Chapter 13 Exercises — Detailed Estimating

Work these with a calculator and a blank table. Estimating is a skill you acquire by doing arithmetic you can defend, not by reading about arithmetic somebody else did.

Difficulty legend: ⭐ basic · ⭐⭐ applied · ⭐⭐⭐ advanced judgment · ⭐⭐⭐⭐ research and extension

Part A — Conceptual Understanding ⭐

A1. In your own words, what is the difference between a division and a bid package? Give one example from Northgate where the two do not line up, and say what money is at risk in the gap.

A2. What is the purpose of writing a dash in an estimate summary row for a division that has no work in it? Why is a dash better than simply omitting the row?

A3. Name the five lines that sit between the Northgate cost of work ($40,000,000) and the Guaranteed Maximum Price ($47,500,000), in order, with the amount of each.

A4. Define scope sheet, bid tabulation, and leveling. Which of the three must be created before bids arrive, and why does the order matter?

A5. What does it mean to say general conditions are time-dependent? Name four items from the Northgate general-conditions estimate that are time-dependent and three that are not.

A6. Define bid shopping and bid peddling precisely. State the one-sentence test that distinguishes both from legitimate post-bid negotiation.

A7. List the five components of equipment ownership cost and the four components of operating cost. Which group continues to accrue when the machine sits idle on site, and which does not?

A8. What is a plug number? Give the five disciplines that keep a plug from becoming a liability.

A9. Explain the difference between markup and margin in one sentence each, then state which is always the larger percentage and why.

A10. Name three documents the estimate becomes after award, and say who owns each.

Part B — Applied Analysis ⭐⭐

B1. A glazing subcontractor's proposal for the Northgate enclosure states: "Includes furnish and install of aluminum curtain wall and storefront systems per drawings A-501 through A-508. Excludes air and vapor barrier, excludes perimeter fire-safing, excludes exterior sealants, excludes precast panels and their embeds, excludes hoisting, excludes interior finishing at jambs and sills."

List every exclusion and identify which MasterFormat division each one lives in. Which two of them are most likely to be excluded by every bidder on the package — and what is the danger of an exclusion that everybody shares?

B2. You are pricing a $28,000,000 school with a 640-calendar-day contract. Your itemized general-conditions estimate comes to $2,240,000. Compute the burn rate per calendar day. Liquidated damages are $3,900/CD. What is your total daily exposure to slipping substantial completion, and what does that number tell you about how much you should be willing to spend to protect the schedule?

B3. Three mechanical bidders come in on a $19,000,000 medical fit-out. Bidder A is $4,820,000 and excludes test and balance, controls interface wiring, and seismic bracing. Bidder B is $5,140,000 and excludes only seismic bracing. Bidder C is $5,290,000 and excludes nothing but requires a 20-day extension to the mechanical rough-in milestone.

Without doing arithmetic, describe what additional information you need before you can compare these three, and explain why Bidder C's schedule requirement may or may not be a price issue.

B4. Kestrel's Northgate estimate carries Divisions 21–28 at $12,935,000, or 32.3% of the cost of work. On a warehouse of the same square footage, that percentage would be closer to 14%. Explain the mechanism behind the difference, and say what it implies for where a project manager on each building should spend their coordination effort.

B5. A subcontractor's proposal says "Price firm for 30 days from date of bid." Your award is expected 75 days after the bid. Describe three different ways to handle this in your estimate, and state which one you would use on a hard-bid lump-sum job and which on a negotiated GMP, with your reasoning.

B6. Your drywall bid tab shows a leveled low bidder at $2,778,000 against a budget of $2,760,000 — a variance of +0.65%. Your electrical bid tab shows a leveled low bidder at $3,410,000 against a budget of $3,860,000 — a variance of −11.7%. Which of these two results should worry you more, and why?

B7. Explain why the payment and performance bond premium must be computed on the full contract value including the fee, and describe the circular-reference problem this creates when you build an estimate by hand. How would you resolve it?

Part C — Calculations & Deliverables ⭐⭐–⭐⭐⭐

C1 — Reconcile a GMP. A CM at Risk project has a cost of work of $63,400,000, general conditions of $4,180,000 over 700 calendar days, insurance and bonds of $1,290,000, and a construction contingency of 3.0% of the sum of those three (round up to the nearest $10,000). The CM fee is 3.75% of the subtotal. Escalation is 2.15% of the material-heavy unbought scope of $22,000,000 plus 1.75% of the labor-heavy unbought scope of $11,500,000.

Build the reconciliation table. State the GMP, the general-conditions burn rate per calendar day, and the fee expressed as a margin on the GMP.

