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Estimating for Heavy Construction and Unit Price Bids
Hal Johnston
Faculty of Civil Engineering Department of Economics and Management CZECH TECHNICAL UNIVERSITY IN PRAGUE
Short Bio � Hal Johnston
◦ Professor (20 years)
� Construction Management Department � California State Polytechnic University (Cal Poly)
� San Luis Obispo, California, USA
◦ Professional Construction Experience (17 years) � Bechtel – EPC/CM � Morrison Knudson – Design Build/General/CM
� The Austin Company – Design Build � R.E. Bayley Construction – General Contractor
� Mason/Johnston General Contractors – General
◦ Education � B.S. in Building Theory and Practice – Washington State University
� Masters in Building Construction – University of Florida
◦ Other
� 2 books, many scholarly papers, given many professional seminars � Latest seminar for the ASCE – Atlanta (2 days)– Fundamentals of
Construction Estimating And ASCE – Panama (Panama Canal Authority – 10 days) Const. Estimating
Learning Outcomes for (Estimating for Heavy Construction and Unit Price Bids)
� The attendee will be able to: ◦ Discuss how heavy construction estimating is different from commercial estimating
◦ Describe a unit price bid ◦ Decide when and where the different types of estimates are used
◦ Illustrate the different parts of the unit price estimate and describe them
◦ Explain how the different types of cost play a role in heavy construction estimating
Session Outline
� Construction organizations (review) � Construction contracts (review) � Contract documents
◦ Standard specifications ◦ Standard specifications for DOTs
� Unit prices ◦ Unit bid items ◦ WSDOT Unit bid items ◦ Short in-class exercise
� Quality control / acceptance � Price adjustments
History of Project Delivery in US
� Legal Separation of Design and Construction ◦ The Miller Act (1935)
◦ Public contracting laws mandating separation of design from construction & contractor selection solely on cost
◦ Professional licensing requirements
Project Delivery Defined
A comprehensive process including planning, design, construction and other services, necessary for organizing, executing and completing a construction project.
� Three fundamental owner decisions
◦ Type of project delivery system ◦ Type of procurement method ◦ Type of contract format
Project Delivery Process Framework
Project Feasibility
Project Performance Criteria
Facility Owner’s Profile
Critical Owner Decisions
NOTE: Chart shows logic flow, not timing or sequence of steps, which vary depending on methods used.
Programming & Scope Definition
Project Delivery System
Selection
Procurement Method Selection
Team Selection
Contract Format Selection
Design & Construction
Operation & Maintenance
Project Financing
Confirm Project Scope and Program
Project Delivery
� Always 3 or 4 major parties involved in the project delivery process ◦ Owner (public or private) ◦ Designer (Engineer or Architect) ◦ Contractor ◦ Construction Management Firm (can also be one of these parties)
The Method Selected will:
� Determines the contractual relationships among the parties.
� Establishes when the parties become
engaged.
� Influences impact of changes and
modifications on project cost.
Project Delivery Types
� Design-bid-build (Lump Sum or Unit Price)
� Multi-prime (often under CM)
� Construction management-at-risk
� Construction Management agency
� Design-build (DB, EPC, etc.)
Procurement is the methodology used to buy
design and construction services.
