Construction Engineering 221

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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

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### 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 contractor’s indirect labor costs.

A = True B = False

Construction Engineering 221

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

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

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

Important Estimating Principle

Become thoroughly familiar with the bid documents. Why?

Construction Engineering 221

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

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

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

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

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

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

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

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

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

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

Preparing a Bid
• Preliminary Considerations
• Become familiar with
• Instruction to bidders
• Proposal form
• Alternates
• General and supplementary/special conditions
• Form of the contract
• Prebid meeting (in-house)
• Prebid meeting (with owner)

Construction Engineering 221

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

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