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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.

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Presentation on theme: "Estimating for Heavy Construction and Unit Price Bids Hal Johnston Faculty of Civil Engineering Department of Economics and Management CZECH TECHNICAL."— Presentation transcript:

1 Estimating for Heavy Construction and Unit Price Bids Hal Johnston Faculty of Civil Engineering Department of Economics and Management CZECH TECHNICAL UNIVERSITY IN PRAGUE

2 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

3 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

4 Session Outline Construction organizations (review) Construction organizations (review) Construction contracts (review) Construction contracts (review) Contract documents Contract documents ◦Standard specifications ◦Standard specifications for DOTs Unit prices Unit prices ◦Unit bid items ◦WSDOT Unit bid items ◦Short in-class exercise Quality control / acceptance Quality control / acceptance Price adjustments Price adjustments

5 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

6 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

7 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

8 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)

9 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.

10 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.)

11 Procurement is the methodology used to buy design and construction services. Procurement Defined

12 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

13 Procurement Options Sole Source/Direct Selection Negotiated procurement Competitive ◦QBS – Qualification Based Selection ◦BVS - Best Value Selection ◦Low Bid

14 Market Penetration of Major Project Delivery Systems

15 Design-Bid-Build Contractual Relationship Characteristics Three linear phases: Design, bid and build Three linear phases: Design, bid and build Three prime players: Owner, designer, constructor Three prime players: Owner, designer, constructor Two separate contracts: Two separate contracts: Owner to designer Owner to designer Owner to constructor Owner to constructor ResponsibilitiesOwnerDesignerConstructor Program, finance, management Prepares plans & specs, normal services Prime and sub construction Owner DesignerContractor Subcontractors Sub Consultants

16 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

17 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

18 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.

19 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

20 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

21 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)

22 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

23 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

24 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

25 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

26 Divisions MasterFormat 1995 MasterFormat 2004 Procurement and Contracting Requirements Group Introductory Information 00 Procurement and Bidding RequirementsContracting Requirements Contracting Requirements Specifications Group General Requirements Subgroup 1 General Requirements0 1 General Requirements

27 MasterFormat 1995MasterFormat 2004 Facility Construction Subgroup 2 Site Construction02 Existing Conditions 3 Concrete03 Concrete 4 Masonry04 Masonry 5 Metals05 Metals 6 Wood and Plastics06 Wood, Plastics, and Composites 7 Thermal and Moisture Protection 07 Thermal and Moisture Protection 8 Doors and Windows08 Openings Divisions

28 MasterFormat 1995MasterFormat 2004 Facility Construction Subgroup (continued) 9 Finishes09 Finishes 10 Specialties 11 Equipment 12 Furnishings 13 Special Construction 14 Conveying Systems14 Conveying Equipment 15 – 19 Reserved Divisions

29 MasterFormat 1995MasterFormat 2004 Facility Services Subgroup 20 Reserved 13 Special Construction21 Fire Suppression 15 Mechanical22 Plumbing 15 Mechanical23 Heating, Ventilating, and Air Conditioning 24 Reserved Divisions

30 MasterFormat 1995MasterFormat 2004 Facility Services Subgroup (continued) 13 Special Construction25 Integrated Automation 16 Electrical26 Electrical 13 Special Construction27 Communications 13 Special Construction28 Electronic Safety and Security 29 Reserved Divisions

31 MasterFormat 1995MasterFormat 2004 Site and Infrastructure Subgroup 30 Reserved 2 Site Construction31 Earthwork 2 Site Construction32 Exterior Improvements 2 Site Construction33 Utilities 2 Site Construction34 Transportation 2 Site Construction35 Waterway and Marine 36-39 Reserved Divisions

32 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

33 MasterFormat 1995MasterFormat 2004 Process Equipment Subgroup 11 Equipment40 Process Integration 11 Equipment41 Material Processing and Handling Equipment 11 Equipment42 Process Heating, Cooling and Drying Equipment 11 Equipment43 Process Gas and Liquid Handling, Purification and Storage Equipment Divisions

34 MasterFormat 1995MasterFormat 2004 Process Equipment Subgroup (continued) 11 Equipment44 Pollution Control Equipment 11 Equipment45 Industry-Specific Manufacturing Equipment 46-47 Reserved 16 Electrical / 13 Special Construction 48 Electrical Power Generation 49 Reserved Divisions

