1. The Risks and Rewards of Contractor Bids and Proposals.
To Bid Or Not To Bid?
The Risks and Rewards of Contractor Bids and Proposals.

2. Learning Objectives
Learn the Intricacies behind putting a Bid or Proposal together
Examine the Similarities and Differences between “Hard Bid”, “Design-Build”, and “CM at Risk”
Understand what Happens when your bid is “Too Low”

3. The Contractor’s Bid How is an Estimate put together
What Decisions have to be made on Bid Day
How is a Proposal different from a Bid

4. The Estimate
An ESTIMATE is the calculated approximation of a result which is usable even if the input data may be incomplete, uncertain, or missing.

5. What is an Estimate? SWAG Scientific Wild A _ _ Guess WAG
Dumb A _ _ Guess

6. OR
The estimator reads the designer’s mind and converts the drawing symbols into measurements of materials and labor-hours

7. Types of Estimates

8. The Estimating Process
Deciding which project to Bid
Plans and Specifications
Site Visit
Quantity Take-off
Pricing
Estimate Summary

9. Job Condition Factors Economic Climate Location Labor Availability
Material Availability
Site Access
Material Storage Area
Working Conditions

10. Job Condition Factors (cont.)
Hoisting Conditions
Alternates and Specialties
Subcontractor Availability
General Contractor Management

11. The Repair & Remodel Challenge Why is a repair / remodel estimate more difficult than an estimate for new construction?
Every Project is Unique
As-built Drawings, if they exist are not always up to date
Requires more Site Visits
Existing Structures Restrictions
Complete Plans and Specs are sometimes not available
Hidden Conditions

12. The Repair & Remodel Challenge (cont.)
Availability of Matching Materials
Access / Egress
Security
Disruption to Occupants
Code Compliance
Hazardous Materials Abatement
Disposal

13. Types of Costs in an Estimate
Direct Costs
Job Overhead
Indirect Costs
General Overhead for a Contractor

14. Direct Costs
Materials
Labor
Equipment
Project (Job) Overhead

15. Job Overhead Architect / Engineer Fees On-site Supervision
Permits / Fees
Shop Drawings / Submittals
Testing / Inspections
Temporary Utilities
Dust Protection
Barricades / Fencing
Security / Safety
Project Signs
Vehicles / Hoisting
Disposal
Field Office
On-Site Clerical / Timekeeper
Surveying
Construction Photos
QA / QC
Temporary Construction
Scaffolding
Winter Protection
Access Roads
Storage Trailers
Cleanup
Punchlist

16. Indirect Costs
General (Office) Overhead
Profit

17. General Overhead
Salaries (Executives, Project Managers, Estimators, Clerical Staff)
Fees (Legal, Accounting, Marketing)
Office Rent (or Building Depreciation)
Utilities, Telephone
Taxes
Insurance, Bonds
Advertising
Training, Seminars
Travel, Entertainment
Submittals that were not accepted

18. Sources of Cost Information
Your Own Current Cost Records (Historical Data)
Current Subcontractor Quotations
Current Vendor Quotations
Adjusted Figures from Previous Quotes
Unit Price / System Cost Books

19. Bid Day!

20. The “War Room”
The Place where the Bid is put together, Strategies are Reviewed and Risks are Taken
“The General” – Head Estimator running the Estimate
“The Troops” – Assistant estimators and any available able-bodied persons
“The Clerk” – Assistant to “The General”

21. The Bid Day Process
“The General” sets up the Bid Day Tabulation Sheets and Runs the Estimate
Subcontractors and Suppliers typically fax or call in their Quotes up until Bid Submission Time
“The Troops”
1) gather up the Quotes (usually from multiple fax machines),
2)Sort the quotes by division of work,
3)Tabulate the quotes on the Tab sheets by division of work,

22. The Bid Day Process (cont.)
4) Review the Scope of Work stated on the Subcontractor and Supplier Quotes for Inclusions and “Exclusions” (this is the big one) and Adherence to the Project Specifications
5) Call the Subs and Suppliers with any questions or concerns
6) Determine the Lowest “Responsible” Bidder for each division of work
7) Convey this Information to “The Clerk”

23. The Bid Day Process (cont.)
“The Clerk” Gathers together the information from “The Troops” and Presents it to “The General” in a Logical Fashion for Insertion into the Estimate
“The Clerk” may also be Responsible for putting together the Bid Submission Package (The Bid Submission Forms, Bid Bond, and Subcontractor List) and Submitting the Bid Package at the required Location by the required Time
Once all the Quotes have been entered into the Estimate it’s Time (if there’s any left) for Strategies and Risk Taking
LUNCH! – What’s That?

24. Some Typical Emotions on Bid Day
Frenzy Stress Exhaustion

25. The Different Processes
Hard Bid – Discussed above, The Owner Contracts with an A/E Team and Contractor separately
Design/Build – The Owner Contracts with an A/E and Contractor Team to Design and Build (hence the name) a project without resorting to a Hard Bid Process (typically done only in the private sector)
CM at Risk – The Owner Contracts with an A/E Team for the Project Design and Brings a Contractor into the Loop thru an RFP Process early in the Design Process to develop a Guaranteed Maximum Price (GMP)

26. What Happens if Your Bid is Too Low?
The First Reaction is to “Shoot the Messenger”

27. What Happens if Your Bid is Too Low?
Question? – Can You Build the Project without “Losing Your Shirt”?
If Yes – Proceed and Hope for the Best
If No – What are the Options?
1) Withdraw Your Bid? (Prove a Bid Error)
2) What about the Bid Bond?
3) Get Creative during Project Buyout

28. What Happens if Your Bid is Too Low?
4) Lose Your Shirt and Move On

29. Contractor Risks & Rewards
The Risks
You Don’t Cover all the “Holes” in your Bid and WAG it
You Cover all the “Holes” but your bid is too low
You Cover all the “Holes” , Bids are close, you Win the Project, BUT, “It all goes South”
The Rewards
Everything Goes Right and You Make a Profit!
Not only do You make a Profit, Everyone goes Home Happy!