Chapter 12 Estimate Summaries and Bids Bid Summaries

Chapter 12 Estimate Summaries and Bids

Bid Summaries • The format of the summary depends for what the estimate is to be used. – – Ordering materials Calculating the sales price of a home Providing a price breakdown for a purchaser Preparing a bid price • Examples of each are shown on the following slides.

Preparing a Bid Price • To prepare an accurate, error-free bid, the estimating process has to be carefully planned and organized. • The busiest period, and the period when the process is most error prone, is the last few hours before the final price is determined. • Every task that can possibly be accomplished before bid-closing day has to be out of the way so that these last few hours can be devoted to completing the bid.

Bid Closing – The Advance Stage • The following tasks should be completed at least two workdays before the day of the bid closing: – Complete takeoff, pricing, and the summary sheet, except for subtrades. – Calculate all required alternative prices relating to the builder's work. – Obtain bid bonds, and other documents required to accompany the bid. – Complete as much as possible of the bid forms. – Make duplicate copies of all bid documents for retention. – Prepare an envelope for delivery of bid documents. – Prepare a plan for the delivery of the bid. – Brief the office staff regarding their roles on bid-closing day. – Check all fax machines, computers, and telephones to ensure that they will be operational for closing day.

The Bid Form • The bid form should contain certain basic information: – The name and address of the project – The identity of the owner – The identity of the bidding builder – A description of the work to be done – A list of the bid drawings and specifications – The bid price – The duration or completion date of the project – The signatures of the bidders, all duly witnessed – The time, date, and place of the bid

Alternate Prices and Allowances • The builder may offer alternative prices that are quoted for proposed changes in the specifications. – For example, “If 26 oz. carpet is substituted for 32 oz. carpet, deduct $9, 000. 00 from our price. ” • The owner may require builders to include a sum of money (an allowance) in their bid to be expended on a specific work item. – For example, all bidders may be told to include $5, 000 in their bid for light fittings. – Later, the owner will instruct the contractor they hire to use the allowance to buy the fittings they then specify.

Owner’s Bid Conditions • Experienced developers often impose conditions to which bidders on their project are required to acknowledge and agree: – The bidder has examined all of the contract documents. – The bidder has inspected the site of the work. – The bidder agrees to provide all labor, materials, equipment, and any other requirements necessary to construct the complete project. – The bidder agrees to give the owner 30 days to consider the bid. – If the bidder, whose bid is accepted, fails to enter into a contract with the owner or fails to provide contract bonds, the bidder shall be liable to the owner.

The Builder’s Pre-bid Review • The estimator, the chief estimator, and possibly other managers conduct a pre-bid review two workdays before the bid is due to be submitted. • Topics discussed at the pre-bid review include: – The nature and scope of the project work – Construction methods proposed for the project – The proposed site supervisor – Labor resources required for the project – The equipment needs and availability – Prices used in the estimate – Project risks – The general expense requirements and prices – The response from subcontractors – The markup fee to be added to the estimate – Clarifications to be submitted with the bid

Bid Markup • Project markup (or fee) has two components: company overheads and profit margin • Company overheads include cost of: – Office premises including mortgage or rent costs – Office utilities – Office furnishings and equipment – Office maintenance and cleaning – Executive and office personnel salaries and benefits – Company travel and entertainment costs – Accounting and legal consultant's fees – Advertising – Business taxes and licenses – Interest and bank charges

Profit Margin • Profit margin: the amount of money remaining after all project expenses and company expenses have been paid • Two ways to assess profit: – A return on the investment • What markup is needed to achieve the required return on the amount invested in the company? – Compensation for the risk assumed • What level of markup is sufficient to compensate for this risk involved?

Bid Closing • After the bid has been reviewed, the amount of fee set, the last steps are finalizing the subtrade prices and completing the bid documents. • On a large project as many as 6 to 8 staff members may be required to complete the bid closing. • Where the bid is to be hand delivered, the bid runner needs to be briefed and sent off in good time. • A list of proposed subcontractors may have to be compiled and entered into the bid documents by the bid runner at the location of the bid closing. • A breakdown of the bid price (similar to a summary) may also be required.

After the Bid is Submitted • After the bid goes in, there are still questions to be addressed: – Was it low? – Was it high? – Was everything covered? – Were there any mistakes? • The group of people who attended the pre-bid review should meet again for the post-bid review to consider these and any other questions arising from the bid.