Bidding Lump Sum Civil Engineering Job 3

[mwest]

For the 7 years I've been in business as a consulting engineering (primarily land development and civil design in northern California) I've never been able to develop a good procedure for bidding on a lump sum design job (e.g., all civil plans and spec's, plus drainage report and other misc. items for 50-lot subdivision). I've heard some guys use $3,000/acre, or 10% of the construction cost. I'm in the process of writing a cost proposal for a $16 million multi-family housing complex and it is impossible to predict how many hours and what all my costs will be.

Anybody have any good ideas they want to share?

Doug

 

[mas]

Doug,
I've worked with a number of small consultants and each had similar problems like yours. One boss just had a good feel as to "what the market will bear", another would use quotes from similar projects and tweek the price accordingly. Others wouldn't care about the appropriateness of the price so long as they got the job!

If you're gunning to really get this job and you feel you have to low-ball it, you'd better make certain that you're damn good at hitting them up for change orders if and when they happen. Otherwise, your low-ball price will end up hitting you in the knees!

I think a good method to pricing a job is founded in good record keeping and analysis of all of your other past jobs. I'm sure there are jobs you did where you made a killing. And other jobs where you nearly lost your shirt. And then everything in between.

I'm going to rattle some thoughts here:
how many man-hours did a job take you? Did the job come in under budget? Or did you spend more time on the job than you anticipated? If so, why? Was it because of underpricing; failure to raise a change order for work out of scope; inefficient work performance, methods, or equipment? Etc.

This kind of information really helps you price out the next job with more and more confidence. Of course, compare your prices against the local "Rules of Thumb" for that ever-important sanity check!

Good luck!

 

[nnjunger]

My two cents:

As a client, I would much rather have an up front meeting with prospective bidders, and make sure we agree on a reasonable scope, and look at the fee that is being charged, and the services rendered. A low ball quote with a lot of change orders will sour any long term relationship in my opinion. I personally understand that everyone has to make money, and I have no problem paying a resonable price for services, I don't want to overpay, but I don't expect good quality providers to lose money, once again, it is not conducive to a long term working relationship.

 

[tipsyengine101]

Is 16M the budget limit?
Why not break down the entire project into different disciplines e.g. civil, mechanical, electrical,landscaping etc.
Having done that u may request for quotations from a minimum of three experienced contractors per discipline.
Then you compare their figures, take the most responsive quote and add your charge for supervision, tax, profit, etc to it.

You then send this figure as your quote, if you win then you may enter an agreement with the subcontractors, that leaves u as the main contractor incharge of supervision.

However you must ensure that you not only give to your sub contractors a complete and detailed scope of work, but that you include legal clauses that will ensure that they only get paid for work done to owner specification.

In order words they only get paid when you are paid which implies that the owner is happy!

 

[PEinc]

It sounds to me like mwest is only trying to bid on designing the project, not design and build it. It's not fair or reasonable to ask several contractors to give you bid estimates just to help you prepare your design cost estimate. After all, you don't even have the job yet. I realize that some contractors like to have early information on upcoming projects but they must spend considerable time and money to prepare an estimate. Maybe mwest should engage and pay an estimating service to do his preliminary construction cost estimates.

[bmas]/b had some good comments above.

 

[tipsyengine101]

I missed it!
For designs, experience on previous works, i.e. man hours, leg work, and over heads are the inputs. in most cases this add-up to a percentage ranging between 2.5%-10% of the actual construction cost.

For a design job change orders are rarely expected for it is an indication that the initial scope was not properly presented by the client or that the designer did not capture the clients request properly. Proper and detailed documentation signed off by all parties helps in reducing the problems associated with this but never completely.

So don't plan on getting change orders, except u plan to spend on legal fees, and also strain the relationship.

 

[RDK]

Peinc

Asking contractors for budget numbers is a common practice around here.

We are in a small market where almost all consultants, owners and contractors know each other and cross hiring is not uncommon. That is a person may be in a meeting with his current employer and two previous employers when the owner, consultant and contractor get together.

It’s all about a small market working together to make projects happen. The owner has good budget numbers, the consultants save time, the contractors know what is coming and that the owner has sufficient budget to do the work.

It is moist unfair to ask a contractor for a detailed contract bid price when you do not have sufficient budget available to complete the work.



Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[PEinc]

RDK,

You are right. Contractors and subs are frequently asked to provide budget prices to owners, engineers, CM's, etc. I've worked for a GC, a specialty sub, and now as a consultant and have provided many, many budget prices. However, the prices were always to someone who HAD the job, not to an engineer who was only bidding on a design job. Many times contractors and subs are taken advantage of and are treated like a free estimating service by those budgeting a project. Frequently, a quick price is not good enough in the recipient's opinion. When you give many budget prices to someone but never get any work out of it, it's time to either give quickie budgets or no budgets at all.

 

[smwpe]

mwest:


There is no other way to work this one.

Propose:

Cost times a 2.5 to 3.0 multiplier.

Or, propose 6% of total construction cost, plus any testing costs, which will get you under the stat limit.

Try it, it usually works.

 

[weh3]

I have a similar question on the Engineering Project Management forum, "Providing Engineering Estimates", that has so far received 0 replies. Some of this is helpful.

Regards,
William

 

[smwpe]

PEinc:

Thanks for some clarity in the art of estimating.

You mentioned "estimating services".

Do you have any companys operating in the south east you could recommend?

 

[PEinc]

smwpe,

I have none that I can recommend but the following site has estimating service companies listed in various states. Check it out. I scrolled through and saw companies from the southeast.

http://www.professional-services-co...g/nsearch.html?&us=42409852a1d12&heading=1882