Construction estimating is part of the bid process, during which contractors and builders will typically compile a group of documents, known as the bid package, which summarizes the project details and key information. These bids aggregate the costs that the contractor expects to pay for the sourcing of materials and construction of the project.
The process begins with the project owner creating the bid package.
The bid package contains all of the information the contractors will need to create an accurate cost estimate, schedule, and delivery method.
The documents included in the bid package typically include the Invitation For Bid (IFB), project blueprints, location and schedule constraints, detailed specifications of the contract, which include general standards, contract terms, insurance requirements, and other information about the bid and contract.
Traditional Bidding Process
A takeoff (sometimes referred to as material takeoff or quantity takeoff) is the first step in the bidding process. This step involves examining the blueprints and bid documents in order to extract the required materials and labor required for the project.
The information produced from the takeoff is what is used to build the cost estimate and project schedule.
For a General Contractor, some examples of takeoff items may include:
- Unit counts: E.g. Counts of light fixtures, concrete barriers, pipe fittings, doors, beams, trusses, etc. Anything that needs to be calculated in unit quantities.
- Linear length: E.g. Total lengths of cable, lumber, wiring, trim, rebar, piping, etc. Anything that needs to be calculated in lengths.
- Surface area: E.g. Counts of areas that require painting, drywall, roofing materials. Anything that needs to be calculated by its length times its width.
- Cubic volume: E.g. Concrete pours, earthworks, insulation, asphalt, etc. Anything that needs to be calculated by length times width times height.
- Physical weight: E.g. Gravel, sand, shipping requirements, waste disposal, etc. Weight calculations are often a byproduct of other takeoffs, and are useful when planning transportation and logistics.
ESTIMATE COSTS & TIMELINES
Once a takeoff has been completed, we compile the data to create the cost estimates required for materials, labour, and supplies.
The process typically follows this schedule:
- Review Project Scope and Requirements
- Create a project schedule with deadlines and milestones.
- Identify in-house work and work that needs to be subcontracted.
- Determine labour and material costs.
- Include risk factors, contingencies, and profit margins.
- List project inclusions and exclusions.
- Submit bid to Business Development or to the client.
There are several tools available to estimators to help them build their cost estimate.
- Estimating & Takeoff software – Manual takeoffs are resource-intense and prone to error. software creates a seamless process from takeoff to bid, with minimal chance for human error and several integrated checks and balances to ensure you have completed the takeoff and estimate accurately.
- Subcontractor database – It’s critical to have a good network of subcontractors that you can rely on for expertise and cost estimates. Some companies that provide takeoff software also provide a database of material pricing and general costs associated with a construction project, which can provide a helpful overview into the cost of the project before going out to source local pricing.
- Pre-built estimate templates – Pre-built templates are critical to efficient takeoff and estimating processes, and they help you capture details that the IFB may have missed. Most estimating software providers have multiple pre-built templates for GC’s and larger sub-trades.
- Item specifications – Many software suites will allow you to store item specs and useful data about materials and components. The information may include things like cost to purchase, cost to install, ANSI specifications, and local distributors.
The most common way of bidding is to prepare a hard bid (AKA competitive bid, hard dollar, fixed price, and others).
The GC sources material and subcontractor pricing, and then adds costs for their own supervision, site requirements (such as offices, sanitary facilities, dumpsters), contingencies, and profit.
Contractors with the most competitive bid, along with the best strategy and history/reputation, will likely earn the work. In the case of public projects (owned by government), the contractor with the most competitive bid is required to be awarded the project by law, provided their bid fully meets the requirements of the project.