112777.24 6 | 12,500.00 12500.00 | 4,800.00 4800.00 7 | 10.00 65200.00 | 6.80 44336.00 8 | 11.00 9240.00 | 21.00 17640.00 9 | 2,000.00 4000.00 | 480.00 960.00 10 | 18.00 9900.00 | 15.70 8635.00 11 | 10,000.00 10000.00 | 15,124.00 15124.00 12 | 65.00 29250.00 | 556.80 250560.00 13 | 340.00 15300.00 | 5,346.66 240599.70 14 | 240.00 5520.00 | 401.99 9245.77 15 | 130.00 71500.00 | 127.73 70251.50 16 | 4.50 6345.00 | 2.35 3313.50 17 | 35.00 83300.00 | 30.03 71471.40 18 | 4,800.00 23520.00 | 1,885.70 9239.93 19 | 2,200.00 52800.00 | 3,450.00 82800.00 20 | 2,000.00 64000.00 | 3,400.00 108800.00 21 | 5.00 4580.00 | 8.20 7511.20 22 | 50.00 3450.00 | 42.00 2898.00 23 | 50.00 200.00 | 41.80 167.20 24 | 30.00 200700.00 | 29.24 195615.60 25 | 35.00 14350.00 | 43.50 17835.00 26 | 6,600.00 66000.00 | 3,600.00 36000.00 27 | 120.00 600.00 | 98.00 490.00 28 | 1,250.00 6250.00 | 624.00 3120.00 29 | 3,000.00 9000.00 | 2,800.00 8400.00 30 | 11.00 3850.00 | 6.72 2352.00 31 | 100,000.00 100000.00 | 157,316.00 157316.00 TOT 1,032,055.00 1,487,484.04

Possible Example

Other Bid # 3 Other Bid # 5

Item Unit Unit

No. Price Total Price Total

8 11.00 9240.00 21.00 17640.00

8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840

Example of Unbalancing: Fixed Costs, In-directs, etc.

� Remember earlier we spread our indirects and end of bid items over our direct cost items.

� We did that based on each cost items value and gave each item a piece of the indirect costs based on that value. More costly items got more of the indirect cost.

� Instead of doing a percentage of each direct cost item, one could allocate any amount of the indirect costs to that bid items.

� We could even go so far as moving direct costs onto another direct cost in increase its total, keeping in mind that we would want to keep the total the same as a balance bid.

Flow chart of the Heavy Bid Process

Quantities are checked against the Engineers

End of bid item distributed to Bid items

Unit Price Estimates and The Bid Process

Select Project

Selection\Decision & Review Phase

Review the Plans Specs. & Contract

� Does work fit with-in the company business

plan? � Does the company have the bonding capacity to handle the work? � Probability of making a profit? � Is it the type of work the company and its individuals can succeed at? � Does my company have the right plant and equipment?

Subcontractor Determinations

Begin Takeoff for Self Work

Request for Material Quotes

Site Visit

Preparation for Pricing

Estimator determines the scope of work that will be subcontracted. This is a much smaller group of subcontractors.

Estimator begins takeoff of quantities of work this contractor will do with their own forces. They will review the specifications for what to include in both the pay quantities and work quantities.

Estimator determines the scope of materials and sends out for quotes. Heavy contractors often control their own materials. i.e. rock, asphalt, concrete

Estimator schedules a site visit (Mandatory vs. Voluntary).

Preparation for Pricing Continued:

Request for Sub bids

General Conditions and Indirect Job Cost Determination

Historical labor & Material Cost Records Reviewed

Job Plan & Preliminary Scheduling

Much more time it spent On the job plan and scheduling Because of the plant and Equipment requirements

Analysis and Pricing

Budgeting for Sub trades

Labor Pricing

Material Pricing

Plant and Equipment Pricing

Indirect Job Cost Pricing

Subcontract Bid Tab.

Cost Extensions & Finalizing the Estimate

End of Bid Items (Profit & Over- head)

Estimate Summary

Distribution of End of Bid Items To the Bid Items

Finalizing the Estimate

Adjustment to Bid or Proposal

Bid or Proposal Submission

Award of Project

Owner’s Final Review

Review & Log for Historical

Heavy Bid Process

� Can be very similar to commercial process when bidding a lump sum.

� But is very different when bidding a unit price type of contract

� Materials can play a major role in the bid process

� Plant and equipment are a big portion of the work

Heavy Bid Estimating

� The use of digitizers is used more that in commercial because of the speed of earthwork takeoff process.

� Also almost all heavy estimating is done with computers because of the need to distribute the indirect costs in unit price estimates.

Summary

� Heavy Civil can be either Lump Sum or Unit Price.

� The Heavy Civil world also does

negotiated work.

� More risk is associated with Heavy

Construction work vs. Commercial work. ◦ Equipment productivity

◦ Labor productivity

End of Today’s Session

Questions?