Estimating and Bidding
Scope
Estimating converts drawings and specifications into a defensible price; bidding converts that price into a contract. The exam tests takeoff accuracy, pricing structure, bid documents, and the commercial terms that travel with a bid.
Concepts to know
Know the bid package: invitation, instructions to bidders, plans, specifications, addenda, and the bid form. Addenda modify the documents before bid opening and must be acknowledged. Quantity takeoff means measuring from the documents and adding a waste factor for materials. Pricing layers include direct labor and material, equipment, subcontractor quotes, general conditions, overhead, contingency, and profit. Distinguish a bid bond (a guarantee the bidder will enter the contract) from performance and payment bonds. Understand alternates, unit prices, allowances, escalation, and unbalanced bidding - front-loading or pricing early items high to improve cash flow, which owners screen for.
Traps
The most common exam trap is confusing markup with margin. Others include forgetting addenda, omitting sales tax or freight, double-counting overlaps, and using a labor rate that already includes overhead while adding overhead again. Watch for scope gaps between trades and for bids that exclude permits or temporary facilities.
Worked example
Cost is $100. A 20% markup gives $120 (profit $20 on cost). A 20% margin gives $125 (profit $20 on price). To convert a desired margin to markup: markup = margin ÷ (1 − margin). A 20% margin equals a 25% markup.
Rule of thumb
Price the work, then price the risk. Review every bid against a checklist of exclusions, addenda, and bonds before submission.