Estimating and Bidding
Takeoff, price, then risk
Estimating begins with a quantity takeoff from the plans, then applies unit costs, labor productivity rates (crew-hours per unit), material waste factors, equipment, and subcontractor quotes, and finally adds overhead, profit, contingency, and the cost of bonds and insurance. A bid is a priced risk decision, not just arithmetic.
Public bidding adds procedural traps. Bids are sealed and usually require a bid bond of about 10 percent. Every addendum must be acknowledged; failure to do so makes the bid nonresponsive. Alternates are applied in the order the bid documents specify, and the base bid plus alternates determines the award amount. Under the Subletting and Subcontracting Fair Practices Act, a bidder must list subcontractors performing more than one-half of one percent of the bid, with name, license number, and portion of work, or submit the list within 24 hours after bid opening. Substitution later requires the agency's consent.
Trap: an unbalanced bid that front-loads early items may be rejected, and a bidder who refuses to execute the contract forfeits the bid bond. A clerical error that gives the bidder an advantage generally cannot be corrected after opening.
Rule of thumb: no bid is final until every addendum is acknowledged and every required subcontractor is listed with a valid license number.