(Excerpted from the book Standard Estimating Practice by BNi Building News)
Once an estimating team learns the mechanics of bid preparation, it can begin performing quite effectively. The team's next goal is to ensure the estimate it submits at the bid opening is complete. Using the following essential techniques will help accomplish this.
Have all information ready and waiting on bid day by creating a spreadsheet of all the bid's cost items a few days in advance
Carefully review the index of the project manual and list each section with its corresponding CSI number. Next, read each section to identify its contents. By reading each section again, the estimator may recognize items assigned to a certain specification section not usually done by that particular trade.
For example, take roofing: The roofers may have excluded metal and wood requirements from their bid. The estimator must confirm that these items are included by other trades, such as sheet metal or roofing specialties - it helps to create a scope of work for each section and list acceptable exclusions. The estimator can't be afraid to ask his bidders to break out the cost of certain items in their bid. He'll want to develop questions for that trade to ask at bid time, and cross-reference them into any other trade that might pick up the excluded or break-out items.
Read each section. List any items that are subject to exclusion by subcontractors bidding that section as separate line items on the spreadsheet. Also, prepare a number in case there is no bid for that item on bid day. Write the questions and list the acceptable exclusions. (These extra line items will be scratched at bid time if they are covered on another line.) Write down the items not listed in the specification book that are required in all sections for a complete job. Question the subcontractors at bid time about these items.
Add items not mentioned in the specification section to the spreadsheet. During the estimating process of company-performed work, make notes of special items for this project. Check the specifications for a listing of these special items.
Add items to the spreadsheet found in the drawings and not found in the specifications. Next, examine any ambiguous areas. Find items on the plans that are either not noted with size or nomenclature, or are not in the specifications. You may find that these items are necessary to complete the structure. Question the design professional in writing and request an answer by addendum.
Add items to the spreadsheet that are not on the drawings or in the specifications that are necessary to complete the job. Advise the design professional via written questions or the estimator's interpretation of the plans and specifications. Also, state this is the basis of the bid if he chooses not to answer in an addendum.
Add items to the spreadsheet needed for code compliance. These codes may already be mentioned on the plans or in the specifications. There may be a requirement to build a complete functioning project "to code." The design professional may not have identified all code requirements. He usually won't allow any "extras", and will require the contractor to furnish everything to comply with the code. This is usually done with no increase in contract amount. Again, write questions for the subcontractors and ask the design professional for clarifications of undefined terms or any questions involving the Code. The following are some suggestions to locate those items which may not be covered:
- Use professionals in each discipline. Have them analyze the sections to determine if the specified materials will operate as a complete system.
- Check items missed on previous jobs. Have the project reviewed by other experienced personnel.
- Review the drawings and implications of all notes on the plans.
- Complete an analysis of the construction schedule, takeoff, and pricing of work by the contractor's own forces. Analyze differences in subcontractor scope of work/quotation sheets received in the mail before bid day, and pricing of general condition items.
- Prepare a bid document form, including the signatures and other required information.
- Develop a bid day strategy for the estimating team, its functions, and communication of any important information, so that everyone is on the same page.
The estimator should prepare a brief written set of instructions for bid-takers which includes:
a) The number of addenda and the subcontractors affected by each addendum.
b) The unit price or alternate bid information required from each subcontractor.
c) A list of questions for the material suppliers and subcontractors at bid time.
The estimator usually has the responsibility of preparing the above documentation. However, other company departments may share these tasks. For instance, the prospective project manager and superintendent may provide input to the analysis. The legal and/or accounting department may review the contract documents for bonding, insurance, and liability requirements. These departments must evaluate the risk factors prior to bid day.
Communicate effectively all throughout the bid process, but especially on bid day. Some of the key items for maximizing efficiency include developing a system for:
- The receptionist to channel calls to the next available bid-taker without disruption or overload.
- Continuing the bid process during mealtime. Discuss the meal orders and meal times early in the day so that the project doesn't stagnate while everyone is out to lunch.
- Prioritizing time on bid day. Each person on the estimating team should concentrate only on the estimating process - an essential part to being an effective team player.
- Handling visitors or questions from subcontractors and material suppliers during the bid day process.
The flow of communication starts with the call screening process and controlling the disruptions of other business calls. An intercom system helps when there are calls waiting. Get the telephone number of the caller; there may not be another opportunity to get the quotation if he hangs up. Handle interruptions on bid day in such a way that the estimating process isn't jeopardized.
3. Team Cohesiveness
Develop organizational cohesiveness within the estimating team. Some of the guidelines include:
- Working together as professionals.
- Communicating openly and clearly, without unnecessary conversation.
- Writing legibly.
A positive approach to develop estimating team cohesiveness is for every member to be supportive of each other toward the common goal of a successful bid. The discipline of the estimating team should be responsive to the needs of the estimator and the risk manager. Written or oral information must be concise and understandable. Unnecessary conversation in the bid room can cause a loss of concentration, jeopardizing the potential success of the entire bid day operation. Working together is also being considerate of each other.
The implementation of these operating techniques will help determine the outcome of a complete bid package. Assemble, review, and have the pre-bid day information ready when bid day arrives; otherwise there will be more stress on the estimating team.
Bid day is an intensely compressed period in which all the various parts of the estimate come together and form a critical mass. The compilation of the estimate becomes a race against time. A smaller estimating team makes it more difficult to complete the bid without holes or overlaps, so be sure that you're fully staffed on that day.
Bid day can be a stressful time when there are many callers and few bid-takers. It puts a burden on the estimator and the risk manager when callers wait until the closing hours of bid day to place their bids. Unfortunately, this happens frequently. One suggestion is to have the bid-takers start calling the prospective subcontractors early on bid day. The bid-takers can get each subcontractor's scope of work and, possibly, an early quotation (subject to change later in the bidding process). During the bidding process, estimators must analyze every bid on the spreadsheet to determine the lowest viable responsive bid.
The communication techniques used during the bid process become essential during the final hours of the bid closeout. Good organizational behavior is the key to good decision making. The risk manager depends on the full cooperation of the other estimating team members, especially during the final hour. This involves an organizational cohesiveness within the team -- built on trust, loyalty, and intestinal fortitude - to avoid more stress on the team.
The attitude of each estimating team member can reduce or increase stress. Members must be supportive of each other as individuals and as a group. Each member should listen to and take direction from the team captain. By recognizing the causes of stress and dealing with them effectively, the team can ensure that the estimating process has a successful conclusion.
After the bidding is over, the estimating team can decompress and discuss the estimate. This post-bid period is a good time to re-evaluate the estimate, confirm the bid analysis, reorganize the telephone quotations, clarify areas of concern, and prepare for the bid results.
There is one last decision that the estimating team makes on bid day. Who will give out the subcontractor bid results? The decision must be consistent with company policy. It's typical to hold all information in confidence until the company receives the final bid results.
The estimating team determines the success of an estimate. A successful estimate is one that is complete, not necessarily the lowest bid. The success of a general contractor's business in a competitive bidding situation relies on the completeness of the estimate on bid day, which can be achieved by implementing the proper bid day procedures.
This article is an excerpt from the book "Standard Estimating Practice 8th Edition" by the American Society of Professional Estimators - available at http://www.bnibooks.com. "Standard Estimating Practice 8th Edition" provides standardized estimating techniques and practices for achieving construction estimates that are accurate and complete. It is an invaluable reference for contractors, engineers, architects, and facility managers who want a clear understanding of estimating techniques they can apply to their business practice.