Chapter 15 — Exercises

Work these with the chapter closed where you can. Where an exercise asks for a deliverable, produce the actual document — a scored matrix, a memo, a qualifications page — not a description of one.

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

Part A — Conceptual Understanding ⭐

A1. State the chapter's thesis in one sentence, and explain in two more why a contractor's upside and downside on a lump-sum contract are shaped so differently.

A2. Define responsive and responsible in the context of a public bid. Which of the two is usually not curable after the bid opening, and why does that rule exist?

A3. What is a bid bond, what is its penal sum, and who does it actually protect?

A4. Distinguish bid shopping from bid peddling. Name the party who initiates each.

A5. What is a complementary bid (also called a courtesy or cover bid)? Explain why a contractor who merely answers a request for one has a problem.

A6. Explain the difference between a mathematically unbalanced bid and a materially unbalanced bid. Which one can a public owner typically reject as nonresponsive?

A7. A subcontractor's number arrives at 12:52 p.m. for a 2:00 p.m. bid. Why is that timing rational from the subcontractor's point of view rather than disorganized?

A8. Name the four questions this chapter says every owner is really asking in a qualifications-based interview.

A9. In one sentence each, say what a contractor is actually competing on under design-bid-build, design-build, CM at Risk, and IPD.

A10. What is a strategic pursuit, and what three things must accompany one for it to be legitimate rather than an accident?

A11. Kestrel's model gives "contract terms" a weight of 12 and makes a score of 1 there a knockout. Explain the reasoning in your own words, using the phrase "you cannot price your way out of a clause" and showing that you understand why it is true in a competitive field.

A12. What is the minor informality doctrine, and why should a bidder never plan around it?

A13. Name three items on the bid-document review checklist that an estimator would never encounter in a set of drawings, and say what each one can cost if it is missed.

Part B — Applied Analysis ⭐⭐

B1. A public bid opens with these results: $14,880,000 · $14,940,000 · $15,010,000 · $15,120,000 · $15,300,000. You are the low bidder. Interpret the spread. What, if anything, do you do in the next four hours?

B2. Now the same job opens like this: $13,100,000 · $14,880,000 · $14,940,000 · $15,010,000 · $15,300,000, with an engineer's estimate of $15,050,000. You are low. Interpret the spread and describe exactly what you do in the next four hours — and in what order.

B3. Six bidders on a $30M job come in across a 17% spread, from low to high. Nobody is an obvious outlier; the numbers are simply scattered. What does that tell you about the documents rather than the bidders, and what does it predict about the job's RFI and change-order volume?

B4. A project manual furnishes a geotechnical report marked "for information only," and the supplementary conditions delete the differing site conditions clause. Explain, in the language you would use with your own VP, why adding contingency does not solve this — and what your two real options are.

B5. An owner's bid form requires unit prices for rock excavation and for imported structural fill, but the instructions to bidders do not say whether those unit prices apply to deletions as well as additions, and do not say whether markup is included. Write the two written questions you would submit during the question period, in the exact words you would use.

B6. Your firm has a 14% hit rate on public hard bids and a 31% hit rate on private invited bids. Average pursuit cost is $24,000 for public and $19,000 for private. Compute the cost per win for each, then write two sentences to your president about where the firm's business-development effort should go.

B7. A subcontractor you have never worked with is $310,000 low on the electrical package, which is 9% below the next bidder. You have eleven minutes to the lock. List, in order, the questions you ask and the single document you require before you may carry the number.

B8. Kestrel's go/no-go model weights "self-perform opportunity" at 8 and "contract terms" at 12. Argue for changing those weights — in either direction — for a firm that self-performs 45% of its work by value rather than Kestrel's roughly 20%. Then argue the opposite.

B9. An owner's RFP for CM at Risk services publishes this matrix: qualifications 30, team 15, preconstruction approach 15, understanding of constraints 10, schedule approach 10, fee 20. That is a very different document from Meridian's. Describe the kind of owner who writes it, what it tells you about how the selection will actually be made, and how it changes your decision about whether to pursue at all.

B10. Your firm has been invited to a private bid list for the first time by a developer whose last three projects were financed through single-purpose entities. The documents are excellent and the schedule is fair. Name the three questions you would ask before authorizing estimating hours, name who you would ask each one of, and say what answer would turn the pursuit into a decline.

B11. A general contractor tells you its hit rate is 60%. Before congratulating them, name three explanations for that number that would be bad news rather than good, and say what single additional piece of data would let you tell the difference.