Procurement Defined
Construction Contracts
� Method of award ◦ Competitively Bid
contracts � With designer doing
Project Supervision � With CM – agency � CM at Risk � Design Build
◦ Negotiated contracts � GMP � Design Build � Negotiated Lump
sum � CM at Risk
� Method of pricing ◦ Fixed-price
� Lump sum contract � Unit price contract
◦ Cost-plus � Cost plus percentage
of cost � Cost plus fixed fee � Cost plus fixed fee
with a targeted maximum cost
� Cost plus incentive fee
◦ Guaranteed Max Price
� GMP plus percentage of cost
� GMP plus fixed fee � GMP plus a fixed fee
plus share of savings - incentive
Procurement Options
� Sole Source/Direct Selection
� Negotiated procurement
� Competitive ◦ QBS – Qualification Based Selection
◦ BVS - Best Value Selection
◦ Low Bid
Market Penetration of Major Project Delivery Systems
Design-Bid-Build Contractual Relationship
Characteristics � Three linear phases: Design, bid and build
� Three prime players: Owner, designer, constructor
� Two separate contracts:
� Owner to designer
� Owner to constructor
Responsibilities
Owner
Designer
Constructor
Program, finance, management
Prepares plans & specs, normal services
Prime and sub construction
Owner
Designer Contractor
Subcontractors
Sub Consultants
Design-Bid-Build Advantages
◦ Established way of doing things ◦ Suitable for competitive bidding ◦ A/E directly works for owner ◦ Extensive litigation has resulted in well established legal precedents
◦ No legal barriers in procurement and licensing ◦ Insurance and bonding are well defined
Design-Bid-Build Disadvantages
◦ Two contracts for owner to manage � Disagreements go through owner � Owner bears design adequacy risk
◦ All parties have different agendas/objectives ◦ Initial low bid might not result in final best value
◦ Bids over budget presents most difficulties in reducing costs / creates significant delay
◦ No constructor involvement in design ◦ Slowest project delivery ◦ Most litigious delivery process
Design-Bid-Build Unique attributes and challenges
� Utilization helps to avoid potential conflicts of interest
� Provides a check and balance between design and construction functions
� Owners less familiar with the design and construction process may benefit from Design-Bid-Build because it is so well understood throughout the building industry.
Primary Reasons for Choosing Design-Bid-Build
� Low first cost is the priority
� Project is simple
� Procurement laws restrict use of anything
else
� Owner wants to control design
� No need for value engineering or innovation
Influence vs. Cost Project delivery selection influences when contractor gets on board.
Contractor on-board early allows best opportunity to achieve objectives
MAJOR
INFLUENCE
RAPIDLY
DECREASING
INFLUENCE
LOW
INFLUENCE
High
Small
Large
Low
INFLUENCE
COST
Planning & Design Construction & Operations
Risk in Heavy Construction
� Equipment productivity � Labor productivity � How material may react differently in
different circumstances � Locations � Lower number of subcontractors on job,
higher risk to the General � Fuel costs � Soil Conditions (acting different than
expected)
How does Risk change the Estimate?
� Higher profits ◦ Commercial Profits – 1% to 5%
◦ Heavy Profits – 8% to 15%
� Less return on investments ◦ Large cost of equipment
� Contingencies for potential
escalation costs
Standard Specifications for DOT (Department of Transporation) Typically do not use MasterFormat 2004 � Generally use 9 Divisions
◦ General Requirements ◦ Earthwork ◦ Production from Quarry and Pit Sites and
Stockpiling ◦ Bases ◦ Surface Treatments and Pavements ◦ Structures ◦ Drainage Structures, Storm Sewers, Water
Mains, and Conduits ◦ Miscellaneous Construction ◦ Materials
Standard Specifications for most Commercial / Building Projects
