Contracting Business, Estimating, Bidding, and Project Management
Core concepts
Candidates should understand takeoff, labor units, overhead and profit, contingency, and change-order management. Key estimating elements: quantity takeoff from plans, material pricing, labor hours by task, equipment costs, permits, and escalation. Bidding strategy includes bid bonds, performance bonds, and the difference between lump-sum and unit-price contracts. Project management covers submittals, RFIs, scheduling, coordination with other trades, and closeout documents (as-builts, O&M manuals, warranties). Understand retainage, progress billing, and lien rights.
Traps in questions
- Confusing overhead with profit; overhead is a cost, profit is a margin.
- Forgetting contingency in bids, then absorbing unforeseen costs.
- Missing change-order documentation that protects the contractor.
- Assuming retainage is optional; it is typically contractual.
- Overlooking bond requirements in public work.
Worked example / rule of thumb
A project has $80,000 material and $40,000 labor, with 10% overhead and 10% profit applied sequentially. Total = $120,000 × 1.10 × 1.10 = $145,200. Add a 5% contingency for unknowns: $145,200 × 1.05 ≈ $152,460. Rule of thumb: apply overhead and profit sequentially, not additively, and always document assumptions in the bid.