C ONSTRUCTION C OST E STIMATING S EPTEMBER 2017 Michael Dyer, Mike Myette, PE CCM, CPE, AVS MM Construction Port of Seattle Consulting, LLC
Owner Cost Estimate Topics • The estimate Life Cycle inside the owner’s upper management business process – slides • How to hire an estimating consultant • Handout tool reviews of the following: • New project estimate checklist • Sample capital planning estimating template • Soft costs Included? • Estimate assumptions and qualifications • When to Bid Matrix
Estimate Process Estimates are made up of 3 components • Known Scope – Facility concept/plans /final product / business objective • Contingency - know changes will occur but cannot quantify o Items that will be defined as design progresses • Risk - unknowns market conditions, subsurface conditions, labor quality and availability The ideal estimate would have a balance of these three components and be to predict the final project cost at any stage of the life cycle
Estimating Life Cycle Time Line Business Plan Prospective Scope at concept level • Contingency and risk at maximums • Investment committee • Scope may be more advanced from Business Plan Perspective • Contingency and risk still high Request design funds from Upper Management • Scope is defined a preliminary design level • Contingency better quantified as the defined building parameters definition increases • Risk being reduced as the more the scope is defined
How to Hire an Estimating Consultant • What to put in your RFQ • How to interview and select an estimating consultant • Once hired, when should the estimating consultant work on what stage of the project.
Interactive Discussion of Handout Tools • New Project Estimate Checklist • Sample Capital Planning Estimating template • Soft Costs Included? • Estimate Assumptions and Qualifications • When to bid Matrix
9 MYSTIQUE OF CONTRACTING WHAT IS HAPPENING IN THEIR OFFICES? MM Construction Consulting LLC Mike Myette President 8/27/2018
Contractors the Misunderstood? • Contractors-are we misunderstood or do we create an air of misunderstanding? • Why are we secretive and to what end • Should we be transparent • What should we expect from the Owner/Consultant • Should they be transparent • Same goals • Goals of a project from Owner/Contractor/Designer MM Construction Consulting LLC Mike 8/27/2018 10 Myette President
Why we appear Tense and Uptight! Work Long days Have deadlines with the threat of LD’s Concerns about bonding Concerns about Insurance losses/No Insurance Concerns about lines of credit Concerns about meeting production rates Concerns about unknown conditions MM Construction Consulting LLC Mike 8/27/2018 11 Myette President
Why we appear Tense and Uptight! Concerns about Equipment breakdowns Staffing/Unions/Non-Unions/Training Programs Notice Provisions and making owners upset Provide safe work environment for employees & subcontractors Meeting Minority/DBE subcontracting requirements MM Construction Consulting LLC Mike 8/27/2018 12 Myette President
The Process For Bid-The Sources The Daily Journal of Commerce Construction Business Journals Contacts From Our Industry Trade Magazines Plan Centers Websites/Marketing Networking With Associates and Industry Experts MM Construction Consulting LLC Mike 8/27/2018 13 Myette President
“Go/No Go” Decision Does this project fit our company? Definition of a construction contract: “ A TRANSFER OF RISK FOR AN AGREED FEE” How do you determine what risk is realistic/perceived, acceptable, and manageable? Can it be defined and quantified? Does the client view the risk the same way? Are we looking at it from a similar vantage? Is the risk worth taking on, and for what fee; or are we just gambling? Do we have the experience and foresight to manage this risk? Owner, our experience with him and his attitude Yes MM Construction Consulting LLC Mike 14 8/27/2018 Myette President
“Go/No Go” Decision Project size and value, managerial complexity Regional market conditions Current and projected workload Type of client Type of project. MM Construction Consulting LLC Mike 15 8/27/2018 Myette President
“A Go Decision” Plan/Item Review for Resources. Calls to Prospective Subcontractors. Call to Prospective Material Suppliers. WAIT FOR REPLIES(Week or Two Depending on Size of Project.) MM Construction Consulting LLC Mike 8/27/2018 16 Myette President
