Should RFP include estimated construction cost?

[graybeach]

I work for a utility and am preparing an RFP for engineering design services to rehabilitate a large industrial building. Based on a previous engineering inspection, a fairly detailed list of anticipated construction items has been assembled. I am including this list in the RFP, but I am debating about including the estimated construction cost (ECC). On the one hand, I think it would help the proposers determine the level of effort. On the other hand, I am concerned that it might encourage the proposers to submit a price based on a percentage of the ECC without fully studying the scope. One of my managers has also expressed a concern that including the ECC in the RFP will influence the construction contractor bids. I did a web search and saw several RFPs for design services that did include the ECC.

Your opinions would be greatly appreciated.

 

[lkjh345]

Graybeach:

Personally, I would not require that RFP responses to include a Estimate of Construction Cost.

You may limit the number and types of companies that will submit a response to your RFP if you intend to solictit seperate bids for the construction.

I work for an engineering company. We can estimate fairly quickly, based on our collective expererience, how much engineering effort will be required in the design. Our expectation is, obviously, if we have the best proposal (Note: I say 'best', not neccesarily cheapest. They are two entirely different things.) we will be selected. We do not do construction estimating. It would be difficult for us to find a construction company to partner with to do the construction estimating unless they (the construction company) had some expectation that if our 'team' won, they would get the construction contract. If you plan on later solicting bids for the construction, there is no incentive for a construction company to team up with us and spend their time estimating the construction cost. Knowing this, we would probably conclude that we are not able to respond to the RFP and would not submit a proposal. I suspect this would be the attitude of a lot of engineering companies. You might fairly quickly limit your pool of available responders. Not neccesarily what you want when you are looking for the best proposal.

If you are looking for engineering services AND construction services, you would be best served by soliciting a Design/Build proposal.

JMHO. Others will likely disagree.

Regards.

 

[graybeach]

lkjh345,
We have done an in-house conceptual estimate and believe the work will cost approximately $4,000,000. Do you think we should state in the RFP: "The estimated construction cost is $4,000,000 in 2007 dollars?"

 

[jike]

This depends upon how well define the scope of work is. If the scope of work is not well defined, include the ECC. If the scope is well defined, the ECC is not necessary. If in doubt about the scope then include it.

 

[lkjh345]

Graybeach:

I think I would give a range of costs, just so potential engineering responders know if it is something that is in their usual range of work and is not potentially too large for some firms.

I might say 'The estimated construction cost of the project is between $3,000,000 and $6,000,000 in 2007 dollars.'

Thats not specific enough for anyone to just put a percentage estimate together, but it also gives an indication this is not a $100,000 project nor a $20,000,000 project.

Again, just my opinion.

 

[graybeach]

Thank you lkjh345. That is a good point about communicating the magnitude of the project to potential responders. My manager is very much against including the cost, and maybe I can sway him with this argument. At least the RFP includes a fairly detailed scope of expected construction work which may suffice as jike pointed out.