Closing the Bid

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Closing the Bid
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• The objective in this stage is to ensure the
  completeness of the estimate and to assemble and
  submit the bid with all other required documents
  with.
• A summary sheet can be prepared as a convenient
  tool to achieve this objective (See Figure 15.1)

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Stages for completion of Bid

• Advance Stage
• Review Stage
• Closing Stage

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The Advance Stage

• The quantity takeoff, recaps, general expenses,
  and the summary sheet, with the exception of the
  subcontractors prices, are completed
• Unit prices and alternates prices for the
  contractors work are determined
• The Bid Bond and other required documents by the
  Contract are prepared
• The Bid Forms is completed and signed.

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Unit Prices

• The Contract documents may contain a Schedule of
  Work Items and the Contractor will be responsible
  for pricing these items (See Figure 15.2).
• The prices are used for evaluating change orders

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Example Calculating Unit Price for Concrete
Reinforced Beam Based on 100-ft Section
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Alternates

• Alternates are alternative features (e.g.
  differently specified material) proposed by the
  designer or the owner. The Contractor is required
  to price the original feature in the base bid as
  well as price the alternates.
• The work may be performed by subcontractor and
  consequently the price may not come until late in
  the bidding process.
• Alternates give the owner opportunity to
  investigate options based on the prices
  submitted.

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Bid Bond

• Often the contractor will be required to submit a
  bid bond along with the bid package
• A bid bond (or bid guarantee) is a guarantee for
  the owner that if the bid is selected the
  contractor will enter into contract with the
  owner and submit a Performance Bond. Failure to
  do either will forfeit the bond.
• If contractor does not submit the bond with the
  bid, he is disqualified

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Bid Review

• Objectives of Review
• Make sure there are no obvious omissions or
  errors
• Consider how the bid price can be made more
  competitive
• Consider what the appropriate FEE for the project
  should be

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Issues Discussed in the Review Meeting

• Scope Is it all covered in the estimate?
• Construction methods Are there more efficient
  methods?
• Supervision What positions are needed? Are they
  available?
• Labor What is the demand? Available?
• Equipment What is needed? Available?
• Risk Which items in the estimate considered
  risky?
• Project OH What can be done to improve
  competitiveness?
• Subcontractors Are there any anticipated
  problems?
• Markup What is appropriate? What are the risks
  in the project?

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Bid Markup

• Bid markup is a fee added the previously
  estimated costs to determine the final Bid Price
• It is made up of
• Company Overhead
• Profit

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Company Overhead

• Costs associated with conducting the business of
  the company but not directly related to the
  project
• Rental or ownership cost of company offices
• Office utilities
• Furnishings and equipment
• Salaries of executives and office personnel
• Marketing
• Accounting and legal consulting
• Financial charges
• Company travel

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Determination of Overhead

• Estimate company overhead per year
• Estimate total projects value to be undertaken
  for the year
• An overhead fee (percentage) is found as
• Total OH per year Annual Projects Value

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Example Allocating Company OH

• Project Cost SR 4 millions
• Annual Company OH SR 1,500,000
• Total projects value for year SR 25 million
• OH fee 1,500,000 / 25,000,000
• 0.06
• Company OH allocated to project
• 0.06 x 4,000,000 SR 240,000

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Profit

• Profit is generally determined taking into
  considerations several factors
• Organizations Minimum Required Rate of Return
• Amount of risk involved in the project
• Current commitments
• Market situations and degree of competitiveness
• Desirability of the project

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Closing the Bid

• During this stage some subcontract bids may still
  be incoming. Estimator need to review these bids,
  especially for any conditions that could impact
  the price. In that case the impact should be
  evaluated and added to the bid price.

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Unit Price Bids

• Unit price contracts differ from Lump sum
  contracts in that the contractor is not paid the
  quoted amount in the bid. The contractor is paid
  based on the quantities completed as priced by
  the quoted unit price.
• In a unit price contract the contractor submits a
  Schedule of Prices which comprises an itemized
  breakdown of the project. The breakdown and the
  estimated quantities of each item are prepared by
  the Designer.

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Procedure for Estimating Unit Prices

• Takeoff As in the case of lump sum, unit price
  contracts are taken from contract drawings.
• Recap
• This is different from lump sum because recap
  need to be prepared according to the items in the
  Schedule of Prices. Each item is recapped
  individually.
• Estimator must ensure that all tasks required to
  complete an item in the Schedule of Prices are
  included and priced.
• Pay Quantity Unit price Contracts define a
  method of measurement for quantities. If the
  takeoff method used is different, the estimator
  need to make the necessary adjustment.

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Procedure for Estimating Unit Prices (Continued)

• General Expenses The total of the General
  Expenses is determined in the same manner as for
  Lump sum contracts. The total is then prorated
  over the items based on the items labor price.
• Summary
• (See Summary Sheet)

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Unbalanced Bids

• Unbalanced bids refers to the situation where the
  contractor does not quote the actual prices. The
  contractor increases the prices of some items
  (those that occur early in the schedule) and
  reduces prices of others (those that occur late
  in the schedule) to obtain the same total amount.
  
• This practice is considered unethical and can
  result in the disqualification of the contractor.