C2 — Build a general-conditions estimate. A 380-calendar-day, $14,000,000 renovation needs: a project manager at 60% for 14 months at $18,900/mo; a superintendent full time for 13 months at $19,400/mo; a field engineer for 11 months at $9,800/mo; a project accountant at 25% for 14 months at $3,800/mo; one trailer for 13 months at $2,400/mo plus $12,000 setup and removal; temporary power for 12 months at $2,900/mo; portable toilets for 12 months at $1,600/mo; dumpsters and hauling for 12 months at $4,300/mo; final cleaning of 42,000 SF at $0.58/SF; small tools $34,000; safety program $46,000; surveying $28,000; closeout $31,000.

Compute the total, the staff percentage of the total, and the burn rate per calendar day. Then state whether the staff percentage is inside the normal band and what you would check if it were not.

C3 — Level three roofing bids. A 34,000 SF TPO roof package has a budget of $503,000.

Kestrel's carried values: cover board $31,000 · sheet metal copings and edge metal $48,000 · roof hatch and safety rail $9,000 · walkway pads $7,000 · hoisting $16,000 · temporary roof at tie-in $12,000 · warranty upgrade from 15 to 20 years $14,000 · daily cleanup $6,000. Addendum 4 added a mechanical screen curb detail worth $19,000. Bond, where not included, is 1.25% of the leveled subtotal.

Produce the leveled bid tab, identify the true low bidder, and state the variance to budget.

C4 — Own versus rent. A 30,000-pound hydraulic excavator: purchase price $284,000, useful life 10,000 hours, salvage $71,000, fleet utilization 1,200 hr/yr, cost of capital 8.0%, taxes/insurance/storage 4.5% of average value. Fuel 5.8 gal/hr at $4.15/gal, lubricants 12% of fuel, undercarriage $19,000 per set with a 4,000-hour life, repairs 60% of straight-line depreciation. Internal rate load 15%.

The job needs it for 7 months and 780 hours. Rental is $7,900/month plus 12% damage waiver, 2% environmental fees, $2,100 delivery and pickup; fuel and lubricants are the renter's cost. Owned mobilization and demobilization is $3,600.

Compute the owned hourly rate, the total for each option, and the difference. Then re-run the owned rate at 700 hr/yr utilization and state whether the decision changes.

C5 — The markup stack. A cost of work of $8,600,000 and general conditions of $940,000 over 410 calendar days. Bond premium is 0.95% of contract value. General liability is 0.62% of contract value. Builder's risk is $1.55 per $1,000 of contract value. Contingency is 2.5% of cost of work plus general conditions plus insurance and bonds. Fee is a 5.0% markup on the subtotal.

Because the insurance and bond lines depend on the contract value, which depends on them, solve it by iteration: start with an assumed contract value of $10,400,000, compute through to a total, then re-run with your computed total as the new assumed contract value. Report the value after the second pass, and state the fee as both a markup and a margin.

C6 — Self-perform decision. You have a subcontract quote of $412,000 for 27,000 SF of slab on grade. Your self-perform build-up is: labor crew of 9 at $448/hr for 10-hour days, 4 placement days; concrete 420 CY plus 4% waste at $178/CY; pump 4 days at $2,240/day; vapor barrier, reinforcing, curing, and saw cutting at $1.38/SF; forms and miscellaneous $9,500; finishing equipment $15,200. Add self-perform supervision of $18,000, a 5% productivity-risk allowance on direct cost, and small tools of $6,400.

Compute your self-perform cost. Should you self-perform? Then compute what happens if productivity misses by 25% (labor and pump only) and state the break-even productivity miss at which self-performing becomes the wrong call.

C7 — Build a bid-day summary. Using the Northgate division table in §13.1, assume that at T−60 minutes you still have plugs in Divisions 12 ($390,000), 13 ($470,000), 27 ($580,000), and 28 ($495,000). Compute the plug total and state it as a percentage of the cost of work and of the GMP. Then write the two sentences you would say out loud in the final review meeting about those plugs.

Part D — Judgment & Ethics ⭐⭐⭐

D1. At 1:22 p.m. on bid day, an electrical subcontractor calls and says: "I know I'm not low. Just tell me what I need to beat and I'll be there." Write out exactly what you say. Then explain what you are protecting and from whom — and explain why the honest answer also protects your company, not just the subcontractor's.

D2. Your executive says in the final review: "Take a hundred thousand out of general conditions. We'll manage it in the field." The general-conditions estimate is itemized and every line is defensible. Describe three ways this instruction could be legitimate and three ways it could be buying the job. What single question separates the two, and what do you do if the answer is unsatisfactory?