� Typically used today is the MasterFormat 1995 edition, but a new edition has been published (2004)
� MASTERFORMAT 1995 EDITION Before November 2004, MasterFormat was composed of 16 primary divisions:
Division 1 — General Requirements
Division 2 — Site Construction
Division 3 — Concrete Division 4 — Masonry
Division 5 — Metals Division 6 — Wood and Plastics
Division 7 — Thermal and Moisture Protection
Division 8 — Doors and Windows Division 9 — Finishes
Division 10 — Specialties Division 11 — Equipment
Division 12 — Furnishings
Division 13 — Special Construction Division 14 — Conveying Systems
Division 15 — Mechanical Division 16 — Electrical
Standard Specifications for most Commercial / Building Projects � MASTERFORMAT 2004 EDITION After November 2004, MasterFormat was composed of 49
primary divisions: � The current MasterFormat Divisions are: Division 1 - 49
Divisions
MasterFormat 1995 MasterFormat 2004 Procurement and
Contracting Requirements Group Introductory Information 00 Procurement and Bidding Requirements Contracting Requirements
Contracting Requirements
Specifications Group General Requirements Subgroup
1 General Requirements 01 General Requirements
MasterFormat 1995 MasterFormat 2004
Facility Construction Subgroup
2 Site Construction 02 Existing Conditions
3 Concrete 03 Concrete
4 Masonry 04 Masonry
5 Metals 05 Metals
6 Wood and Plastics 06 Wood, Plastics, and Composites
7 Thermal and Moisture Protection
07 Thermal and Moisture Protection
8 Doors and Windows 08 Openings
Divisions
MasterFormat 1995 MasterFormat 2004
Facility Construction Subgroup (continued)
9 Finishes 09 Finishes
10 Specialties 10 Specialties
11 Equipment 11 Equipment
12 Furnishings 12 Furnishings
13 Special Construction 13 Special Construction
14 Conveying Systems 14 Conveying Equipment
15 – 19 Reserved
Divisions
MasterFormat 1995 MasterFormat 2004
Facility Services Subgroup
20 Reserved
13 Special Construction 21 Fire Suppression
15 Mechanical 22 Plumbing
15 Mechanical 23 Heating, Ventilating, and Air Conditioning
24 Reserved
Divisions
MasterFormat 1995 MasterFormat 2004
Facility Services Subgroup (continued)
13 Special Construction 25 Integrated Automation
16 Electrical 26 Electrical
13 Special Construction 27 Communications
13 Special Construction 28 Electronic Safety and Security
29 Reserved
Divisions
MasterFormat 1995 MasterFormat 2004
Site and Infrastructure Subgroup
30 Reserved
2 Site Construction 31 Earthwork
2 Site Construction 32 Exterior Improvements
2 Site Construction 33 Utilities
2 Site Construction 34 Transportation
2 Site Construction 35 Waterway and Marine
36-39 Reserved
Divisions
Division 31 - EARTHWORK
MasterFormat 2004 � 31 00 00 EARTHWORK
� 31 10 00 SITE CLEARING � 31 20 00 EARTH MOVING
� 31 30 00 EARTHWORK METHODS � 31 40 00 SHORING AND UNDERPINNING
� 31 50 00 EXCAVATION SUPPORT AND PROTECTION � 31 60 00 SPECIAL FOUNDATIONS AND LOAD-BEARING
ELEMENTS � 31 70 00 TUNNELING AND MINING � 31 80 00 Reserved
� 31 90 00 Reserved
MasterFormat 1995 MasterFormat 2004
Process Equipment Subgroup
11 Equipment 40 Process Integration
11 Equipment 41 Material Processing and Handling Equipment
11 Equipment 42 Process Heating, Cooling and Drying Equipment
11 Equipment 43 Process Gas and Liquid Handling, Purification and Storage
Equipment
Divisions
MasterFormat 1995 MasterFormat 2004
Process Equipment Subgroup (continued)
11 Equipment 44 Pollution Control Equipment
11 Equipment 45 Industry-Specific Manufacturing Equipment
46-47 Reserved
16 Electrical / 13 Special Construction
48 Electrical Power Generation
49 Reserved
Divisions
Unit Prices
� Standard Units ◦ Defined in Standard Specifications
