Project Estimation & Cost Bidding Flashcards

An installation estimator uses 'historical data' from past projects. What is the MAIN benefit of this practice?

Answer: It provides realistic productivity and cost benchmarks based on proven experience

Historical data provides reliable cost and productivity benchmarks that improve estimate accuracy and reduce the risk of underbidding.

Which cost category includes expenses such as project management, temporary facilities, and site security that benefit the project as a whole rather than a specific task?

Answer: General conditions (or indirect costs)

General conditions cover project-wide costs that support all activities but cannot be assigned to a single work item.

A CPI installer is asked to provide a 'not-to-exceed' (NTE) price on a service call. What does this mean for the customer?

Answer: The customer will not be billed more than the stated maximum price

An NTE price caps the customer's financial exposure; the final invoice may be less but cannot exceed the agreed maximum.

When estimating multi-phase projects, why is it important to schedule cost escalation factors for future phases?

Answer: Material and labor costs may increase over time due to inflation

Inflation and market fluctuations can increase material and labor costs over a project's duration, so future phases should include escalation allowances.

What does 'value engineering' mean in the context of a CPI installation bid?

Answer: Analyzing the project to find cost savings while maintaining required function and quality

Value engineering seeks to reduce project cost by identifying alternative methods or materials that meet performance requirements at lower cost.

An installer submits a bid and later realizes a significant math error that made the bid too low. What is the BEST course of action before contract award?

Answer: Promptly notify the owner of the error and request permission to withdraw or correct the bid

Promptly disclosing a clerical error allows the owner to make an informed decision and protects the installer from being bound to a financially damaging contract.

Which document formally transfers a portion of the prime contractor's work scope and risk to a specialty installer?

Answer: Subcontract agreement

A subcontract agreement legally defines the work scope, price, schedule, and responsibilities transferred from the general contractor to the specialty installer.