Bidding, Estimating, and Contract Management
Reading the bid documents
Every bid rests on the invitation, instructions to bidders, drawings, specifications, and addenda. Addenda issued before bid opening must be acknowledged; failing to acknowledge can make a bid nonresponsive on public work. A pre-bid conference and site visit reduce the risk of differing site conditions. Know the difference between lump-sum and unit-price pricing, and recognize that quantity errors in unit-price work shift risk to the owner.
Building the number
A defensible estimate has a complete quantity takeoff, priced labor with burden, material with sales tax and delivery, equipment, subcontractor quotes with clearly defined scope, general conditions, overhead, profit, and contingency. Scope gaps - items no subcontractor included - are the classic source of lost margin. Escalation matters on long-lead materials.
Bid strategy and contract administration
Unbalanced bidding, front-end loading, and bid shopping raise ethics questions and can be rejected. On Virginia public work, competitive sealed bidding awards to the lowest responsive and responsible bidder, while competitive negotiation is used when price alone is not the criterion. Under the Virginia Prompt Payment Act, a contractor must pay subcontractors within seven days of receiving payment for their work. Change orders require written notice and documentation; missing a notice deadline can waive entitlement even for a valid change.
Worked example
Direct costs $480,000 plus general conditions $70,000 = $550,000. Overhead at 9 percent = $49,500, for a cost base of $599,500. Profit at 7 percent = $41,965. Bid = $641,465. Applying profit only to direct costs would underprice the job by roughly $33,000.
Traps: applying overhead twice, forgetting bonds and insurance in markup, and assuming a verbal change is compensable.