Presentation on theme: "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."— Presentation transcript:
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.