The Estimate and the Bid
When a project is initiated, one of the first tasks of the Project Manager is to determine the scope of the work and to estimate the amount of time and money that will be necessary to complete the project. To do the estimate, the PM will rely upon comparisons to other completed projects of a similar scope. The estimate is an educated guess at what the final cost of the project will be. The Project Manager will try to balance the need for an accurate estimate against a reasonable expenditure of resources to make the estimate. Unfortunately, the best estimate in the world is still nothing more than an educated guess, a guess at what the lowest bid of a given group of contractors will be on a given day. An estimate is NOT a bid. Bids are taken only after the project has been fully designed and specifed. Often, the final design of the project will be quite different from the project that was originally estimated, in which case, it is the responsibility of the Project Manager to keep the client apprised of how those changes are affecting the budget. When the bids are taken from contractors, they can vary as much as 100% on small projects! Usually, the estimate will have been adequate to cover the project costs, but there are occasions when all of the bids are higher than expected, in which case the funding in the project account will have to be increased in order to execute the construction contract, or the project scope reduced to fit the available budget.
Once the construction documents (drawings and specifications) are complete, all approvals are received, and adequate funding has been made available, the project will go out to bid.
The bidding process involves a Contractor obtaining construction documents, compiling costs for each piece of work, and submitting a sealed bid at the public bid opening. The process normally takes three to four weeks. At the bid opening the apparent low bidder is determined. The bidder then obtains the required bonds and insurance certificates in preparation for award of contract. This process can take from one to four weeks. If adequate project funds are available, a contract is then awarded and work will normally begin within five to 30 days, depending on the size of the project.
The process from bid to start of construction, therefore, ranges from four to eight weeks, or more, and will be reflected in the project schedule.
Your Project Manager can answer further questions you may have about the bidding process.