LECTURE 7 BIDDING AND ESTIMATING

CEEGR 4812: Construction Management Uzair (Sam) Shamsi, Ph.D., P.E. Adjunct Professor Department of Civil / Environmental & Chemical Engineering

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OUTLINE
Bidding and estimating process Bidding Estimating Homework No. 4 (Cost estimating spreadsheet)

BIDDING AND ESTIMATING PROCESS

T H E EST IM AT IN G PR O C ESS

ST AR T

O BT AIN BID IN FO R M AT IO N

D EC ISIO N T O BID

NO

BEFORE BIDDING
YES

O BT AIN BID D IN G D O C U M EN T S R EVIEW BID D IN G D O C U M EN T S

SIT E IN VEST IG AT IO N

T AKE-O FF Q U AN T IT IES

N O T IFY SU BC O N T R AC T O R S

ESTIMATING

PR IC E G EN ER AL EXPEN C ES

PR IC E O W N W ORK

M AN AG EM EN T R EVIEW

PR IC ES FR O M SU BC O N T R AC T O ES

SU M M AT IZE AN D PR EPAR E BID

BIDDING

SU BM IT BID C O M PLET E BID R EPO R T

EN D

BIDDING OUTLINE
Procedures and steps
Advertisement Bidding documents Site tour Pre-bid meeting Questions and clarifications
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ADVERTISEMENT
Newspapers, emails, Online, RFP subscription services Bid date and time Project description Bidding documents Bid Security Any local requirement Contract time Registration to bid (optional)
Fax, email, or online

Letter of intent / interest (optional)

Allows owner to estimate number of potential bidders

BIDDING DOCUMENTS
Request for Proposals (RFP)
Invitation for Bids (IFB) Invitation to Bid (ITB), or Invitation to Tender (ITT)

May require purchasing of bid documents Front end documents Specifications Drawings Addenda
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FRONT END DOCUMENTS

Part 1 Administrative and Advertisement
Instruction to Proposer (Pre-bid meeting and site tour, questions, clarifications & concerns, delivery of bids (time & location and number of copies) Information to Proposers (Bidders) Bid forms Bid bonds Bidder qualification for certain type of projects Form of agreement General conditions (Indirect cost, e.g. staging area, access roads, construction building access, temporary offices, daily/weekly and final clean up, temporary power and water utilities, safety, etc.) Supplementary conditions
Project specific conditions
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FRONT END DOCUMENTS

Part 2 General Requirements
Administrative provisions (scope of work, alternates, coordination, etc.) Progress meetings Construction schedules and procurement of equipment Submittals Quality Control (testing for soil, concrete, paving, etc.) Construction facilities and staging area O&M manuals and training
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SITE TOUR AND PRE-BID MEETING

Site Accessibility Temporary construction roads Staging area Storage area Security Site conditions and finishes Pre-bid meeting (pre-proposal conference)
Generally after the site tour Sign-up sheet Presentation by the owner and his representatives Questions Often recorded
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QUESTIONS AND CLARIFICATIONS

Clarify any existing site condition that could affect the estimate (underground utilities not shown on documents, any dewatering and discharge, construction power and water needs, etc. Any conflict between the drawings and specifications Ask for any missing detail or specification section. Must be asked before a deadline (1-2 weeks before the bid deadline)
No questions answered after this date (black-out period)

Generally submitted in writing Answers distributed to all registered bidders via an addendum Addenda: Provide more info, Q&As, or clarifications Delivery of bid: Meet bid date and time dead line
Know the Fedex pickup and delivery times Online tracking and delivery confirmation

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AWARD OF BIDS
Selection criteria
Qualifications References Technical approach Schedule Price
New trend: price proposals received separately in sealed envelopes and reviewed only to compare top 3 bids.
When we sum up the ratings, both solutions B and C are equivalent and outperforming solution A. While similar globally, options B and C present different intrinsic strengths and weaknesses. Indeed, option B is better than option C for the criterion C3, but weaker on C2, while option C distribute more evenly its forces. Therefore, Option B is usually called a best-of-breed solution.
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http://www.rfp-templates.com/What-is-a-Decision-Matrix.html

BIDDING RESOURCES RFP SUBSCRIPTIONS

Bid Clerk www.bidclerk.com

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BIDDING RESOURCES RFP SUBSCRIPTIONS

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BIDDING RESOURCES RFP SUBSCRIPTIONS

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BIDDING RESOURCES RFP SUBSCRIPTIONS

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BIDDING RESOURCES HOW TO PREPARE A REQUEST FOR PROPOSALS (RFP)

www.rfp-templates.com

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BIDDING RESOURCES SAMPLE INVITATION TO CONSTRUCTION BID

http://www.cityofnewhaven.com/Purchasing/index.asp

City of New Haven, CT Construction of new drainage structures and piping, sanitary manhole, concrete walls and pads

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BIDDING RESOURCES SAMPLE INVITATION TO CONSTRUCTION BID

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BIDDING RESOURCES CALCULATION SHEET (EXCEL FILE)

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ESTIMATING
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ESTIMATING OUTLINE
Definition Types of costs and estimates Cost estimating resources
R.S. Means ENR Software

Construction economics Four cost estimating examples Homework No. 4

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COST ESTIMATING DEFINITION

The process of determining the price to bid for goods and services. An approximation that defines the Cost of construction activity or activities prior to commencement of work vs. the cost of work during and after construction, which is the actual cost. Activity Cost in general is basically the cost of material, labor and equipment. Estimating is a combination of art and science.
The more you know about construction methods, sequencing of work, resource estimates, and bidding strategies, the more you will excel in estimating.
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TYPES OF COSTS
Feasibility: order of magnitude estimates Preliminary Design: preliminary by area (SF) or component Detailed Design: detailed estimate using unit prices, crews and production rates

