Bidding and Estimating
Bidding and Estimating tests how contractors read bid documents, perform quantity takeoffs, price work, account for risk, and submit responsive bids. Expect bonds, addenda, contract types, markups, and bid strategy.
Core rules
- Bid documents include drawings, specifications, addenda, instructions to bidders, and proposal forms. Acknowledge every addendum; omissions can make a bid nonresponsive.
- Bid bonds protect the owner if the low bidder refuses to sign; performance bonds guarantee completion; payment bonds protect subcontractors and suppliers.
- An estimate includes direct labor, material, and equipment; indirect jobsite costs; home-office overhead; profit; and contingency.
- Quantity takeoffs use measured quantities plus waste or conversion factors. Unit prices are useful when quantities are uncertain.
- Unbalanced bidding front-loads early work or overprices likely changes; it can improve cash flow but may be rejected.
Worked example. Direct cost is $800,000; indirect jobsite cost is $100,000; contingency is $40,000. The subtotal is $940,000. Overhead at 6% is $56,400, giving $996,400. Profit at 5% is $49,820. The bid is $1,046,220. State the markup base; applying profit only to direct cost would underprice the bid.
Traps
- Ignoring an addendum issued during the bid period.
- Applying overhead and profit in the wrong order or to the wrong base.
- Forgetting bond premiums, permits, or temporary facilities.
- Treating a unit price as a lump sum when quantities change.