Construction estimating consists of three parts:
1. Quantity Survey
2. Price Extension
Quantity survey is the physical removal of quantities from the working drawings
and specifications. This can be done using instruments such as a scale, tape,
wheel or a digitizer attached to a computer program.
Price extension is the portion of the estimate in which the contractors “price out”
the individual items, such as pricing out labor and material using current labor
rates and material prices.
Due to technological advancement and specialization in today’s construction
world, the prime contractor’s work is confined to those trades that the company
performs directly, usually without subcontracting. Depending on the type and
size of the projects and the bid strategy the prime contractor’s portion of the
total estimate may be only 5% to 20%.
The amount of direct work contributed to the project reflects the “risk” that the
prime contractor determines to take on a certain project. The remainder of the
work is them “brokered out” or subcontracted.
Bidding is the process whereby the prime contractor receives subcontractor and
vendor prices for labor, material and/or the combination of the two. It is a
systematic process of simplifying facts, reducing errors and omissions, relying
upon speed and efficiency to produce relatively accurate results. Tensions rise
because of the mental concentration required, apprehension over possible
errors and anxiety regarding financial success or failure. It has been said that
during the construction bid there is more competitive pressure and more
performance intensity than in any other industry.
In bidding, one is dealing with many divisions of the specifications, both broad
and narrow scope in nature. Subcontractor and vendor quotations are
matched to the specifications by the CSI 16 Division format. The various
subcontractor and vendor trades, personalities, ambiguities, omissions,
contradictions - not to mention having to meet state and federal regulations -
make “number crunching” within a few hours of bid time a major feat.