Unit Bid Items / Bid 03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E R PAGE 7 04/23/08 04/27/08 ----------------------------------------------------------------------------------------------------------------------------------- ITEM ITEM UNIT OF ESTIMATED NO. CODE ITEM DESCRIPTION MEASURE QUANTITY BID AMOUNT ----------------------------------------------------------------------------------------------------------------------------------- 1 074016 CONSTRUCTION SITE MANAGEMENT LS 1 10,000.00 10,000.00 2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 1,000.00 1,000.00 3 074032 TEMPORARY CONC WASHOUT FACILITY EA 1 1,500.00 1,500.00 4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 3,000.00 3,000.00 5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 150,000.00 150,000.00 6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS 1 20,000.00 20,000.00 7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 6.00 39,120.00 8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840 10.00 8,400.00 9 011868 REMOVE PRECAST CONC POST SUPPORT EA 2 2,500.00 5,000.00 10 (S) 153103 COLD PLANE ASPHALT CONC PAVEMENT SQYD 550 30.00 16,500.00 11 160101 CLEARING AND GRUBBING LS 1 10,000.00 10,000.00 12 190101 ROADWAY EXCAVATION CY 450 125.00 56,250.00 13 193006 STRUCTURE BACKFILL (SLURRY CEMENT) CY 45 250.00 1,250.00 14 260201 CLASS 2 AGGREGATE BASE CY 23 250.00 5,750.00 15 390132 HOT MIX ASPHALT (TYPE A) TON 550 100.00 55,000.00 16 394077 PLACE HOT MIX ASPHALT DIKE (TYPE F) LF 1,410 5.00 7,050.00 17 394090 PLACE HOT MIX ASPHALT (MISC AREA) SQYD 2,380 35.00
03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E
R PAGE 7
04/23/08 04/27/08 --------------------------------------------------------------------------------------------
---------------- ITEM NO. ITEM
UNIT OF
CODE DESCRIPTION MEASURE
------------------------------------------------------------------------------------------------------------
ESTIMATED UNIT
BID QUANTITY PRICE
AMOUNT --------------------------------------------------------------------------------------------
----------------
2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 $
1,000.00 $ 1,000.00 _______________________________________________________
_____
4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 $ 3,000.00
$ 3,000.00 _______________________________________________________
______
5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 $ 150,000.00
$ 150,000.00 _____________________________________________________________
7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 $ 6.00
LS 1 $ 98,000.00 $ 98,000.00 TOTAL $ 980,685.00
UNIT OF ESTIMATED UNIT BID MEASURE QUANTITY PRICE AMOUNT ------------------------------------------------------------------------------
Heavy Estimates take on two styles:
� Detail Estimates for Lump Sum Contracts and Subcontracts
� Unit Price Estimates for DOT and
other Unit Price Contracts
Remember that Heavy/Civil Contractors may act as
Subcontractors on many projects
A Heavy Civil Detail Estimate looks much like a Detail Estimate for a Commercial Project
� Major Differences ◦ Larger labor component
◦ Larger equipment component
◦ Very few Subcontractors
◦ More self performed work
◦ Not as many activities or work items
◦ Work items are often quantified by the agency for Unit Price Estimates
Structure of a Lump Sum Estimate and Bid
� Summary Sheet Headings ◦ Description ◦ Labor ◦ Material (often called Permanent Materials) ◦ Consumables / Expendables (often called Expendable Materials)
◦ Subcontractors ◦ Equipment Operating Costs or Expense ◦ Repair Costs (Labor item) ◦ Rental Costs or Company Equipment Costs ◦ Total
Typical Lump Sum Bid
Description Labor Materials Expendables Subs Equip Operating
Costs
Repairs Rent Total
Direct Costs
Jobsite
Indirect
Costs
End of Bid
Items
Total Bid
