How to prepare a bid estimate to win a project

A bid process is required to award the most jobs in construction industry. In a bidding contest the lowest bidder will be awarded the contract. Estimating a construction bid involve some knowledge of the building process.

The bid estimate is specific to the project conditions illustrated in the plans and specifications. The bid estimate is required by contractors and subcontractors for bidding purposes or the owner to appraise bids.

In order to prepare an accurate construction bid, the most current drawings, project specifications and copies of any addenda or change bulletins that have been issued are required. The company who is calling for the bid should render all of these documents. In case the drawings are submitted from a plan room, the addenda and bidding requirements should be checked properly.

Review the drawing and floor plans. Then review the title and symbols pages for any general project requirements.

Review the project specifications for getting most sets of construction documents. Read the section related with your trade and read the prelim section featuring general project conditions.

Measure material quantity by executing a material takeoff. As for instance, an electrical contractor should take into consideration the receptacles, switches, junction boxes, light fixtures, and length of wires and conduits along with panels, transformers and any electrical connections for equipment or mechanical work. These estimates will sum up the total material price.

Work out the labor costs. Find out the time frame for completion of the job and multiply this number of hours with the average wage plus any labor burden to ascertain the total labor costs.

Put material and labor costs together and comprise any special fees like permits, wage scale, bonds, insurance premiums or other costs. Multiply the total dollar figure with an appropriate percentage to contain overhead and profit.

Finally prepare your bid form putting price, complete scope of work and the name of the project.
In case the project is different from typical designs, the contractor should evaluate the actual cost of construction by taking the actual construction procedures to be used and the related costs.

Posted by Rajib Dey
Business Development
Global Associates
A pioneer company in construction estimating
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The Technique of Construction Estimating

The construction estimating is the calculated amount of various required items of work, and the expenses likely to be incurred there on. The total of the probable expenses to be incurred on the work is known as estimated cost of the work. This cost is a close approximation of its actual cost. The agreement of the estimated cost with the actual cost will depend on accurate use of estimating methods and correct visualization of the work, as it will be done. Doing accurate estimating is very important as the success of the project largely depends on estimating methods. Under estimating may result in the client getting an unpleasant shock when tenders are opened and drastically modifying or abandoning the work at that stage. Over- estimating may loose the engineer or estimator his client or his job, or in any case his confidence.

Estimating is the most important of the practical aspects of construction management, and the subject deserves the closest attention of one aspiring to a career in the profession. It is a comparatively simple subject to understand; however, as it brings one up against practical work, methods and procedure, knowledge of it cannot be acquired without close application.

Data Required for Preparing an Estimate:

In order to prepare a detailed estimate the estimator must have with him the following data:

1. Plans, sections and other relevant details of the work.

2. Specifications indicating the exact nature and class of materials to be used.

3. The rates at which the different items of work are carried out.

To enable an estimator to take out the quantities accurately, the drawings must themselves be clear, true to the fact and scale, complete, and fully dimensioned. The estimator has also to bear in mind certain principles of taking out quantities.

Steps in Preparation of an Estimate:

There are three clearly defined steps in the preparation of an estimate.

1. Taking out quantities

In the first step of taking out quantities, the measurements are taken off from the drawings and entered on measurement sheet or dimension paper. The measurements to be taken out would depend upon the unit of measurement. For example, in the case of stone masonry in superstructure, length, thickness and height of the walls above plinth level would be taken out from the drawings and entered on the measurement sheet, whereas, in the case of plastering only the lengths and heights of the walls would be entered. Obviously, the unit of measurement in the first case is cubic meter and that in the second case is square meter.

2. Squaring out

The second step consists of working out volumes, areas, etc. and casting up their total in recognized units.

3. Abstracting

In the third step all the items along with the net results obtained in the second step are transferred from measurement sheets to specially ruled sheets having rate column ready for pricing.

The second and third steps above are known as working up. All calculations in these stages and every entry transferred should be checked by another person to ensure that no mathematical or copying error occurs.

The Industrial risk of Cost Estimation in the Bidding Process

Project cost estimation in the bidding process is a critical concern for the competitiveness and profitability of an engineering and contracting company. Estimates which diverge as little as possible from actual costs have to be made on the basis of relatively limited information. Of the macro-items contributing to the overall cost of a plant project, those
linked to engineering activities have been growing continuously in percentage terms for a number of years and have thus become the object of considerable interest. Moreover, since these items are difficult to standardize, estimation is particularly difficult. A method able to produce reliable estimates for these activities could certainly be usefully transferred to other project stages. The methodology proposed to formulate a bid estimate for a HAZOP study envisages the joint use of three tools to produce more accurate estimates and improve the quality of decisions through explicit assessment of the risk of over-estimating (or under-estimating) the cost.

First, an analytical estimation model based on improved structuring of available information provides more accurate estimates and facilitates the use of IT applications. Second, company knowledge gained in previous projects is structured and maintained in order to ensure continuous improvement in estimation. This information can be used to improve over time the understanding of the determinant values in the model itself, so obtaining increasingly accurate estimates and probability distributions which take account of historical errors. Finally, a simulation technique provides the probability distribution of the overall cost and thus the confidence interval of the estimates.

Project cost estimation in the bidding process is a critical concern for the competitiveness and profitability of an engineering and contracting company as it involves considerable risk. Indeed, with only the limited information available in the tender documents and the partial results of the basic engineering, an estimate must be drawn up which varies as little as possible from the effectively sustained costs. The reason for this is that the industrial goods market is becoming increasingly competitive and the typical contract is now the lump-sum, in which the contractor agrees to supply at a pre-determined price. Since the starting point for this price is the estimate prepared during the bidding, it is evident that this cost estimate is crucial to the competitiveness and profitability of engineering and contracting companies.

That’s why project cost estimation is always a critical process on the part of the engineers. The estimator must have to take great care in the estimating process to deliver an accurate calculation.