Estimating and Bidding
What this domain tests
Quantity takeoff, pricing, indirect costs, bid strategy, addenda, and Montana public bidding.
Core rules
- Read the instructions to bidders, scope, alternates, unit prices, and every addendum. Acknowledge addenda; an unacknowledged addendum can make a bid nonresponsive.
- Build cost from direct labor, material, equipment, and subcontractors; then add job overhead, general overhead, profit, contingency, bonds, and insurance.
- Bond premium is usually a percentage of the bid price, so divide by (1 - bond rate); do not simply multiply cost by the bond rate.
- Montana has no statewide general sales tax. Do not add a sales-tax line for materials in a Montana bid; check local resort taxes and equipment taxes.
- Public bids: sealed bids, bid bond, performance and payment bonds, and prevailing wage under the Montana Prevailing Wage Act (MCA Title 18, chapter 2, part 4).
- Unbalanced bids can be rejected.
Worked example
Direct cost $500,000; job overhead $50,000 = $550,000 cost. Desired profit 10% of cost = $55,000. Bond premium 2% of bid price. Bid = ($550,000 + $55,000) / (1 - 0.02) = $617,347. Multiplying $605,000 by 1.02 gives $617,100, which under-recovers the bond and cuts profit.
Traps
Adding sales tax in Montana; applying bond premium to cost; missing addenda; treating contingency as profit; ignoring unit-price risk.