# 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

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### 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

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### 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

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### 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

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### Become thoroughly familiar with the bid documents. Why?

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### Because…….

Accurate quantity takeoff of material

Accurate quantity takeoff of labor

What equipment will be needed and when

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### 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

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### 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?

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### 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”

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### 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 unitprice 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.

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### 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

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### 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

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### 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.

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### 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:

1. Bonding capacity considerations

2. Location of project

3. Severity of contractual terms (contractor responsibilities and liabilities)

4. Owner and their financial status

5. Who is the architect/engineer

6. Nature and size of project as it relates to company experience and equipment

7. Labor conditions and supply

8. Completion date

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### The Bidding Period

Why is a reasonable bidding period important?

1. An accurate bid requires adequate time

2. Too little time to bid results in contractors either not bidding or bidding too high

3. Result of “rushed” or “quick” bids is NOT a lower price

CONTINGENCY \$\$\$\$\$\$\$ to their bid

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### 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)

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### 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

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### 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

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