76_980001 - Chapter 5 Cost Estimating and Bidding 5.1 COST...

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Chapter 5 Cost Estimating and Bidding 5.1 COST ESTIMATING Construction estimating is the compilation and analysis of the many items that influence and contribute to the cost of a project. Estimating, which is done before the physical performance of the work, requires a detailed study of the bidding documents and the site conditions. It also involves a careful analysis of the results of the study in order to arrive at the most accurate possible assessment of the probable cost, consistent with the bidding time available and the accuracy and completeness of the information submitted. Construction costs are estimated to serve a variety of purposes, and much of the credit for the success or failure of a contracting enterprise can be ascribed to the skill and astuteness, or lack thereof, of its estimating staff. If the contracting firm obtains its work by competitive bidding, it must be the low bidder on a sufficient number of the projects it bids if it wishes to stay in business. However, the jobs it obtains must not be priced so low that it is impossible to realize a reasonable profit from them. In an atmosphere of intense competition, the preparation of realistic and balanced bids requires the utmost in good judgment and estimating skill. Although negotiated contracts frequently lack a competitive element, the accurate esti- mating of construction costs nonetheless constitutes an important aspect of such contracts. The contractor is expected to provide the owner with reliable advance cost information and its ability to do so determines in large measure its continuing ability to attract owner- clients. In design-construct and construction management contracts, the contractor and the construction manager are called upon to provide expert assistance and advice in regard costs as the design develops. The advance estimation of costs is a necessary part of construction operation and is a key element in the conduct of a successful construe contracting business. It must be understood that construction estimating bears little resemblance to the pilation of industrial "standard costs." By virtue of standardized conditions and close p control, a manufacturing enterprise can predetermine, almost exactly, the total cost of a of production. Construction estimating, in comparison, is a relatively crude process. -:-- absence of any appreciable standardization of conditions from one job to the next, cou .e with the inherently complicating factors of weather, materials, labor, transportation, I and a myriad of others, makes the advance computation of exact construction costs a ~ of accident more than of design. Nevertheless, on the whole, construction estimators remarkably good job despite the imponderables involved in any project.
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