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Project Cost Estimating for GCs
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Project Cost Estimating for GCs
ch 5 and 6
Study
1
Question
Why is project cost estimating important for General Contractors (GCs)?
Answer
In competitive markets where they rely on bidding to secure contracts. Many GCs aim to establish relationships for negotiated contracts to avoid solely relying on competitive bids.
2
Question
On average, what percentage of projects do General Contractors (GCs) win in a competitive bid market?
Answer
GCs typically win around 15-18% of projects in a competitive bid market.
3
Question
What are some factors that might affect the number of bidders on a project?
Answer
Geographical project location and the overall strength of the construction business
4
Question
What are approximate estimates, and what are they based on?
Answer
also known as conceptual, preliminary, or order of magnitude estimates. They provide a small amount of accuracy and are based on historical cost data from the contractor.
5
Question
Why might a developer need an order of magnitude estimate?
Answer
A developer may need an order of magnitude estimate to determine project viability and financing options.
6
Question
What are some examples of how order of magnitude estimates are calculated using historical data?
Answer
Order of magnitude estimates are based on historical data, such as cost per room for hotels, cost per square foot for office buildings, or cost per cubic foot for buildings.
7
Question
What is required to produce detailed estimates, and why are they used?
Answer
Detailed estimates require a complete set of documents, drawings, and specifications. They help GC decide if they want to bid or negotiate
8
Question
What are detailed estimates used for?
Answer
These estimates are produced by GC's in order to submit a competitive bid or when negotiating a contract To provide a cost breakdown for a project, enabling contractors to bid accurately and owners to understand project expenses.
9
Question
What are the two widely used forms of detailed estimates in the construction industry?
Answer
Lump sum and unit price estimates
10
Question
In a lump sum arrangement, what does the bidding contractor do?
Answer
Reviews the contract documents and offers a fixed lump sum price to furnish and install the project in compliance with those documents.
11
Question
Who bears the risk if actual costs exceed the estimated costs in a lump sum arrangement?
Answer
The General Contractor (GC)
12
Question
In a lump sum arrangement, who benefits if the project costs less than the estimate?
Answer
The General Contractor (GC), potentially adding to the projected profit.
13
Question
What type of projects are unit price estimates historically more popular on?
Answer
Engineering and heavy highway type projects.
14
Question
When is the unit price bidding method typically used?
Answer
When it is difficult to determine the exact quantity of material to be installed.
15
Question
In the example of NYSDOT resurfacing asphalt paving, what unit of measure is used and why?
Answer
Per ton of asphalt, because delivery tickets provide the weight of asphalt delivered on each truck.
16
Question
What does the bidding contractor include in their per ton price in a unit price estimate?
Answer
All labor, equipment, traffic control devices, management, and safety oversight costs.
17
Question
After learning of a project, what does the contractor examine to determine interest in bidding?
Answer
The information in the advertisement for bids or the invitation to bid. they should also visit the site
18
Question
What details about a project might factor into the GC's decision on whether or not to bid?
Answer
Project location, project schedule (start/completion dates), GC's experience with the project type, labor availability, and the number of bidders/competition.
19
Question
If a GC decides to bid on a job, who do they contact to obtain documents to start their estimate?
Answer
The architect.
20
Question
Why do architects keep a current list of document holders?
Answer
So the architect and the owner know who to expect bids from on bid day.
21
Question
What are set asides?
Answer
Programs established by certain governmental agencies to assist disadvantaged contractors and small business contractors such as MWBEs.
22
Question
How do subcontractors typically provide estimates to General Contractors (GCs)?
Answer
With complete documents, detailing costs for their specific scope of work.
23
Question
What is the typical participation range for SDVOB contractors?
Answer
20-30% (service-disabled veteran owned business)
24
Question
Why should a contractor make a site visit after the initial review of contract bid documents?
Answer
To determine exact location, topography, availability of utilities, access/egress, location of emergency services, storage area, and transportation facilities.
25
Question
Why is a site visit especially important for renovation projects?
Answer
To assess existing conditions and potential challenges.
26
Question
Why is it crucial for a GC to review bidding documents regarding owner-furnished materials?
Answer
To avoid duplicating costs in the estimate and to understand installation responsibilities.
27
Question
What is an allowance in construction bidding?
Answer
A sum included in the bid to cover the cost of a material or product not yet specified.
28
Question
What happens if the actual cost of a material exceeds or is less than the allowance?
Answer
The GC is issued a change order OR a reduct change order for the difference.
29
Question
Approximately what percentage of a project's total dollar value is typically subcontracted out?
Answer
70-85%
30
Question
When estimating, on what work does a GC perform quantity takeoffs?
Answer
Only on work they plan to self-perform or purchase directly.