1. CON 4003 CVE 4073/5073 The Estimating Process Prof. Ralph V. Locurcio, PE

2. Contract Documents or Bid Set

3. Contract Documents… 1.The Agreement or Contract 2.The Specifications 3.The Drawings Important Note: Unless otherwise specified this list is the Unless otherwise specified this list is the “order of precedence” of the contract documents

4. Where Estimates are Used…

5. Estimating

6. The Estimating Process-1 Decision to bid Decision to bid Form the estimating team Form the estimating team Estimate work plan Estimate work plan  Type of estimate  Procedures  Documentation Risk & contingency analysis Risk & contingency analysis Review & check the estimate Review & check the estimate Finalize the estimate Finalize the estimate

7. The Estimating Process

8. Estimate work plan Type of estimate required Deliverables by subcontractors Budget for the estimate Staffing Schedule Methodology Controls & reviews Presentation format & production

9. Types of Estimates Conceptual estimate Conceptual estimate  Decision on units  Adjustments for time & location Detailed estimate Detailed estimate  Material take-off  Equipment & cycle time  Labor & productivity  Admin + overhead+ logistics+taxes+profit

10. Basic estimating procedure Read the plans, specs & contract Read the plans, specs & contract Conduct a site investigation Conduct a site investigation Decide on construction method Decide on construction method Consider the construction schedule Consider the construction schedule Material quantity takeoffs Material quantity takeoffs Plan for equipment Plan for equipment Plan for subcontracts Plan for subcontracts Estimate costs of labor & materials Estimate costs of labor & materials Assess risks Assess risks Determine contingency Determine contingency Finalize bid Finalize bid

11. Basic estimating procedure

12. Conduct thorough site visit Physical characteristics Physical characteristics Sub-surface conditions Sub-surface conditions Site logistics for construction layout Site logistics for construction layout Condition of roads & bridges Condition of roads & bridges Storage space for lay-down Storage space for lay-down Security requirements Security requirements Operational requirements Operational requirements

13. Read the plans, specs & contract Contract terms & conditions Contract terms & conditions Payment & penalties Payment & penalties Scope and quantities Scope and quantities Complexity of construction Complexity of construction Completeness of plans Completeness of plans Quality of materials required Quality of materials required

14. Decide construction method Basic approach & teaming Basic approach & teaming Work breakdown structure & sequence Work breakdown structure & sequence Skills of work crews Skills of work crews Decision on work to be subcontracted Decision on work to be subcontracted Timing of individual activities Timing of individual activities Phasing of crews on site Phasing of crews on site Procurement of equipment Procurement of equipment Flow of materials & laydown Flow of materials & laydown Cash flow projection Cash flow projection

15. Work schedule Based on contract provisions Based on contract provisions Sequence of work Sequence of work Operational constraints Operational constraints Site constraints Site constraints Weather & safety factors Weather & safety factors Lead time for materials Lead time for materials Availability of subcontractors Availability of subcontractors

16. Material quantity takeoff Study plans & specs Study plans & specs Systematic breakdown of units Systematic breakdown of units Bid instructions, format & alternates Bid instructions, format & alternates Follow sequence of construction Follow sequence of construction CSI category of materials & labor CSI category of materials & labor Check for duplicates & omissions Check for duplicates & omissions Document all work Document all work Review & check for errors Review & check for errors

17. Direct costs Materials, labor, equipment Materials, labor, equipment Subcontractor bids Subcontractor bids Contact suppliers Contact suppliers Market factors apply Market factors apply Establish and update cost data base Establish and update cost data base

18. Indirect costs Mobilization Mobilization Field office Field office Insurance Insurance Bonds Bonds Taxes & permits Taxes & permits Cleanup Cleanup Demobilization Demobilization

19. Risk analysis Complexity of plans & specs Complexity of plans & specs Terms of contract & penalties Terms of contract & penalties Experience with owner Experience with owner Timing of project Timing of project Market factors for labor & materials Market factors for labor & materials Weather & safety Weather & safety Other uncertainties effecting execution Other uncertainties effecting execution Probability of occurrence of each Probability of occurrence of each

20. Determine contingency Percentage of base estimate Percentage of base estimate Determine high-cost risk factors Determine high-cost risk factors Expected net risk based on probability Expected net risk based on probability Aggregate total project risk Aggregate total project risk Establish contingency Establish contingency

21. The Estimating Process

22. CSI Master Format-1

23. CSI Master Format-2

24. CSI Master Format-1

25. CSI Master Format-2

26. Typical Excel Format

28. RSMeans

29. Bid summary One line item cost for each CSI category One line item cost for each CSI category  01 – General conditions = $3000  02 – Concrete =$1000  05 – Metals=$ 500  06 – Wood, Plastics=$1500  Total ………………………….$6000  Contingency…………………...$ 600  Taxes………………………….$ 396  Profit………………………….$ 700  Your bid………………………$7696

30. Bidding

31. Issuance of Bid Documents… Prepare adequate bid sets Prepare adequate bid sets  Make “reproducible” set of Mylar drawings Plan bidding process carefully Plan bidding process carefully  May issue pre-bid notice  May include pre-bid conference to clarify owner’s intent  Issue amendments to correct errors  Avoid “irregularities”  Documents are “close hold” to ensure competition Issue bid documents Issue bid documents  All sets must be identical  Keep accurate log of documents issued  Addenda must be mailed to all bidding firms  Answers to questions to all bidders Avoid bid protest Avoid bid protest  Process stopped pending review  May be cause for rebid  Financial problems result

32. Bonds… Bid bonds Bid bonds  Avoids loss if bidder cannot/does not accept contract  5%-10% of bid price  Returned when agreement signed  Common on public contracts  Bonds purchased from “surety” company Performance & payment bonds Performance & payment bonds  Intent is to protect owner from contractor failure  Insurance (surety) company guarantees completion  Payment bond pays labor & material debts of contractor  Prime often requires bonds of subcontractors  Ability to obtain bonds depends on prior performance

33. Insurance… General liability insurance General liability insurance  Operations  Personal injury  Liability during construction  Automobile medical & physical payments  Post-project liability Builder’s Risk Insurance Builder’s Risk Insurance  Covers perils during construction  Fire, lightning, vandalism, windstorm  Additional perils: collapse, terrorism, rupture, etc…

34. Bid Opening & Evaluation… Technical evaluation & review Technical evaluation & review  Will bid achieve owner’s intent  Is bidder’s plan competent & safe  Are subcontractors qualified Price evaluation Price evaluation  Rank order by low to high bid  Are all bids “responsive”; i.e.. meet all requirements  Bids may not be “qualified” in any way  Review of “schedule of values” or estimated payment schedule  Determine “apparent” low bidder Bid qualification Bid qualification  Is bidder disqualified for any reason  Are bonds, insurance & certifications adequate Recording of bids & recommend award Recording of bids & recommend award

35. Questions?

36. That’s all for today… Slides are on my web site Slides are on my web site My web site: My web site:www.my.fit.edu/~locurcio

37. Schedule of Values