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 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 Wild A _ _ Guess • DAG 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 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

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. 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! Contractor Risks & Rewards