D3. A subcontractor's leveled number is $84,000 below the next bidder. You are confident they have missed something, but they have confirmed in writing — twice — that their price is complete and includes all scope on your scope sheet. You have their signed acknowledgment. Do you carry their number? Discuss the risk on both sides, including what happens to your job and to their company if they are wrong, and what you would put in the subcontract either way.

D4. Your project is a public school. A trade contractor you have used successfully for years is not the low bidder, and the low bidder is a firm you do not know with an experience modification rate of 1.41. The bid documents require you to list subcontractors at bid time. Walk through your decision, including what public bidding rules typically require regarding subcontractor listing and substitution — and note that the specific requirements vary by jurisdiction and must be read in the actual bid documents.

D5. You discover, three days after submitting a hard bid you won by $190,000, that your masonry plug was $240,000 low because an addendum added scope you never priced. The owner has not yet issued a notice to proceed. What are your options, what does each cost, and which do you take? Discuss what your bid bond has to do with the answer, and what the reputational arithmetic looks like over a ten-year career.

Part M — Mixed / Interleaved Practice ⭐⭐–⭐⭐⭐

M1 — Chapters 7 + 13. You are leveling a bid tab and two subcontractors disagree about who owns the fire-rated joint at the head of a partition. The drawings show one detail; Specification Section 07 84 00 describes a different assembly. Using the order-of-precedence principle from Chapter 7, explain how you resolve it for pricing purposes before the bid, and what you write into the scope sheet so that neither bidder can qualify around it.

M2 — Chapters 6 + 13. Take four lines from the Northgate estimate — the escalation allowance, the builder's risk deductible reserve, the construction contingency, and the plug risk load in §13.9. For each, state whether it is a contingency (reserve for identified risk), an allowance (placeholder for undefined scope), or a markup (compensation for service). Then explain, using the Chapter 6 definition, why conflating the three is the most common way a contractor deceives itself.

M3 — Chapters 11 + 12 + 13. Your conceptual estimate at schematic design was $310/SF on a 132,000 SF building. Your detailed estimate at construction documents comes to $360/SF. Write the variance explanation you would present to the owner: a table of named causes with dollar values summing to the $50/SF delta. Invent plausible causes consistent with Northgate (design development, market movement, scope additions, and estimating refinement) and label which category each belongs to. Which category is the only one you should apologize for?

M4 — Chapters 4 + 13. Northgate's general-conditions burn rate is $5,150/CD and liquidated damages are $5,500/CD. On a lump-sum contract with the same durations, would the contractor's daily exposure be the same? What about on a cost-plus contract with no GMP? Explain how contract type changes who feels the burn rate, and connect this to the Chapter 4 principle that contract type is a risk-allocation decision.

M5 — Chapters 10 + 13. Divisions 21–28 total 32.3% of the Northgate cost of work, bought from seven subcontractors whose work occupies the same ceiling cavity. Design a bid-package strategy for these seven trades. Would you buy them as seven separate packages, as a single design-assist MEP package, or some hybrid? Price the trade-off in terms of leveling difficulty, scope-gap exposure, coordination cost, and competitive pressure, and connect your answer to the Chapter 10 point that MEP coordination sets the interior schedule.

M6 — Chapters 13 + 28 + 32. Take five lines from your Willow Street detailed estimate. For each, write the cost code you would create, the schedule-of-values line it would roll into, and how you would measure percent complete for billing. Then identify the one line where the cost code and the SOV line cannot be one-to-one, and explain why that is normal rather than a mistake.

Part E — Research & Extension ⭐⭐⭐⭐

E1. Obtain a real bid tabulation from a public agency in your jurisdiction — most state departments of transportation and many city purchasing departments publish them. Study the spread between the low bidder and the second bidder as a percentage of the low bid. Then find five more from the same agency and compute the average spread. What does that number tell you about competition in that market, and what would you do differently as a bidder in a market with a 1.2% average spread versus one with an 8% average spread?

E2. Find the current subcontractor listing requirements for public work in your state or province: what threshold triggers listing, what information must be listed, what grounds permit substitution after award, and what the penalty is for improper substitution. Compare them to a neighboring jurisdiction. Write a one-page memo for a project manager who works in both, highlighting the differences that would change their bid-day behavior. Cite the actual code sections you find — do not rely on secondary summaries.

E3. Ask a working estimator or a subcontractor's chief estimator to show you a real scope sheet for a trade they bid regularly, and to talk you through the three exclusions they are most tired of arguing about. Write up what you learn as a one-page addition to your own scope-sheet template. If you cannot get access to a person, obtain a publicly posted bid package for a government project and reconstruct the scope sheet the general contractor would have needed to write for one trade.