Have you ever turned in a Bid Proposal or pricing that was not accurate and wished you could have found the error before submittal? If we were to define a "Big Mistake" as a mistake that is large enough that it could not be overcome during the course of the job, would you admit you had ever made one? Or have you ever turned in a number, and wished you could withdraw it because you weren't sure it was correct? Quick Bid's Reports can help you avoid these bidding pitfalls.
Bid Analysis means reviewing key aspects of a Bid to identify potential errors before submitting a Bid Proposal. Using the Markups Tab and Bid Reports, an estimator can quickly double-check Material and Labor, Labor Risk, Cost per Square, and Bid Section per Material Quantity. Experience shows that a mistake will normally surface by examining a Bid from these four different perspectives. If there is an error, one of the perspectives/formulas should expose it. Each analysis formula gives the estimator a different perspective. Here is a break down of each:
Material and Labor Percentages
Using the Markups Tab, view the graph that shows a breakdown of Material, Labor, Equipment, Other and Subcontractor expenses. This is used to review the ratio percentage of labor to material pricing in each Bid section for the Bid along with the percentage of cost for the overall Bid. Many contractors already know what the correct ratios need to be - this will depend on the job and line of work being performed. As a guideline, look at several completed bids and compare to the current Bid. If a Bid shows that either Material or Labor are out of proportion, it may be necessary to review each Condition to determine why - this might be completely acceptable for the given Bid. For example, if your typical/normal Material/Labor ratio is 60/40 for this type of job, and the current Bid shows 20/80, something is wrong. This information is also available in the 'Cost Percentages' report.
Labor Risk
Every estimator knows that the "risk" of a project is in the Labor. The Labor Risk Report takes the total Overhead and Profit (markup) and divides it by the total Labor for each Section. The result is a Risk ratio (percentage) showing the amount of variation to current production rates (Labor) available before a project starts losing money. When an estimator or chief estimator reviews a project, he or she knows if a project is difficult or not. As an estimator reviews or builds Conditions they know if the project includes labor activities that use known production rates or whether the production rate is uncertain and they must use estimated production rates.
For projects where Labor production is well understood, the Risk rate could be lower and the project should still make money, however, for projects using unknown (estimated) production rates, the Risk ratio should be higher (more cushion, so to speak). The smaller the Risk ratio (%), the smaller your safety net, and the more chance you have of making a Big Mistake! Riskier or unknown jobs should have a higher Labor Risk %.
To correct Risk, sort the Conditions Tab by dollar and check the most expensive Conditions first. Be sure to check those Conditions that have a large proportion of Labor to Materials.
Cost per Square Size
Using the Cost per Sq Size Report allows the estimator to use the square size of each area, building or the total Bid to show a dollar cost per square measure for each of those items. This can help avoid under or over reporting quantity for a Bid. For example, projects for similar type of work would generate similar cost per square size. If similar types of Bids show a wide variation in cost per square size, then the estimator needs to determine why. This report requires the square area to be entered at the Bid Cover Sheet for either the whole building or for each individual area at the Bid Areas list.
Unit Cost by Cost Code
Using the Unit Cost by Cost Code Report, an estimator can analyze unit cost for Material. Most estimators know the selling price per square foot of material. For example, say the average price per square foot of drywall is $1.00; if the current Bid does not show a similar unit cost for drywall, the estimator needs to determine the reason. This report displays all Material quantities by Material Cost Code. The total bid price is divided by the quantity of each Material Cost Code to extract a unit selling price per unit. Because estimators key on different materials for this ratio, the report lists all Material Cost Codes although they have no relationship to each other.
Review
Let's say you bid the same type of work on a somewhat consistent basis - hospitals, schools, tenant improvement, shell and core, etc. By analyzing and comparing the current Bid to historical information, you can get a pretty good idea whether the current Bid is accurate or needs review. If significant variations in costs or risk are shown, the Bid may be priced incorrectly.
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