Estimating and bidding work is an exercise in applying previous experience to forecast events. This involves taking recent labor and material costs for similar projects then applying those results to the projects being bid. A part of this involves making decisions on the conditions that can vary the costs.
If someone gets too complacent about determining the current conditions on the bid, the bid may be too low or too high. Too low of bids are all too frequently referred to as the one that made the biggest mistake.
Construction prices are not like determining prices for refrigerators, cars or other durable goods produced in factory. These items have material costs and consistent production costs that can be readily determined for a given volume of production. Costs can be determined before the item is put up for “sale” to the customer. Construction bids are based upon forecasts of likely productivities, crew composition and future material pricing. This is the “rolling of the dice” on bids or the risk of doing business as a contractor. None of the costs are firm before putting in the bid – selling to the customer. This is what makes construction pricing unique. This is why experienced estimators are critical to construction process.
When placing concrete for a continuous footing, the material price can vary due to the quantity involved. The labor can vary for placing the concrete due to different project conditions. These conditions can change from one portion of the site to another.
Estimators are trained to determine these conditions. But how can the buyer or client readily determine if prices are reasonable, too high or too low when they do not have experienced estimators working for them on a project?
The quick answer is they can’t and will not be able to unless they have experienced estimators preparing their estimates to evaluate the bids.