Typical Unit Price Bid 03-0E2004 BID245 03-SIE-49-2 C O N T R A C T P R O P O S A L O F L O W B I D D E R PAGE 7
04/23/08 04/27/08
----------------------------------------------------------------------------------------------------------------------------------- ITEM ITEM UNIT OF ESTIMATED
NO. CODE ITEM DESCRIPTION MEASURE QUANTITY BID AMOUNT -----------------------------------------------------------------------------------------------------------------------------------
1 074016 CONSTRUCTION SITE MANAGEMENT LS 1 10,000.00 10,000.00
2 (S) 074017 WATER POLLUTION CONTROL PROGRAM LS 1 1,000.00 1,000.00
3 074032 TEMPORARY CONC WASHOUT FACILITY EA 1 1,500.00 1,500.00 4 (S) 120090 CONSTRUCTION AREA SIGNS LS 1 3,000.00 3,000.00
5 (S) 120100 TRAFFIC CONTROL SYSTEM LS 1 150,000.00 150,000.00
6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS 1 20,000.00 20,000.00 7 1 50662 REMOVE METAL BEAM GUARD RAILING LF 6,520 6.00 39,120.00
8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840 10.00 8,400.00 9 011868 REMOVE PRECAST CONC POST SUPPORT EA 2 2,500.00 5,000.00
10 (S) 153103 COLD PLANE ASPHALT CONC PAVEMENT SQYD 550 30.00 16,500.00
11 160101 CLEARING AND GRUBBING LS 1 10,000.00 10,000.00 12 190101 ROADWAY EXCAVATION CY 450 125.00 56,250.00
13 193006 STRUCTURE BACKFILL (SLURRY CEMENT) CY 45 250.00 1,250.00 14 260201 CLASS 2 AGGREGATE BASE CY 23 250.00 5,750.00
15 390132 HOT MIX ASPHALT (TYPE A) TON 550 100.00 55,000.00
16 394077 PLACE HOT MIX ASPHALT DIKE (TYPE F) LF 1,410 5.00 7,050.00 17 394090 PLACE HOT MIX ASPHALT (MISC AREA) SQYD 2,380 35.00 83,300.00
18 (F) 510502 MINOR CONCRETE (MINOR STRUCTURE) CY 4.9 10,000.00 49,000.00 19 011869 PRECAST CONC POST SUPPORT (8 FOOT) EA 24 1,500.00 36,000.00
20 011870 PRECAST CONC POST SUPPORT (6 FOOT) EA 32 1,500.00 48,000.00
21 (SF) 750001 MISCELLANEOUS IRON AND STEEL LB 916 5.00 4,580.00 22 820108 DELINEATOR (CLASS 2) EA 69 40.00 2,760.00
23 820151 OBJECT MARKER (TYPE L-1) EA 4 50.00 200.00 24 (S) 832002 METAL BEAM GUARD RAILING (STEEL) LF 6,690 27.50 183,975.00
25 832008 METAL BEAM GUARD RAILING (ELEMENT) LF 10 20.00 8,200.00
26 (S) 839541 TRANSITION RAILING (TYPE WB) EA 10 5,000.00 50,000.00 27 (S) 839552 TERMINAL SECTION (TYPE C) EA 5 150.00 750.00
28 (S) 839581 END ANCHOR ASSEMBLY (TYPE SFT) EA 5 1,000.00 5,000.00 29 (S) 839585 ALTERNATIVE FLARED TERMINAL SYSTEM EA 3 3,000.00 9,000.00
30 (S) 840656 PAINT TRAFFIC STRIPE (2-COAT) LF 350 6.00 2,100.00
31 999990 MOBILIZATION LS 1 98,000.00 98,000.00 TOTAL 980,685.00
Typical Lump Sum Bid
Typical Unit Price Bid
Major Difference: Distribution of Indirect Cost into Unit Prices
� In-directs are totaled � Each big item is calculated as a
percentage of the total direct costs � Using this percentage, we multiply the
total direct costs by each percentage � That number is than added to the base
direct cost to come up with a total. � It is divided by the quantity to generate a
unit price
How do we do this Distribution of In-
directs?
� First the In-directs and end of bid items are totaled.
� A total of direct costs is also established with a total
� A column of each bid item direct cost is made into a % of the total direct costs.
� This % is then multiplied by the total indirect cost
� This % of the indirect costs is than added to the direct costs
The Result is: Example of Bid Item
Item No. Description 390132 HOT MIX ASPHALT (TYPE A) Unit Quantity Unit Price Total TON 550 $ 100.00 $ 55,000.00
Specification are reviewed for the Item No., what is included in each
work items and how the item will be paid for.
The Pay Quantity vs. Bid Quantity
� Bid quantity - ◦ Defined as a quantity of individual units of work that represents the owner’s engineer’s estimate of the number of units of that type work included in the contract.
