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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

Construction Engineering 221

Cost Estimating and Bidding

slide2
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
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
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
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
Important Estimating Principle

Become thoroughly familiar with the bid documents. Why?

Construction Engineering 221

because
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
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
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
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
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
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
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
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
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
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
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

preparing a bid cont
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
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