B12. You are the owner's representative writing the instructions to bidders for a $9M municipal building. List five specific provisions you would include to reduce the chance of receiving a bid that is low because it is wrong — and say honestly what each one costs you in bidder participation.

Part C — Calculations and Deliverables ⭐⭐–⭐⭐⭐

C1 — The recovery arithmetic. A contractor carries 3.5% profit on a $16,400,000 lump-sum job and finishes 7% over its cost budget.

(a) Compute the planned profit and planned cost. (b) Compute the actual cost and the final result. (c) Compute the additional revenue, executed perfectly at 3.5%, required to earn the loss back. (d) Express that additional revenue as a multiple of the original contract value.

C2 — Build your own bid-cost model. Using the format in §15.3, build a pursuit-cost estimate for a $9,000,000 private invited bid on a building type your firm knows well. Include every labor line with hours and a rate, plus reproduction, plan-room fees, bond processing, and an allocation for software. State your total in dollars and in man-hours. Then compute the cost per win at hit rates of 20%, 30%, and 50%, and say what each means as a percentage of a 3% margin on $9,000,000.

C3 — The bid tab as intelligence. You are the third bidder of six on a $19,600,000 school, at $20,410,000. The low bid is $19,240,000 and the second is $19,880,000. The architect's estimate was $20,150,000.

(a) Compute each bidder's percentage above the low bid. (b) Compute the low bid's percentage below the architect's estimate. (c) Name the two divisions you would call first, and say what specific question you would ask each about the low bidder's likely scope.

C4 — Expected value of a pursuit. A $24,000,000 hard bid will cost you $31,000 to pursue. Your honest win probability is 45%. If you win: 50% chance of a clean job at +2.8% margin, 30% chance the margin erodes to zero, and 20% chance of a 5% cost overrun.

(a) Compute the dollar outcome of each branch. (b) Compute expected value given a win. (c) Compute expected value of the pursuit. (d) State the decision in one sentence you could say to a VP.

C5 — Score an opportunity. Take a real project in your area that is currently bidding — a school, a municipal building, a road, anything with a public advertisement. Find the advertisement and whatever documents are publicly available. Score it on the eleven-criterion model from §15.2 as if you were a mid-size general contractor. Where you cannot get information, score it as a 2 and write down what question you would have to answer to change that. Produce the completed matrix, the total, the band, and a three-sentence recommendation.

C6 — Write a qualifications page. For the Willow Street Community Center (or any project you know), write a full Qualifications and Clarifications page in the format shown in §15.6: basis of proposal, clarifications of scope, exclusions, and a note on alternates. Minimum twelve numbered items. Then apply the test: read every line aloud and strike any one you would not want the owner reading in the award meeting.

C7 — The bid-day plan. Build a bid-day timeline for a $12,000,000 bid due at 11:00 a.m. Work backward. Name every task, its clock time, the role responsible, and the failure it prevents. Include your lock time and justify it. Include the two-person check at the envelope.

C8 — Unbalanced unit prices, both directions. A unit-price contract lists 2,800 LF of 24-inch storm pipe at an honest price of $184/LF and 6,500 CY of structural excavation at an honest price of $38.50/CY.

(a) Compute the total on the estimated quantities at honest prices. (b) Construct an unbalanced bid that raises the pipe to $240/LF and lowers the excavation enough to hold the total within $2,000 of the honest total. State the excavation unit price you used, to the cent. (c) Compute what each bid is paid if the actual quantities come in at 3,400 LF of pipe and 6,200 CY of excavation. (d) Compute the gain to the unbalanced bidder, then state the two arguments — one enforcement, one ethical — against doing it.

C9 — The hit-rate business case. Your firm pursues 60 jobs a year at an average pursuit cost of $23,000, wins 13, and averages $11,500,000 per win at a 3% margin.

(a) Compute total annual pursuit spend, hit rate, cost per win, and pursuit spend as a percentage of revenue won. (b) Compute total annual project contribution at 3%. (c) Now model a disciplined year: 44 pursuits, same average cost, 13 wins. Recompute (a) and state the dollar saving. (d) Write the two sentences you would use to sell (c) to a president who believes that bidding fewer jobs means winning fewer jobs.

Part D — Judgment and Ethics ⭐⭐⭐

D1. A competitor calls you three days before a bid and says: "We're not really chasing this one, but we need to stay on the district's list. What number should we put in so we don't step on you?" Write, verbatim, what you say. Then write what you do in the next hour, and what you do if the same person calls you again on the next project.