35 Unit Prices Standard Units ◦Defined in Standard Specifications

36 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 LS1 3,000.00 3,000.00 5 (S) 120100 TRAFFIC CONTROL SYSTEM LS1150,000.00 150,000.00 6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS1 20,000.00 20,000.00 7 150662 REMOVE METAL BEAM GUARD RAILINGLF6,520 6.00 39,120.00 8 150771 REMOVE ASPHALT CONCRETE DIKELF 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 14260201 CLASS 2 AGGREGATE BASE CY23 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)SQYD2,380 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 25832008 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 31999990 MOBILIZATION LS 1 98,000.00 98,000.00 TOTAL 980,685.00

37 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 LS1 $ 3,000.00 $ 3,000.00 _______________________________________________________ ______ 5 (S) 120100 TRAFFIC CONTROL SYSTEM LS1 $ 150,000.00 $ 150,000.00 ___________________________________________________ __________ 7 150662 REMOVE METAL BEAM GUARD RAILING LF6,520 $ 6.00 $ 39,120.00 _______________________________________________________ ______ 8150771 REMOVE ASPHALT CONCRETE DIKE LF r 840 $ 10.00 $ 8,400.00 _______________________________________________________ ______ 9011868 REMOVE PRECAST CONC POST EA 2 $ 2,500.00 $ 5,000.00 _______________________________________________________ ______ 10 (S) 153103 COLD PLANE ASPHALT CONC PAVEMENT SQYD 550 $ 30.00 $ 16,500.00 _______________________________________________ ______________

38 LS 1 $ 98,000.00 $ 98,000.00 TOTAL $ 980,685.00 UNIT OF ESTIMATED UNIT BID MEASURE QUANTITY PRICEAMOUNT ------------------------------------------------------------------------------

39 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

40 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

41 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

42 Typical Lump Sum Bid DescriptionLaborMaterialsExpendablesSubs Equip Operating Equip OperatingCostsRepairs Rent Rent Total Total Direct Costs JobsiteIndirectCosts End of Bid Items Total Bid

43 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 LS1 3,000.00 3,000.00 5 (S) 120100 TRAFFIC CONTROL SYSTEM LS1150,000.00 150,000.00 6 (S) 128650 PORTABLE CHANGEABLE MESSAGE SIGN LS1 20,000.00 20,000.00 7 150662 REMOVE METAL BEAM GUARD RAILINGLF6,520 6.00 39,120.00 8 150771 REMOVE ASPHALT CONCRETE DIKELF 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 14260201 CLASS 2 AGGREGATE BASE CY23 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)SQYD2,380 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 25832008 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 31999990 MOBILIZATION LS 1 98,000.00 98,000.00 TOTAL 980,685.00

44 Typical Lump Sum Bid

45

46

47 Typical Unit Price Bid

48

49 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

50 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

51 The Result is: Example of Bid Item Item No.Description 390132 HOT MIX ASPHALT (TYPE A) UnitQuantityUnit Price Total TON 550 $ 100.00 $ 55,000.00

52 for. Specification are reviewed for the Item No., what is included in each work items and how the item will be paid for.

53

54 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

55 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

56 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

57 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.

58 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.

59 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

60 Unbalancing the Bid What words should we be watchful in bidding documents? ◦“grossly unbalanced” ◦“substantially unbalanced”

61 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.

62 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.

63 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.

64 Rejection Can be the Consequences of Unbalanced Bid. Owner will use the term: Non-responsive

65 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 |------------------------------|------------------------------- 1 | 8,000.00 8000.00| 650.00650.00 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

66 Possible Example Other Bid # 3Other Bid # 5 ItemUnitUnit No.PriceTotalPriceTotal 8 11.00 9240.0021.00 17640.00 8 150771 REMOVE ASPHALT CONCRETE DIKE LF 840

67 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.

68 Flow chart of the Heavy Bid Process Quantities are checked against the Engineers End of bid item distributed to Bid items

69 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 work fit with-in the company business plan? Does the company have the bonding capacity to handle the work? Does the company have the bonding capacity to handle the work? Probability of making a profit? Probability of making a profit? Is it the type of work the company and its individuals can succeed at? Is it the type of work the company and its individuals can succeed at? Does my company have the right plant and equipment? Does my company have the right plant and equipment?

70 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).

71 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

72 Analysis and Pricing Budgeting for Sub trades Labor Pricing Material Pricing Plant and Equipment Pricing Indirect Job Cost Pricing Subcontract Bid Tab.

73 Cost Extensions & Finalizing the Estimate End of Bid Items (Profit & Over- head) Estimate Summary Distribution of End of Bid Items To the Bid Items

74 Finalizing the Estimate Adjustment to Bid or Proposal Submission Award of Project Owner’s Final Review Review & Log for Historical

75 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

76 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.

77 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

78 End of Today’s Session Questions?


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