To Bid Or Not To Bid?

1
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 Contractors 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
• Wild A _ _ Guess
• DAG
• Dumb A _ _ Guess

6
OR

• The estimator reads the designers 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 ChallengeWhy 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

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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 its Time (if theres any left) for
  Strategies and Risk Taking
• LUNCH! Whats 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)

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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 Dont 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!