411724, 303M Do Intangible Factors Influence Construction Bia Values? Agree & Join Linkedin By clicking Continue, you agree to Linkedin's User Agreement, Privacy Policy, and Cookie Policy. G Signin to LinkedIn with Google x Prakash Rao Gurpur prakrao@gmail.com To create your account, Google will share your name, email address and profile picture with Linkedin. See Linkedin's privacy policy and Terms of Service. TA tow value ‘contact Build Drawings Consiction Do Intangible Factors Influence “ Construction Bid Values? g Ramani Sundaram CCP CEP PMP MRICS (+ Follow ) Director @ TY. Lin | Cost Estimating, PMP Published Nov 10, 2020 When bid results are out « The owner is keen to see if the law bid value is within owner's budget. «The contractor wants to know who won the job. ‘« The owner’ estimator is eager to know how much the winning bid is above or below his or her estimate If the variance is within the allowable range, it enables the owner to proceed with the award of the contract. In case the variance is beyond the acceptable range and if it is still justifiable with valid reasons, the owner may prepare a bid variance white paper and proceed with the job. In the extreme case, the owner may decide to reject tips linkedin.com/pulse/construction-bids-minimizing-variances-between-owners-ramani 184ii24, 303M ‘Do Intangible Factors nluence Constructon Bid Values? the bids and go for re-design and re-bidding later. This obviously will lead to project delay and compound problems furthy Agree & Join Linkedin While quantitative factors that impac By clicking Continue, you agree to Linkedin’s User intangibles and qualitative factors als Agreement, Privacy Policy, and Cookie Policy, They may not be measurable exactly .-. cannot be disregarded. For example, the way bid nadine are grouped, the procurement method chosen by the owner, like Design Bid Build or Design Build, an aggressive schedule, timing of the bid, sole source requirement, quality of design documents, and so forth can impact bid values. we seep etn eee eee The owner and the design team can take pro-active actions during the pre-bid stage that will aid in reducing variances that may be caused due to any intangible reasons. Considerations for the Owner and Architect = = . oO 2 People Learning Jobs Get the apr In a public project, there were 4 elevators and 2 escalators in scope. The bid requirement was that the same bidder should bid all elevators and escalators as one package. The escalators had custom specifications with only two manufacturers who could meet the specification requirements. Their price was expected to be high, but unexpectedly, the bidder quoted an abnormally high price even for the elevators though it had only standard specifications. Instead of combining escalators and elevators as a single package but making a separate package for the ‘elevators’, it was possible for the owner to avoid the monopolistic pricing. Ensure that the bid scope is not confusing with complex groupings or packages. Otherwise, chances are the bidders may quote a higher price in order to reduce risk. Is it the right Contract Procurement Method? - Evaluate what method of procurement will be suitable to the particular project, like DBB (Design Bid Build), DB (Design Build), CM (Construction Manager), etc. Depending upon the market volume, contractors bid competitively but there are also times we might see large variances. tips linkedin.com/puse/construction-bids-minimizing-variances-between-owners-ramani 26sites 309 Do tangible Facts Ionce Constucton Bi Vas? Especially when it is a renovation project or repair works in a public project, owners should analyze well before deciding if ~ wees Agree & Join Linkedin If it is a public project, evaluate the Vy clicking Continue, you agree to Linkedin’s User and make sure the constraints are no Agreement, Privacy Policy, and Cookie Policy, Drawings & Specifications-Check if the bid drawings make the scope clear with adequate details. ‘« in one of the projects, indicative shoring details shown on the drawings were misleading and the bidders quoted five times higher than the normal! « |n another project, the specifications indicated type-316 stainless steel for the exterior canopy instead of type-304 that was common for this type of structure. For this item, the tke —@comment A share © 8-1 Comment «Make sure there are no unidentified scope changes during the final stages of Design Check if Owner's estimate is updated with cost changes due to Addendums, if any. Prior