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TYPES OF COSTS

Direct cost: for self perform work and subcontractors bids Indirect cost:
General Condition (field cost, safety, permits, clean up, etc.) Insurance Bond cost Overhead & Profit
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TYPES OF ESTIMATES
Conceptual Estimate GMP (Guaranteed Maximum Price)
Time and material (T&M) Not-to-exceed

Design Build Lump Sum Unit Prices

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ESTIMATING RESOURCES MEASUREMENT UNITS

CY: Cubic yards LF: Linear feet SF: Square feet EA: Each L&M: Labor & Material

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ESTIMATING RESOURCES R.S. MEANS CONSTRUCTION COST DATA

Unit-cost data for estimating construction costs www.rsmeans.com Three versions:
Books CostWorks CD-ROM CostWorks Online: Web-based software

Online tools: QuickCost Estimator

Calculate an estimated value of total project cost localized to your selected area. The calculations include addon costs itemizing low, medium & high estimates for Architectural Fees & Contractor's Overhead & Profit.
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ESTIMATING RESOURCES R.S. MEANS CONSTRUCTION COST DATA

Sample page from book Heavy Construction Cost Data Includes costs for heavy construction-from highways, bridges, utilities, rails and marine projects, to sanitary and storm sewer projects 14,000 up-to-date price tables Crew tables Costs for new construction; demolition work; repairs; replacements and change orders.
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Unit cost of excavating a slurry trench: Min = $18.70 / C.F. Max = $31.50 / C.F.

ESTIMATING RESOURCES ENR INDICES

Five types:
Construction Cost Index (CCI) Building Cost Index Materials Cost Index Skilled Labor Cost Index Common Labor Cost Index

National (20-city average) or local (for 20 U.S. and 2 Canadian cities) Based on local prices for:
Portland cement 2 X 4 lumber structural steel union wages, plus fringes, for carpenters, bricklayers and iron workers.
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ESTIMATING RESOURCES CCI HISTORICAL DATA SINCE 1908

MONTHLY DATA SINCE 1977` ANNUAL DATA FROM 1908 TO 1976

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ESTIMATING RESOURCES CCI LOCAL DATA

FOR DECEMBER 11, 2000

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ESTIMATING RESOURCES PPI (PRODUCER PRICE INDEX) DATA

FOR DECEMBER 11, 2000

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ESTIMATING RESOURCES ENR INDICES

ENR = Engineering News Record From McGraw-Hill Construction Publications enr.construction.com/features/conEco/default.asp ENR magazine tracks building costs and has created indices of U.S. costs based on a 20-city national average. The indices provide a general purpose tool to chart basic cost trends. Application: Convert old costs to new costs using:

Year O cost Year O ENRI = Year N cost Year N ENRI Year O ENRI Year N cost = Year O cost Year N ENRI

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ESTIMATING RESOURCES COMMERCIAL CONSTRUCTION COST ESTIMATOR

From McGraw-Hill costest.construction.co m/cest/default.asp Basic preliminary design cost estimating is free (registration and login required)

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CONSTRUCTION ECONOMICS PRESENT WORTH CALCULATIONS

The equivalence of any future amount to any present amount is called the present worth (F.E. Exam Manual).

Single payment present worth factor (P/F) Present worth of a single Future income

Uniform series present worth factor (P/A) Present worth of recurring future Annual cost

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CONSTRUCTION ECONOMICS P/F FACTOR

http://www.me.utexas.edu/~jensen/ORMM/omie/computation/unit/econ_add/functions.html

A single cash flow at time t+n

Present worth of a single Future income

P/F = 0.385543

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CONSTRUCTION ECONOMICS P/A FACTOR

http://www.me.utexas.edu/~jensen/ORMM/omie/computation/unit/econ_add/functions.html

A uniform series of n payments, starting at time t and ending at time t+n

Present worth of recurring future Annual cost

P/A = 51.725

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COST ESTIMATING EXAMPLE 1 SWIRL CONCENTRATOR

Swirl Concentrators: A Combined Sewer Overflow (CSO) control technology Regulates flow and separates solids from wastewater Provides equivalent of primary treatment

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COST ESTIMATING EXAMPLE SWIRL CONCENTRATOR

Advantages:
Can operate unattended during a storm Effective at removing heavy suspended solids and floatables Can provide detention for disinfection No moving parts

Disadvantages:
BOD reduction and DO enhancement varies widely Not feasible in all locations No bacterial improvement Negligible Ammonia removal

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COST ESTIMATING EXAMPLE SWIRL CONCENTRATOR

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COST ESTIMATING EXAMPLE 1 SWIRL CONCENTRATOR

Planning level cost estimation for budgeting purpose EPA cost equation for CCI = 4800 (May 1991) December 2000 CCI for Pittsburgh = 6199

Support\LTCP Cost 3.xls

Present worth of recurring future Annual cost = Annual O&M cost x (P/A)

Present worth of a single Future income = Salvage Value x (P/F)

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COST ESTIMATING EXAMPLE 2 STORM SEWER CONSTRUCTION

Planning level cost estimation for budgeting purpose Date: November 2002 Location: Western Pennsylvania / West Virginia

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COST ESTIMATING EXAMPLE 3 SANITARY SEWER CONSTRUCTION

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COST ESTIMATING EXAMPLE 4 SEWAGE TREATMENT PLANT

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HOMEWORK No. 4
This is an individual homework Recreate the cost table shown on right (Table 4-9) in Excel. Calculate the total present worth based on using:
CCI for September 2007 for the current ENR index value. 20% contingency and 20% non-construction cost.

Submit a printout of the spreadsheet Due: Next class

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