Insights into PROJECT ESTIMATING AND BIDDING

Prepared for

City of MilwaukeeEmerging Business Sustainability

ConferenceMay 21, 2010

Presented byMiron Construction Co., Inc. | JCP Construction

Larry PetronDirector, Estimating

Klaus LemkeVice President, Milwaukee Operations

James PhelpsJCP Construction

Agenda

• Introduction: Estimating and Bidding at Miron

• Finding and Evaluating Bid Opportunities

• Understanding Construction Costs

• Labor

• Materials and Equipment

• Subcontractor Bids

• General Conditions

• Fee and Mark-up

• Mentor Protégé Programs

• Contract Bidding for the Milwaukee Department of Public Works

• Current Challenges of New Business Bidding

• Establishing Bonding Capacity

• Questions and Answers

Miron Company Overview

• 92-Year heritageThird generationFamily-owned corporation

• Currently perform nearly $300 million in construction in Wisconsin alone

• Most competitive construction firm in Wisconsin

Corporate Headquarters1471 McMahon DriveNeenah, WI 54956Phone: (920) 969-7000Fax: (920) 969-7393

Madison Office8215 Greenway Blvd.Suite 100Middleton, WI 53562

Wausau Office500 First StreetSuite 4000Wausau, WI 54403

Iowa Office9440 Atlantic Drive SWSuite 3Cedar Rapids, IA 52404

www.miron-construction.com

Milwaukee Office10700 Research Dr.Suite 100Milwaukee, WI 53226

MARKETS SERVED

• Commercial / Retail

• Educational

• Environmental

• Governmental / Community

• Religious

• Health Care

• Industrial

VOLUME BY MARKET

7%

30%

11%26%

6%

20%

Commercial - Retail

Educational

Environmental

Gov't / Community / Re-ligious

Healthcare

Industrial

2009 Total $469,563,657

OFFICE LOCATIONS

Neenah, WI

Wausau, WI

Madison, WI

Milwaukee, WI

Cedar Rapids, IA

Pre-Construction Services

• Evaluation of building program and site

• Project planning, phasing and scheduling

• Material & systems reviews

• Detailed conceptual/schematic estimates

• Value engineer best methods and materials

• Architectural design constructability reviews

• Subcontractor bidding, analysis and award

• Bid package format/long lead orders

Insights into PROJECT ESTIMATING AND BIDDING

Projects to Bid

• Where to look:

• Local plan rooms

• Milwaukee Builders Exchange 414.778.4100

• Contractors Exchange of West Allis 414.453.1509

• Great Lakes Builders Exchange Sheboygan 920.458.3676

• Visit AGC of WI website for others www.agcwi.org

• Internet plan rooms

• Visit Government agency web sites

• Subscribe to industry publications

• Daily Reporter

• Western Builder

• Dodge Reports

• Local newspaper

• Networking opportunities

Evaluating Bid Opportunities

• Understand your capabilities

• Workforce

• Expertise

• Timing

• Financial capacity

• Evaluate your competition

• Who is your competition for this project

• Relationships with potential client / architect

• Competitive advantage

• Potential profitability

• Risk

• Profit margin

• Hit ratio

After Project Selection…

• Study and understand plans and specifications

• Track and understand all addenda

• Note special requirements (sustainability, LEED, hiring)

• Verify bonding capabilities with your insurance company

• Attend pre-bid meetings

• Clarify items and issues

• Ask questions

• Contact prime bidders (as subcontractor)

• Build relationships

• Verify bid deadlines

• Keep records of each bid for future reference

Elements of Construction Cost

• Cost of Labor

• Direct cost

• Fringes/benefits

• Prevailing wages (if applicable)

• Cost of Materials

• Verifying quantity

• Compliance with specifications

• Taxes (if applicable)

• Construction Equipment

• Equipment purchase/rental

• Maintenance

• Depreciation

• Operating costs (fuel, etc.)

• Subcontractors

• General Conditions

• Fees / Markup

Evaluating Sub-Bids

• Per plans and specifications

• Include all addenda

• Taxes (if applicable)

• Evaluate price

• Compare to other bids

• Check historical pricing

• Capabilities & Qualifications

• Verify compliance with project requirements

• Workforce

• Experience

• Past performance

• Current workload

General Conditions

• Permits

• Testing

• Temporary utilities

• Telephone

• Heat

• Power

• Toilets

• Utility connection fees

• Insurance

• Supervision

• Project Management

• Bonding

• Temporary Conditions

• Coverings

• Enclosures

• Walkways / parking

• Job trailer

• Office supplies

• Plan printing & postage

• Dumpsters

Fee and Markup

• Market conditions

• Overhead costs

• Profit

• Risk

• Past experience

Sample Spreadsheet

Mentor/Protégé Programs

• Purpose

• Smaller contractor participation in larger projects

• Gain project experience

• Learn from a larger general contractor

• Procedures

• Information flow

• Submittal process

• Pay application

• Participation

• Federal & local government

• City of Milwaukee EBE Program

Contract Bidding for the Milwaukee Department of Public Works

Ghassan Korban, P.E.

