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    Jordan, Ishra Ella A._ASS1

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    Jordan, Ishra Ella A._ASS1

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    Ella Jordan
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    3 views3 pages

    Jordan, Ishra Ella A._ASS1

    Uploaded by

    Ella Jordan

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    © All Rights Reserved
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    New Era University

    No. 9 Central Avenue, New Era


    Quezon City 1107, Philippines

    COLLEGE OF ENGINEERING AND ARCHITECTURE


    CIVIL ENGINEERING DEPARTMENT

    NAME: JORDAN, ISHRA ELLA A. DATE: SEPTEMBER 8, 2024

    BSCE 4TH YEAR _ 4CE1-CM RATING:

    CE415–1 8
    CONSTRUCTION COST
    ENGINEERING

    ASSIGNMENT # 1

    ENGR. ARCHIE PENAREDONDO


    Define the following steps in cost estimating for bidding on a construction project:

    1. Review the bid package.

    • Reviewing construction bids is a tedious task often found challenging by property owners who are
    typically non-technical. A careful bid review is necessary before awarding a construction contract, as
    budget and schedules hugely depend on the final approved bid amount.
    In this Bid Review Package, bids are thoroughly examined to ensure that they cover construction work
    as expected by the buyer. A professional Bid Review helps eliminate surprises and unexpected expenses
    during construction

    2. Conduct a site visit.


    • A site visit is a physical inspection of a construction site. It’s an opportunity for the project
    team behind the build to see the work in progress and identify potential problems. It can be
    conducted by the project manager, the engineer, the architect, or any other member of the
    project team.

    3. Perform a material takeoff.

    • Material take-off (MTO) is a term used in engineering and construction and refers to a list
    of materials with quantities and types (such as specific grades of steel) that are required to
    build a designed structure or item. This list is generated by analysis of a blueprint or other
    design document. The list of required materials for construction is sometimes referred to as
    the material take-off list.

    4. Solicit pricing from suppliers and vendors.

    • To solicit and evaluate supplier proposals and bids effectively, start with a comprehensive
    request outlining project details and expectations. Communicate evaluation criteria, such as
    cost, quality, and delivery timelines. Encourage open communication with potential
    suppliers to clarify any uncertainties. Rigorously assess proposals against predetermined
    criteria, considering not only price but also supplier reputation, reliability, and past
    performance. Conduct thorough due diligence, including site visits if possible. Finally,
    engage in negotiations to reach mutually beneficial terms before making a well -informed
    supplier selection.
    5. Evaluate labor requirements.

    • Labor requirement focuses on the amount of human labor needed for agricultural production.
    This measure includes a count of the number of work hours, cost of labor, and seasonal supply
    and demand for labor.

    6. Determine insurance and bonding costs.

    • A bond provides a guarantee to the project owner if the contractor does not adhere to the
    contractual agreements of the project. For the contractor, it provides financial peace of mind and
    ensures they won’t suffer a major financial loss if the project gets derailed. Construction
    insurance is a broad category of commercial insurance products that are applied to the work
    contractors do. These policies protect the contractor’s company as a whole, beyond the project
    they are working on.

    7. Calculate overhead and indirect costs.

    • The overhead rate or percentage is the sum your organization spends on making an item or
    providing services to its clients. Calculating the overhead rate can be done by dividing the
    indirect costs by the direct costs and multiplying by 100. If your overhead rate is 40%, it implies
    the enterprise spends 40% of its revenue on making a good or providing a service. The lower
    your overhead rate is, the more efficient and profitable your company may be.
    Indirect costs are those costs not readily identified with a specific project or organizational
    activity but incurred for the joint benefit of both projects and other activities. Indirect costs are
    usually grouped into common pools and charged to benefiting objectives through an allocation
    process/indirect cost rate.

    8. Account for profit and contingency.

    • accounting for profit and contingency involves budgeting for both anticipated and unforeseen
    costs. Profit is the margin added to cover the contractor’s expertise and risks, typically as a
    percentage of total costs. A contingency is a reserve fund set aside for unexpected expenses, such
    as design changes or unforeseen site conditions. Including these elements in the budget ensures
    financial stability and project success. Profit compensates for the contractor’s role, while
    contingency manages risks and prevents budget overruns. Properly incorporating both into
    financial planning helps mitigate risks and maintain project viability.

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