Methods of preparing cost estimates for building construction are described in Sec. 19. It is advisable to have the routine to be followed in preparing cost estimates and submitting bids well established in a contractors organization.
Particular attention should be given to the answers to the question: For whom is the estimate being prepared and for what purpose? The answers will influence the contractor as to the amount of time and effort that should be expended on preparation of the estimate, and also indicate how serious the organization should be about attempting to negotiate a contract at the figure submitted. Decision on the latter should be made at an early date, even before the estimate is prepared, so that the type of estimate can be decided.
Bid Documents. The documents should be examined for completeness of plans and specifications, and for the probable accuracy that an estimate will yield from the information being furnished. For example, sometimes contract documents are sent out for bid when they are only partly complete and the owner does not seriously intend to award a contract at that stage but merely wishes to ascertain whether construction cost will be acceptable.
Preparation of the Top Sheet. This is usually based on an examination of the specifications table of contents. If there are no specifications, then the contractor should use as a guide top sheets (summary sheets showing each trade) from previous estimates for jobs of a similar nature, or checklists.
Subcontractor Prices. Decide on which trades subbids will be obtained, and solicit prices from subcontractors and suppliers in those trades. These requests for prices should be made by postcard, telephone, or personal visit.
Decide on which trades work will be done by the contractors own forces, and prepare a detailed estimate of labor and material for those trades.
Pricing. Use either unit prices arrived at from the contractors own past records, estimates made by the members of the contractors organization, or various reference books that list typical unit prices (Building Construction Cost Data, Robert Snow Means Co., Inc., P.O. Box G, Duxbury, Mass. 02332). Spreadsheets of unit prices for various types of work on different structures may be maintained by a contractor. These can be updated electronically with new wage and material costs, depending on the program used, so that prices can be applied nearly automatically.
Hidden Costs. Carefully examine the general conditions of the contract and visit the site, so as to have a full knowledge of all the possible hidden costs, such as special insurance requirements, portions of site not yet available, and complicated logistics.
Final Steps. Receive prices for materials and subcontracts.
Review the estimate and carefully note exclusions and exceptions in each subcontract bid and in material quotations. Fill in with allowances or budgets those items or trades for which no prices are available.
Decide on the markup. This is an evaluation that should be made by the contractor, weighing factors such as the amount of extras that may be expected, the reputation of the owner, the need for work on the part of the general contractor, and the contractors overhead.
Finally, and most importantly, the estimate must be submitted in the form requested by the owner. The form must be filled in completely, without any qualifying language or exceptions, and must be submitted at the time and place specified in the invitation to bid. Figure 17.3 shows part of an estimate and bid summary produced for a multistory apartment building by a computer.