Estimating, Bidding, and Project Scheduling
Building the number
Estimating moves in a fixed sequence: review documents and addenda, perform the quantity takeoff, apply waste and conversion factors, price labor with burden (taxes, insurance, fringe), add equipment and subcontract quotes, then apply indirect costs, contingency, overhead, and profit. Labor pricing uses crew rate ÷ crew production per hour, not a single worker's rate.
Bid-day discipline matters: acknowledge every addendum, qualify assumptions in writing, and watch for unbalanced bids (front-loading early items or overpricing quantities likely to increase).
Markup versus margin - the classic trap
Markup is a percentage of cost; margin is a percentage of price.
Worked example
Job cost is $100,000 and you want a 15 percent margin. Price = $100,000 ÷ (1 − 0.15) = $117,647. Adding 15 percent to cost gives $115,000 - a margin of only about 13 percent. Contractors routinely underprice this way.
Scheduling
Critical Path Method converts activities and durations into a network. Know the relationship types (finish-to-start, start-to-start, finish-to-finish, with lags), forward and backward passes, early and late dates, and total float - the time an activity can slip before it delays the project. The critical path has zero float and defines the contract duration. Crashing adds resources to critical activities to shorten duration (costs money); fast-tracking overlaps activities (adds risk). Resource leveling may extend duration; resource smoothing does not.
Trap
Questions ask for the effect of delaying a non-critical activity by less than its float. Answer: no effect on completion, but check whether it consumes float needed by another activity.
Rule of thumb
Float tells you where to spend management attention, and margin math tells you whether the job is worth winning.