W7_A_Estimates the required duration for contractor prepare bidding document

  1. Problem Definition

On this blog posting author want to know what the reasonable duration needed on preparation bidding document by contractor, because in fact contractor always requesting more time to prepare bidding document and always found incomplete bidding document. Based on bidding stage in company regulation contractor can take bidding owner document for identify scope of work until submit the bidding is need 8 – 16 days, it divided into 3 stages :

  1. Stage-1 “Contractor Take Bidding Proposal from Owner” it take 1 – 2 days
  2. Stage-2 “Contractor get detail project explanation” it take 2 -4 days
  3. Stage-3 “Contractor submit bid proposal” it take 5-10 days

On authors works area, project divide to be 3 classification based on project value, it because of level management :

  1. Small Project with value less then US$ 37.000
  2. Medium Project with value US$ 37.000 – US$ 750.000
  3. Big Project with value less then US$ 2.251.000

 

  1. Develop the Feasible Alternative

Figure-1 provide the cost estimate classification for the Process Industries

Figure-1 Cost Estimate Classification System for Process Industries

3. Development of The Outcome for Alternative

Based on Figure-1, cost estimates can be described as follow :

  • Class 5 estimates are generally prepared based on a limited information on project.
  • Class 4 estimates are typically used for project on feasibility study or preliminary budget approval.
  • Class 3 estimates are used as the project budget until replaced by more detailed estimates.
  • Class 2 estimates are often used as the “bid” estimate to establish contract value for contractors.
  • Class 1 estimates are typically prepared to form a current control estimate to be used as the final control baseline.

4. Selection Criteria

On bidding process, contractor use Class 2 estimate in their proposal. Regarding to Figure-1 for class 2 estimates, the preparation effort ranges from 0,02% to 0,1% of project cost.

5.Analysis and Comparison of the Alternative

to obtain the ideal time required by the contractor in drafting the auction document, the supporting data is a rate engineer based on the INKINDO (Indonesian Consultant Firm) 2017 rate, assuming the working time per day is 8 hours, or US $ 17.23 per hour (for 10 years experience) and assume 75% productivity . Tabel-1 shown the calculation

Tabel-1 Bid Estimation Preparation Effort

6. Selection of the Preferred Alternative

Based on table-1, it shown for prepare bidding document contractor need 1 – 22 days depend on project scale of value, compare with company regulations, contractor only  have 8 – 16 days to prepare it. In this situation author has 2 recommendation in point of view for contractor it recommended to make strategic by learning owner’s bidding document on first stage, because it can save 1-2 days before second and third stage, because actually very less discrepancy on BoQ. For Owner point of view its recommended to consider add bidding time from 16 days to be 22 days (6 days added) for contractor prepare a complete and precise bidding document. Factually this finding same with contractor requesting, they need 5-7 days more than company regulation for bidding document submit.

7. Performance Monitoring and The Post Evaluation of Result

This analysis will greatly help estimate the costs incurred as well as the time it takes the contractor to prepare the auction document, and provide a reasonable view to the owner in providing the deadline for the contractor in preparing the documents fairly.

References:

  1. Milza, Rico. (2015). w20_rm_estimate preparation effort for a bi . Retrieved https://goldenaace2015.wordpress.com/2016/05/24/w20_rm_estimate-preparation-effort-for-a-bid/
  2. Guidelines Of Minimum Standards Indonesian In 2017 Direct Personnel and Direct Cost (2017) Retrieved. http://www.inkindo-dki.org/new/BR_2017.pdf
  3. Amos, S. J. (2012). Skills & Knowledge of Cost Engineering: A Continuing Project of the AACE International Education Board (5th ed.). Section 2, Chapter 9. Morgantown, WV: AACE International.
  4. Wibowo, Gideon. (2014). W8_GW_ Costs to Prepare a Bid for a Contractor. Retrieved from:  https://kristalaace2014.wordpress.com/2014/04/16/w8_gw_-costs-to-prepare-a-bid-for-a-contractor/
  5. Occupational Employment Handbook. (2016, May). Retrieved from: Bureau of Labor Statistics: http://www.bls.gov/ooh/business-and-financial/cost-estimators.htm

 

 

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