� Pay quantity - ◦ Defined as the quantity that is calculated when the work is completed and will be paid for by the owner
Work quantity
� Is also defined as the quantity of projected work at time of bid
� Is the calculated quantity by the
contractor when checking engineer’s quantity
� May or may not equal the engineer’s quantity
Relationship of the work quantity to the Bid Item
� It is generally thought by the engineer to be equal.
� This is not always true as many
contractors have found out – sometimes by surprise
Indirect Cost : Lump Sum vs. Unit Price
� When bidding a lump sum, the quantities are not given and certified by the owner. The contractor is responsible for quantity determination. The owner will pay the lump sum bid amount plus any changes.
� When bidding a unit price contract, the engineer is giving the contractor the quantities and will pay the contractor the in-place quantities. Provisions are made when quantities get substantially out of balance.
Indirect Costs from Commercial compared to Heavy
� Major Differences are: ◦ Mobilization costs and items are substantially different. Plant and equipment of large heavy projects.
◦ Temporary access / roads etc. can be very different
◦ Temporary power on a commercial project is much different.
◦ Surveying requirements can be much different from commercial to heavy construction.
Is there any Strategy to Distribution of Indirect Project Costs?
� To protect out of pocket expenses because of inaccurate bid quantities
� To favor work performed early in the
schedule to create positive cash flows on project
� Other strategies
Unbalancing the Bid
� What words should we be watchful in bidding documents? ◦ “grossly unbalanced”
◦ “substantially unbalanced”
What Happens if there are Inaccurate Bid Quantities?
� First on a Balanced Bid ◦ Most DOT specifications allow for change if
quantities are grossly inaccurate. If there is no provision, the contractor could have the wrong equipment, too much equipment etc.
� Next on an Unbalanced Bid ◦ Contractor plays the risk of being determined as
non responsive and bid being rejected. ◦ Owner could be paying a premium on the work.
What Happens if there are Inaccurate Bid Quantities on
a Balanced Bid?
�Most DOT specifications allow for change if quantities are grossly inaccurate. If there is no provision, the contractor could have the wrong equipment, too much equipment, etc.
What Happens if there are Inaccurate Bid Quantities on
a Unbalanced Bid?
�Contractor plays the risk of being determined as non responsive and bid being rejected.
�Owner could be paying a premium on the work.
Rejection Can be the Consequences of Unbalanced
Bid.
Owner will use the term:
Non-responsive
How can an Owner tell or why
would they even
question the
Contractor’s Unit Prices?
03-0E2004 BID245 03-SIE-49-2 S U M M A R Y O F R E M A I N I N G B I D D E R S PAGE 9 04/23/08 04/27/08 |------------------------------ |------------------------------- ITEM| SIXTH | SEVENTH | BID AMOUNT | BID AMOUNT |------------------------------ |------------------------------- 1 | 8,000.00 8000.00 | 650.00 650.00 2 | 1,500.00 1500.00 735.00 735.00 3 | 2,000.00 2000.00 | 2,300.00 2300.00 4 | 3,200.00 3200.00 | 1,540.00 1540.00 5 | 146,000.00 146000.00 | 112,777.24 112777.24 6 | 12,500.00 12500.00 | 4,800.00 4800.00 7 | 10.00 65200.00 | 6.80 44336.00 8 | 11.00 9240.00 | 21.00 17640.00 9 | 2,000.00 4000.00 | 480.00 960.00 10 | 18.00 9900.00 | 15.70 8635.00 11 | 10,000.00 10000.00 | 15,124.00 15124.00 12 | 65.00 29250.00 | 556.80 250560.00 13 | 340.00 15300.00 | 5,346.66 240599.70 14 | 240.00 5520.00 | 401.99 9245.77 15 | 130.00 71500.00 | 127.73 70251.50 16 | 4.50 6345.00 | 2.35 3313.50 17 | 35.00 83300.00 | 30.03 71471.40 18 | 4,800.00 23520.00 | 1,885.70 9239.93 19 | 2,200.00 52800.00 | 3,450.00 82800.00 20 | 2,000.00 64000.00 | 3,400.00 108800.00 21 | 5.00 4580.00 | 8.20 7511.20 22 | 50.00 3450.00 | 42.00 2898.00 23 | 50.00 200.00 | 41.80 167.20 24 | 30.00 200700.00 | 29.24 195615.60 25 | 35.00 14350.00 | 43.50 17835.00 26 | 6,600.00 66000.00 | 3,600.00 36000.00 27 | 120.00 600.00 | 98.00 490.00 28 | 1,250.00 6250.00 | 624.00 3120.00 29 | 3,000.00 9000.00 | 2,800.00 8400.00 30 | 11.00 3850.00 | 6.72 2352.00 31 | 100,000.00 100000.00 | 157,316.00 157316.00 TOT 1,032,055.00 1,487,484.04
Possible Example
Other Bid # 3 Other Bid # 5
Item Unit Unit
No. Price Total Price Total
8 11.00 9240.00 21.00 17640.00
8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840
Example of Unbalancing: Fixed Costs, In-directs, etc.