Coordination Manager

Preliminary Processes

• Identification and Design of Projects

• Each division within the department is responsible for identifying and designing specific public works projects to be submitted for bidding, with an average annual contracting amount of about $60 million

• Project Estimates

• A thorough breakdown of project costs based on historic bid prices

• General Specifications

• Governing provisions for all contracting activities with the Department of Public Works

• Plans

• Special Provisions

• Additional requirements governing the work of a particular project, which were not covered within the General Specifications: access, timing, and special conditions

• Additional Items

• Bidding advertisement in the Daily Reporter for 2 weeks (see also /www.mpw.net)

• Open bid

• Select lowest responsible bidder

• Award contract

Type of ProjectsInfrastructure

• Paving, streets, alleys, bridges

• Sewers and water mains

• Grading

Buildings / Facilities• Elevator upgrade

• Office furniture / partitions / walls

• Roof replacement

Water Works• Water purifications building

Operations• Lawn care or snow removal

• city owned facilities, vacant lots

Non Technical SpecificationsEmerging Business Enterprise (EBE)

• Enacted in 1987 under the title of Equal Opportunity Enterprise Program

• Assists young and small local businesses to thrive in a competitive market environment

• Program recognizes contractors which hire employees which have experienced educational, social, economic or other personal disadvantages

• The ordinance requires that 25% of dollars spent on city contracts be directed toward the utilization of EBE firms

Local Business Enterprise (LBE)

• Assists local firms who submit competitive bids for DPW contracts.

• Local contractors may be awarded a contract if their submitted bid does not exceed the lowest bid by more than 5 percent or $25,000, whichever is lower

Residents Preference Program (RPP)

• Established in 1991, has undergone some recent adjustments to its criteria.

• Encourages prospective contractors to employ city residents, a certain percentage of whom are unemployed or underemployed.

• It is required that 40% of the labor hours for a DPW contract be performed by unemployed or underemployed city residents

Prevailing Wage

• Requires that workers employed for public works contracts receive wages and fringe benefits not less than the wages and benefits which prevail for the same or similar work in the Milwaukee metropolitan area

Required Contract Bonds

Bid Bond

• A bond valued at 10% of a prospective contractor’s bid, submitted prior to bid approval

Payment Bond

• Ensures the completion of work in the event that a contractor is unable to finish a project

Performance Bond

• Ensures the payment of any subcontractors in the event that the prime contractor is unable to fulfill its contractual obligations

Bond Documents

Sample Bid Schedule – Low Bid Rejected

Current Challenges of New Business Bidding

• Establishing Relationships and Company Recognition

• Name Recognition

• The ability to have your phone calls taken or returned

• The ability to have solicited parties provide bids and budget numbers as requested.

•  Networking

• Meeting Individuals who Influence and Make Business Decisions

• Public and Private

• Following Through on What You are Contracted to do.

• Networking (continued)

• Local Chamber of Commerce

• AACC – African American Chamber of Commerce

• HCC- Hispanic Chamber of Commerce

• NAMC-WI National Association of Minority Contractors at Wisconsin Chapter 

• MMAC - Metropolitan Milwaukee Association of Commerce

• Volunteering and Sponsoring Events

Current Challenges of New Business Bidding

Current Challenges of New Business Bidding

• Networking (continued) 

• Trade Associations

• AGC -Associated General Contractors of Greater Milwaukee

• ABC - Associated Builders and Contractors - Wisconsin Chapter

• Other associations depending on what your business focus is

•  Read Local Business Publications for Leads

• Daily Reporter

• Business Journal

• Biz Times

• Milwaukee Journal-Sentinel

• Events, Breakfasts, Seminars

Establishing Bonding Capacity

• Find Insurance Agent that Specializes in Sureties (bonds)

•  SBA Surety Bond Guarantee Program

• Up to $6.5mm in sales for last 3 years on average

•  Typical Information requested to establish bonding capacity

• Providing Financials

• Profit Loss Statement / Balance Sheet

• Personal Financial Statement

• Using assets as collateral

• Business Plan

• Project Completion History if any

• Resume

Insights into PROJECT ESTIMATING AND BIDDING