Business management, estimating, bidding, and project administration
Estimating and project administration
This domain tests the business side: accurate quantity takeoff, labor, overhead, profit, contracts, changes, and closeout. Direct costs include materials, labor, equipment, permits, and subcontractors. Overhead covers insurance, office, tools, supervision, and warranty; profit is separate. Use current labor units and productivity factors, add sales tax and freight, and include allowances. A bid must be based on the same scope as the proposal. Change orders require written authorization before work. Pay applications, retainage, lien notices, submittals, RFIs, and schedules must be administered.
Worked example
Direct costs are materials $10,000, labor 120 hours at $65 = $7,800, equipment $1,500, and subcontractor $4,000, totaling $23,300. Add 12% overhead = $2,796, giving $26,096. Add 10% profit = $2,610, for a bid of $28,706. If the contract instead applies profit as a divisor, the result differs; state the method. A $3,000 change order needs written approval and should include overhead and profit, not just material.
Traps
Forgetting overhead; using old labor rates; bidding without reading addenda; doing extra work without a signed change order; ignoring retainage and cash flow; missing permit or inspection costs; no escalation clause.