� Remember earlier we spread our indirects and end of bid items over our direct cost items.
� We did that based on each cost items value and gave each item a piece of the indirect costs based on that value. More costly items got more of the indirect cost.
� Instead of doing a percentage of each direct cost item, one could allocate any amount of the indirect costs to that bid items.
� We could even go so far as moving direct costs onto another direct cost in increase its total, keeping in mind that we would want to keep the total the same as a balance bid.
Flow chart of the Heavy Bid Process
Quantities are checked against the Engineers
End of bid item distributed to Bid items
Unit Price Estimates and The Bid Process
Select Project
Selection\Decision & Review Phase
Review the Plans Specs. & Contract
� Does work fit with-in the company business
plan? � Does the company have the bonding capacity to handle the work? � Probability of making a profit? � Is it the type of work the company and its individuals can succeed at? � Does my company have the right plant and equipment?
Subcontractor Determinations
Begin Takeoff for Self Work
Request for Material Quotes
Site Visit
Preparation for Pricing
Estimator determines the scope of work that will be subcontracted. This is a much smaller group of subcontractors.
Estimator begins takeoff of quantities of work this contractor will do with their own forces. They will review the specifications for what to include in both the pay quantities and work quantities.
Estimator determines the scope of materials and sends out for quotes. Heavy contractors often control their own materials. i.e. rock, asphalt, concrete
Estimator schedules a site visit (Mandatory vs. Voluntary).
Preparation for Pricing Continued:
Request for Sub bids
General Conditions and Indirect Job Cost Determination
Historical labor & Material Cost Records Reviewed
Job Plan & Preliminary Scheduling
Much more time it spent On the job plan and scheduling Because of the plant and Equipment requirements
Analysis and Pricing
Budgeting for Sub trades
Labor Pricing
Material Pricing
Plant and Equipment Pricing
Indirect Job Cost Pricing
Subcontract Bid Tab.
Cost Extensions & Finalizing the Estimate
End of Bid Items (Profit & Over- head)
Estimate Summary
Distribution of End of Bid Items To the Bid Items
Finalizing the Estimate
Adjustment to Bid or Proposal
Bid or Proposal Submission
Award of Project
Owner’s Final Review
Review & Log for Historical
Heavy Bid Process
� Can be very similar to commercial process when bidding a lump sum.
� But is very different when bidding a unit price type of contract
� Materials can play a major role in the bid process
� Plant and equipment are a big portion of the work
Heavy Bid Estimating
� The use of digitizers is used more that in commercial because of the speed of earthwork takeoff process.
� Also almost all heavy estimating is done with computers because of the need to distribute the indirect costs in unit price estimates.
Summary
� Heavy Civil can be either Lump Sum or Unit Price.
� The Heavy Civil world also does
negotiated work.
� More risk is associated with Heavy
Construction work vs. Commercial work. ◦ Equipment productivity
◦ Labor productivity
End of Today’s Session
Questions?
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