Construction Engineering 221

1. Construction Engineering 221 Cost Estimating and Bidding

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 Construction Engineering 221

3. 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 Engineering 221

4. 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 Engineering 221

5. 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 Construction Engineering 221

6. Important Estimating Principle Become thoroughly familiar with the bid documents. Why? Construction Engineering 221

7. Because……. • Accurate quantity takeoff of material • Accurate quantity takeoff of labor • Determine general and project overhead • What equipment will be needed and when Construction Engineering 221

8. 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 Engineering 221

9. 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 Engineering 221

10. 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 Engineering 221

11. 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. Construction Engineering 221

12. 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 Engineering 221

13. 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 Engineering 221

14. 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 Engineering 221

15. 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: • 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 Engineering 221

16. The Bidding Period • Why is a reasonable bidding period 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 Engineering 221

17. 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 Engineering 221

18. 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 Construction Engineering 221

19. 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