ESTIMATING AND TENDERING

BACKGROUND OF ESTIMATING

According to Seely estimating involve both calculation and assessment ,both technical data
and human judgement of circumstances and probabilities must be brought together in its
production. Estimating is a technical process of predicting cost of construction work.

Previous projects provides information that can be useful when estimating a job or project.
If a new project is similar to a finished project elements of the finished project might be
used as template for developing the new project`s activity. All team members with
experience may help in the identifying worth ideas or methods that worked well in the past
projects.

ESTIMATING TECHNICQUES

(a) Bottom-up estimating

Is a technique that involves both duration and cost estimates. For bottom-up estimates,
duration and cost estimates start at the lowest level of activity on the work breakdown
structure. Once duration and estimate are completed for each cost forecast for the entire
project, the benefit of this technique is that it yields accurate total time and cost estimates
for a project. Accurate estimates allow for realistic project scheduling and budget planning.

(b) Top-down estimating

It utilises the previous project`s work breakdown to compute the duration of a similar new
project. When using top-down estimating technique we assume that estimates for the past
project accurately apply to the new project. It is important that the degree of similarity
between the project is very close or estimates for the project will be accurate. Top-down
estimating is useful when you do not have a finely detailed work breakdown for a new
project, another name for Top-down estimating is Analogous estimating.

(c) Heuristic Estimating

Project team members who have most experience with different projects activities are
asked to exercise the heuristic duration estimating technique. The team members based
their estimates on historical data they have accumulated from the past project as well as
their own experience. The Rule of Thumb and expert judgement are other names of
heuristic estimating
(d) Parametric Estimating

Is a method used when no specific engineering data is available for a new project? It uses
historical data and statistical relationships to estimate the duration, cost or resource
expenditure for the entire project. It is important to realise parametric estimating yields
rough estimates that range from less than 25% accurate to more than 75% accurate. Project
stakeholders must be on a position to understand that parametric estimates are susceptible
to change, otherwise they run the risk of finalising project goals based on unrealistic
estimates might result.

PHASED ESTIMATING

At the beginning of the project, it may be difficult to estimate the project duration and cost,
since the project is composed of different phases or natural breaks in the activity. It is
simpler and more accurate to estimate duration and cost on a phase by phase basis rather
than trying to estimate project duration and cost all at once. When estimates for the first
phase of the project are completed, data from it is used to calculate estimates for the next
phase.

When phase two is completed data from it is used to calculate estimates for the third phase
and so on until all phases have estimates for time and cost. The simplicity and accuracy of
phased estimates for activity duration and cost safeguards project team against prematurely
committing to time and cost constraints that are later found to be impractical. In addition
the project`s major stakeholders can examine the phase by phase estimates when making
their most difficulty decisions of whether or not to go ahead with the project

Types of estimating

-Unit method

-Cube method

-Superficial method

-Approximate quantities

Approximate quantities

It is regarded as the most reliable and accurate method of estimating provided there is
adequate information to use for estimating and experience of the quantity surveyor or
estimator. Measurements can be carried out though they tend to vary from quantity
surveyor to quantity surveyor. It involves grouping together items to sequence of
operations. Rates are then built from available data in the office from site and all
measurements are taken into the bills of quantities.
Cube method

Relates costs of a building to its volume for example cost per cubic metre. The estimates are
unrealistic since volume of a building does not have a significant relationship with cost of
the building. Moreover cost of a building using cube method results in variations due to
unseen changes for example foundations.

Weaknesses of Cube method

-Does not allow for difference in plan shape, storey height, column spacing but they are
suppose to be taken into account when estimating cost of construction works.

Superficial/ Floor area method

It is based on cost per square meter of a building .It should be restricted to early stages of a
design and frequently used method of approximate estimating. The method is quick and
simple to use and it is clear to the client and design team.

Rules for calculating the area using floor area method

-All measurements are taken from internal face or external and no deduction for internal
walls are done.

-Where different parts of a building vary in function the areas are calculated differently.

-External works and non standard items for example piling are calculated separately and
some specialists services for example soil testing and electrical works are costed by
subcontractors.

Unit method

Often regared as a way of making comparison between buildings inorder to satisfy the
design team that the costs are reasonable in relation to other buidings. Suitable for clients
who specialises in one type of project for example hotels where it can be more accurate for
example bed and breakfast for a single room.

Application of Unit method

-schools cost per pupil

-hospitals cost per space

-hotel cost per room per day or night

Importance of estimating

-for planning and forecasting purposes on both sides client and contractor in construction
industry

-for budgeting

-for loss control on construction projects

Parties involved in estimating

-quantity surveyors or estimators

-client and contractor

-procurement committee for adjudication

TENDERING

Is the process of procurement that involves bidding by two or more organisations.

Tendering can also be defined as administrative procedure of sending out drawings to
contractors for them to state their prices for all items of contract. In adjudication financial
standing and competence of contactor is considered. Tender sum is the final price which is
prepared to carry out the work and it will include not only estimates but also a margin for
overheads and profit. Tendering can also be defined as an administrative procedure of
sending out drawings and bill of quantities or specifications to contractors for pricing all
items of a contract, there competence, financial standing.