D2. Your firm has been invited onto a private bid list by an owner you have wanted for six years. The documents are complete, the client is excellent, and the contract is fair. But your only qualified superintendent is committed for another five months, and the job starts in eight weeks. Your go/no-go score is 361 — "pursue with conditions." Write the memo. Include the specific, checkable condition, the priced alternative if the condition fails, and the sentence you would say to the owner if you decide to decline.

D3. You are bidding a unit-price contract. Your geotechnical read tells you the drilled-shaft quantity in the bid documents is understated by roughly 20%. You could load the shaft unit price and shave another item, keeping your total competitive, and make about $130,000 if you are right. Or you could ask the question during the question period and let the owner correct the quantity for every bidder. Argue both positions honestly — including the strongest argument for the unbalanced bid — then state which you would do and why. Address what changes if the owner has expressly warned in the instructions that materially unbalanced bids will be rejected.

D4. Your project manager wants to carry a mechanical number from a firm nobody knows, 11% below the next bidder, with no scope letter. She says, correctly, that you will not win without it. Your chief estimator says, also correctly, that you cannot verify the scope in the time remaining. You decide. Write your decision and the one sentence you say to the person whose recommendation you did not take.

D5. A contractor bids a job knowing it does not have a superintendent for it. Make the case that this is an ethical failure and not merely a business one. Connect your answer to the three findings in the scaffold near-miss investigation.

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

M1 — With Chapter 13. You have leveled five drywall quotes and the low one is 14% under the second. Write the leveling checklist you use, then explain how the same 14% gap is interpreted differently on bid day (before you own the job) and at buyout (after you own it). What can you do at buyout that you cannot do on bid day, and what must you not do at either?

M2 — With Chapter 6 and Chapter 4. Take the top five rows of a risk register for a $20M lump-sum school. For each row, say (a) which party the contract assigns it to, (b) whether contingency can price it or a clause has already decided it, and (c) whether it should appear as a go/no-go criterion score or as a dollar line in the estimate. Then state the general rule your five rows illustrate.

M3 — With Chapter 14. A bid package specifies 425 calendar days and $1,200/CD liquidated damages, and requires a CPM schedule with monthly updates and an owner-approved baseline. Your preliminary logic says the work takes 448 calendar days as designed. List every option available to you before the bid, in order of how much they cost, and say which ones are available only during the question period.

M4 — With Chapter 3 and Chapter 11. The same owner, the same building, the same $30M budget, offered to you two ways: as a hard bid against 100% construction documents, or as CM at Risk with a preconstruction fee and a GMP set at 65% documents. Build a two-column comparison of what you compete on, what you can influence, where your margin comes from, what your pursuit costs, and what your worst realistic outcome is. Then say which you would prefer and under what condition you would change your answer.

M5 — With Chapter 5. Your bid was low by $410,000 on an $11,200,000 job, and your estimator has found a transposed subcontractor quote that accounts for $380,000 of it. Write the sequence of the next four hours: who you call, what documents you assemble, what the letter says, and what you do not say in it. Note explicitly which of your steps depend on rules that vary by jurisdiction.

M6 — With Chapter 16. You won a job carrying a mechanical number of $2,140,000 from a subcontractor whose written scope you never received. At buyout, they now say $2,410,000 because "the controls were never in it." Describe your position, your leverage, and your three realistic options. Then describe the fifteen minutes of work on bid day that would have made this conversation unnecessary.

Part E — Research and Extension ⭐⭐⭐⭐

E1. Find a real public procurement portal for a state, county, or city near you. Locate one advertised construction project and download the instructions to bidders. Read them completely. Then write a one-page summary of that agency's specific rules on: bid bond form and amount, addenda acknowledgment, what makes a bid nonresponsive, whether and how a bid may be withdrawn, and the protest procedure and deadline. Note every place the agency's rules differ from the general description in this chapter.

E2. Attend a public bid opening. They are open to the public — that is the point of them. Record every bidder's number. Compute the spread from low to second and from low to high, and compare the low bid to the engineer's or architect's estimate if it is announced. Write half a page on what the distribution tells you about that market and those documents. If you cannot attend one, find a published bid tabulation on an agency website and do the same analysis.

E3. Research how design-build proposals are scored in one public agency that uses the method — a state transportation department is usually the easiest to find. Identify the specific formula or weighting used to combine technical score and price, and write a page on how that formula would change the way you decide how much design to buy during the pursuit. Describe the source you used; do not guess at numbers you cannot verify.