to the issue of bid, do a thorough constructability review to identify errors and omissions and reduce conflicts (Technology helps if it is a BIM project). Calling for Bids at the Right Time - In normal conditions, the timing may be more important to see when the contractors are busy or hungry for jobs, but Covid-19 has changed everything in our world and also the construction industry. It is necessary to check if the bidder is given enough time to compile and present a realistic bid. A short bidding window should not lead bidders quoting high to cover uncertainties. Considerations for the Owner and the Estimator Aggressive Schedule - Check if the construction schedule is realistic or aggressive. Does it require overtime or weekend works? Does it have complicated phasing? Is there a need for multiple mobilization and demobilization of labor and equipment? Allow premiums in the owner's estimate as necessary. Sole sourcing of Materials /Prequalified Sub contractors - With less competition, there is likelihood of higher price quoted by the contractor. Depending upon the item, this tips linkedin.com/puse/construction-bids-minimizing-variances-between-owners-ramani 6sites 309 Do tangible Facts Ionce Constucton Bi Vas? requirement may be avoided unless it is absolutely necessary and in such a case, make allowances in the owne’'s estirr Agree & Join Linkedin Final Thoughts By clicking Continue, you agree to LinkedIn's User Agreement, Privacy Policy, and Cookie Policy, There is no exception to a good cost and intangible factors that could influence the bid numbers. With checks and proactive steps, the owner and the design team can manage the bidding process well and reduce estimate vs bid variances. A committed effort by the owner and the design team to manage the intangibles well, will ensure that there is no budget overrun and will also serve to eliminate other associated problems. Disclaimer: Opinions in this post are my own and not the positions, strategies or views of my employer eg David McNamara ly Passionate about program planning / cost Excellent article. You hit most of the hot buttons that often get missed. One consideration for DB orojects is the extent of design in some limited scopes. Eg: DB elects to have his designer take design to only DD stage and put the burden of CDs on his bidders, relinquishing some ability to mitigate clash conflicts. The estimator might not include that design cost in their estimate. | particularly like that although you mention “the bid’, that your acknowledge multiple “bids” that ‘occur when trade contractors pursue a CM award © Like «© Reply | 1 Reaction To view or add a comment, sign in More articles by this author uses nest sina Soran BEST ESTIMATING & Cost Estimating Approach - Attended 2023 AACE BIDDING SOFTWARE - Al... Rail Transit Projects - Key... International Conferen Jan 20, 2024 Jan 11, 2024 Jun 21, 2023 See all > tips linkedin.com/puse/construction-bids-minimizing-variances-between-owners-ramani 46411724, 303M Do Intangible Factors Influence Construction Bia Values? Insights from the community Agree & Join Linkedin Construction By clicking Continue, you agree to Linkedin’s User How do you justify construction bids to clin Agreement, Privacy Policy, and Cookie Policy. Construction How can you win more construction bids? Construction How can you update construction drawings after a change order? Construction Management How do you work with others to estimate construction costs? Construction Estimating How do you manage changes and variations in schedule of values vs schedule of rates? Construction How do you add value to your construction proposals? Show more ~ i Others also viewed Top 5 Reasons of Delays and Disputes in Infrastructure Projects in India Manish Khilauria, PyMP® + 3y How Come My Engineer's Estimate Was So Far Off? Gordon Meth + 7y it ry > — Question of the Month: What's the value of having a third party cost estimator? = 4 connie Gowder « 2y tips linkedin.com/puse/construction-bids-minimizing-variances-between-owners-ramani 56411124, 303M Do Intangible Factors Influence Construction Bia Values? Bid and Tender Management in the Oil and Gas Cluwadamilare Oladipupo 3y Agree & Join LinkedIn By clicking Continue, you agree to Linkedin's User Why the Low Price Does no Agreement, Privacy Policy, and Cookie Policy. Jay O'Connor + Sy EPC Contractors in the Oil & Gas Industry: How to Ensure a Successful Midstream or Downstream Project. 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