METHODS OF TENDERING

- Selective tendering

- Negotiated tendering

- Open tendering

- Competitive tendering

Selective Tendering

This is a type of tendering where competition between contractors is controlled by the

client and unsuitable contractors are eliminated from the process of tendering. It restricts
its list only to local firms with good name reputation who are capable of complying with the
contractual obligations but the level of competition is generally reduced from the starting
point. Such reputable companies should carry a good stock of plant and equipment, employ
experienced technical and managerial staff and supply sufficient resources to ensure the
satisfactory completion of the project. It is the architect, quantity surveyor and client all in
consultation with each other who select and compel the suitable and capable contractor in
most cases it is the client who insists on particular firm or organisation on the list. Selective
tendering will invite only a certain competent contractors to submit a tender to the
proposed job.

Negotiated tendering

Having stated that competition preferably by selected tendering which is acceptable under
normal circumstances there are occasions when it would suit the client to dispense with
element of competition altogether and approach only one contractor who is considered to
be the most suitable under the circumstances and negotiate a price with him. Some
circumstances under which negotiated tendering may be preferable are:

i. A quick start time factor to be taken into consideration

ii. The state of the markets that is forces of demand and supply
iii. A company or firm with specialist plant and techniques
iv. Continuation of the contract that is after the one we have been completed
v. Mutual relationship with other contractors of different items as the one in which the
contractor deals or specialises in.

Open tendering

The system of open tendering is often favoured by many large organisations e.g. local
authorities’ health and water authorities. A room is provided for any contractor who feels
he is capable of performing the work and he can submit his tender. In order to attract the
response from prospective tenderers the client advertises giving a brief description of the
proposed work, anticipated starting date and sometimes an approximate value of the
project. The notification of proposed works is brought to the attention of any contractor
large or small, good or bad, local or international, who cares to search though the
appropriate publications.

It allows all interested parties to tender and the client can gain the biggest possible
response to his advert thereby achieving maximum possible competition and certainly the
lowest possible price. In an attempt to reduce the tender lists clients often ask for a deposit
to be paid which is returned to the contractor on receipt of a bona fide tender. Deposits
tend to deter contractors who are not seriously interested in applying for the job. The
amount of the deposit however must be high enough to deter such people and yet it should
not be so high so as to discourage genuine tenderers.
 Advantages

-Open tendering leaves much to be desired when the desired contractor from tender
list of many contractors perhaps the one with reputable history will be offered the
contract
-there is wider selection of contractors

Disadvantages

-It is risk for a client to choose the lowest price irrespective of the reputation or
suitability of the contractor who may be not equipped to undertake the work
resulting in poor quality of results
-It is one of the largest type of tendering which is wasteful of resources because too
many firms will bid but only one will win
-its time consuming on adjudication due to many bids being submitted
-On many occasions the cost of preparing a tender could amount to several
hundreds of dollars and where specialists engineering contractors are involved a
large degree of design work must be done by the tenderers

Competitive Tendering

A competitive tender refers to the final price submitted by the main contractor which itself
may be made up of both competitive prices. Most contractors’ tenders contain an element
of both; however ‘competition’ in this instance refers to the main contractors’ tender only.
Acknowledging the fact that negotiation is available to the client as an alternative method of
contractor selection, prices obtained from a number of contractors, all competing genuinely
with each other for the work, will probably give the best value for money and will be
suitable for the large majority of building projects

Although it is generally accepted that the basis of competition is normally related to the
process of obtaining the lowest possible price for a job, this need necessarily always be the
case, even though the code of procedure for single stage selective tendering argues for the
element of completion being limited to price only with all other possible variables being
determined beforehand and stated clearly in the tender documents. Such a
recommendation assumes that the client regards cost as all important factor in the building
process and whereas it must be recognised that in most cases it would be so, occasionally a
client may be faced with circumstances which throw a different light on the problem
resulting in other factors being made more crucial than cost to the eventual success of a
development. For example speed of erection may be critical requirement
TENDERING PROCEDURES

-Tender documents are completely prepared and a list of tenders are drawn if its
selective tendering and if its open tendering an advert is placed in public media
especially newspapers.

-Instructions to tenderers probably entitled “Instructions to Tenderers,” is prepared

by the client and is issued on site to contractors on site visit date.

-Instructions contains directions and advice for people responsible for producing the
tender.

-Site visit by contractors

-Pre tender construction programme comprising sources of materials, type of plant

and type of labour force required.

- Preparing the bill of quantities

-Tender submission

-Tender opening

-Examination of submitted tender documents by Procurement Committee

-Adjudication choosing the most suitable contractor.

REFERENCE
Contract Practice for Surveyors Fourth Edition: Jack Ramus

Estimating and Tendering for Building Work: Dennis R Mudd

Estimating and Tendering for Building work by R.C Milne

www.estimating.co.zw