The Construction Team Size of Project determines Team. Project Manager/Estimator Project Manager/Estimator/Quantity Determinations. Office Assistance (Bonding/Insurance) Project Specific Personal(Subs, Material Quotes, Material Suppliers, Other Team Assembles As Material Resources are Obtained. MM Construction Consulting LLC Mike 8/27/2018 17 Myette President
Project Assignments for Team. Project Manager Site Visit (Mandatory) Subcontractor Contacts (Bonding) Construction Team Building Construction Work Plan Project Schedule Analysis Project Engineer/Estimator MM Construction Consulting LLC Mike 8/27/2018 18 Myette President
Project Assignments for Team. Site Visits Supplier/Vendor Contacts Spread Sheets Bid Book Read Documents Underlining and Outlining Unique Problems Geotechnical Reports MM Construction Consulting LLC Mike 8/27/2018 19 Myette President
Construction Team Meeting Assembling of Construction Bid Documents Review of Appropriate Bid Documents Review of Deadlines and Drop Dead Dates Discussions of Pinch Points or Problems Areas Discussions of Specialty Contractors Special Construction Techniques Schedule Analysis Special Considerations( Access, Traffic, Interferences, Other Contractors, Fish Windows, Utility Delays/Windows) Insurance/Bonding/Tax-Discussions MM Construction Consulting LLC Mike 8/27/2018 20 Myette President
Construction Bid Documents IMPORTANT” Schedules Long Lead Items Restrictions Owner Supplied Items Special Conditions Utility Conflicts DBE Requirements Other Projects Staged Construction Sequencing MM Construction Consulting LLC Mike 8/27/2018 21 Myette President
Bid TIME Task Task Task Advert PERIOD Week 1 Bid Advertized Order Plans Provide to Plan Bonding/Ins/L egal(if necessary) Week1/2 Call to or From Subcontractor, Visit Project Spread Prospective Material Site(Require) Sheet/Data NO GO TALK Subs and Supply(Bid Entry. Take-Offs Material Data) by Suppliers Suppliers and Understanding by Subs(Same Procedures by Them> Week 3 Receiving Data Spread Sheet, Beginning of Production Calls to Above Data Entry Rate Analysis Week 4 Assemble Team Bid Assembled Production Confusion, for Bid Rate Analysis Cuts, Rationalization, MM Construction Consulting LLC Mike 8/27/2018 22 Myette President Submit Bid.
RCW 39.04.340 Bidder Responsibility (Mandatory) Bidder Responsibility (Supplemental) Basis for evaluation/deadline for appeal CPARB created RCW 39.10.220 suggested guidelines to assist state and municipalities in developing supplemental criteria Contractor’s Toughest Criteria already in place and very restrictive for contractors (BONDING AND INSURANCE) MM Construction Consulting LLC Mike 23 8/27/2018 Myette President
What it takes to “ask” for a bond? ( Bond Prequalification) The last 3 years of your CPA produced financial statements. Preferably reviewed. (This statement can cost anywhere from $8K to $35K. This may not be required for jobs under $500K.) Current in house financial statement year to date. Balance Sheet/ Income Statement. Corresponding Work In Progress statement. Resumes of owners and key personnel. Bid Request Form. MM Construction Consulting LLC—Mike 8/27/2018 24 Myette P.E. President
What it takes to “ask” for a bond? Personal financial statement, accompanied by the willingness of you and your spouse to indemnify (guarantee) that the said insurance company will never have to pay out, and if they do…..your stuff is their stuff. Bank Information {A BANKLINE OF CREDIT MAY BE NEEDED} MM Construction Consulting LLC—Mike 8/27/2018 25 Myette P.E. President
What it takes to “ask” for a bond? After the above is completed the surety still will not guarantee that you will be awarded a bond if you ask. This simply means that you qualify to apply. This information is digested by an underwriting team whose job is to view each case individually and with an open mind, but still maintain a zero loss ratio. {CHARACTER/CAPACITY/CAPITAL} Much of these underwriting decisions can be streamlined and heavily influenced by having a qualified broker that is an expert in the process represent you. MM Construction Consulting LLC—Mike 8/27/2018 26 Myette P.E. President
Bonding Projects Sources of Bonding{Construction Broker} Types of Bonding {Bid/P&P/Release of Retention/Release of Lien/Supply Bond Bond Calculation When To Apply {Very Early} MM Construction Consulting LLC—Mike 8/27/2018 27 Myette P.E. President
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