CHAPTER 2 THE ESTIMATING PROCESS & PRELIMINARY PROCEDURES By Brian L. Swope, MTM, CCM Bowling Green State University College of Technology 1 OBJECTIVES Compile the goals and objectives of a contractor's estimating department Identify the sources of information about projects out for bid Distinguish open bidding from closed bidding Describe the process of prequalifying bidders and explain why it is done Describe contractors' marketing strategies and explain why these strategies are pursued 2 OBJECTIVES (CONT'D.) List and explain the factors considered when a contractor is deciding whether or not to submit a bid on a project Explain what is involved in the preliminary review of bid documents and the use of a query list Describe the purpose of the estimator's site visit and list the items that should be considered on a local project and on a remote project Identify the benefits of using computers and modern communication technology in the estimating process 3 1 THE BID ESTIMATING PROCESS Systematic approach w/ clearly defined objectives Profitable work Maximizing accuracy Maximizing productivity Effective estimating department utilization Company-wide cooperative approach that foster cooperation throughout the estimating & bidding 4 THE LOW OF AVERAGES The actual total cost of a project will be close to the total estimated cost of the different elements when they are reasonably estimated even though each individual element have been estimated a little low or a little high. 5 THE ESTIMATING PROCESS 2 THE ESTIMATING PROCESS Bid information Decision to bid Review tender documents Site investigations Price general Expenses Take-off Quantities Price own work Notify subcontractors Price subcontract work Management review Summarize , prepare, & submit bid Complete bid report 7 SOURCES OF PUBLIC BID INFORMATION Advertisements and web pages Government notices Construction associations News services (Dodge Reports, etc.) Bid information services Advertisement in papers & journals 8 SOURCES OF PRIVATE BID INFORMATION Invitation from Owners & designers Business contact & business news items Architectural and engineering consultants Construction news services Construction associations plan service centers Bid information services 9 3 TYPES OF BIDS Open Bidding Allows all qualified contractors to bid and be considered for award of work Involves publicly advertised bid calls U.S. government agencies use a \"Pre- Solicitation Notice (Construction Contract)\" Closed bidding Direct bid invitation Avoids having a large number of bids Prequalified bids Bids from prequalified contractors only EFFORTS TO COLLECT INFO Marketing Ensures company is on bid list Information gathering system Business contracts Constant monitoring Often pursued by contractors offering construction management services Construction news services Offer bid reporting services Convey project status 11 OBTAINING BID DOCUMENTS Two complete sets of bid documents are usually requested Estimate documents Subcontractor takeoff and estimate preparation Designers usually require deposits for bid documents Reimbursed upon return 4 DECISION TO BID Type of project Size and estimate of contract value Location Access Availability of subs & suppliers Quality of the Drawing & Specifications Reputation of the owner & A/E Specialized work Anticipated construction problems Safety considerations 13 DECISION TO BID (CONTINUE) Competition and the need for work Finance & bonding capacity Conditions of the contract Completion time Personnel Supervision and supporting staff Labor (union vs. non union, training, licensing, etc.) Cost of bidding Other projects being bid Equipment (owned or rented) 14 REVIEW OF BID DOCUMENTS Review specifications and drawings Obtain information for completion Highlight needed data & anything unusual Check for easily missed items Number may be enormous Some selection is unavoidable Select the estimating team members Scope of the general contractor's work Scope of the subcontractors' work Plan the take-off procedures Identify possible problems 15 5 LIST OF QUERIES Compiled list of all questions Single call is made to cover all items Often clarified in documents Designers May encourage questions, but avoid continuous phone calls Fax and e-mail communications Addenda or bid bulletin may result from queries 16 THE TEAM APPROACH Estimator Usually works alone on quantity takeoffs and cost estimates Quality is improved with input Should be encouraged to seek assistance Estimate review Brings team together to review work IT IS IMPORTANT THAT THE ESTIMATOR SEEKS AND GETS THE INPUT OF THE SUPERINTENDENT, PROJECT MANAGER, AND SENIOR MANAGEMENT INITIAL STUDIES FOR THE ESTIMATE Selection of the construction method Site investigation Investigation team Estimator, superintendent , design engineer, finance & legal personnel, etc. Site visit preparation & conduction (next slides) Development of construction plan & schedule 18 6 SITE VISIT PREPARATION Preliminary construction plan Scope of local subcontractor's work Local labor, material, & equipment Local suppliers & services Identification of local legal & financial requirements Questions to the owner & engineer Research local political entities 19 SITE VISIT PREPARATION Maps & charts Climatological data Tax laws Labor regulations Available transportation & cost General geophysical information 20 SOURCES OF INFORMATION CPA firms Attorneys Banks Contractors Surety bond producers Material suppliers AGC chapters Equipment dealers State & federal government agencies Engineering firms Insurance companies 21 7 SITE VISIT Access Electrical service Garbage disposal Adjacent structures Water supply Toilets Telephone Site history Obstructions Contamination Parking & storage Labor housing Soil data Security Local subs Ground water table Soil disposal Others Site conditions 22 COMPUTER & OTHER TECHNOLOGY IN ESTIMATING SYSTEMS Computers Indispensable tool Perform many operations Not foolproof Requires understanding of basic estimating concepts Can be gained by working through them manually Other Technology Fax machines Cellular telephones E-mail & Internet Computer-assisted design SUMMARY Use systematic approach to estimating Required due to number of people and amount of data Bid calls Many sources of information Several factors to consider Encourage team approach Utilize site visits and latest technology 8