Bid Estimates in Construction Project Management

Bid Estimates in Construction Project Management (#16 in the Hut Project Management for Construction)
By Chris Hendrickson

The contractor’s bid estimates often reflect the desire of the contractor to secure the job as well as the estimating tools at its disposal. Some contractors have well established cost estimating procedures while others do not. Since only the lowest bidder will be the winner of the contract in most bidding contests, any effort devoted to cost estimating is a loss to the contractor who is not a successful bidder. Consequently, the contractor may put in the least amount of possible effort for making a cost estimate if it believes that its chance of success is not high.

If a general contractor intends to use subcontractors in the construction of a facility, it may solicit price quotations for various tasks to be subcontracted to specialty subcontractors. Thus, the general subcontractor will shift the burden of cost estimating to subcontractors. If all or part of the construction is to be undertaken by the general contractor, a bid estimate may be prepared on the basis of the quantity takeoffs from the plans provided by the owner or on the basis of the construction procedures devised by the contractor for implementing the project. For example, the cost of a footing of a certain type and size may be found in commercial publications on cost data which can be used to facilitate cost estimates from quantity takeoffs. However, the contractor may want to assess the actual cost of construction by considering the actual construction procedures to be used and the associated costs if the project is deemed to be different from typical designs. Hence, items such as labor, material and equipment needed to perform various tasks may be used as parameters for the cost estimates.

Previously in the Hut Project Management for Construction:

Design Estimates in Construction Project Management

Chris Hendrickson is the Duquesne Light Company Professor of Engineering and Co-Director of the Green Design Institute at Carnegie Mellon University. His research, teaching and consulting are in the general area of engineering planning and management, including design for the environment, project management, transportation systems, finance and computer applications. Prof. Hendrickson is a Distinguished Member of the American Society of Civil Engineering, an Emeritus Member of the Transportation Research Board and a Fellow of the American Association for the Advancement of Science. Hendrickson is also the recipient of many professional awards.