EXERCISE 2.1-In an attempt to obtain what he believes to be the lowest construction cost for his project, the project owner often requires several contractors to submit competing bids, and then awards the construction contract to the low-bird firm. Each of the contractors must prepare estimates, even though most will not be awarded any work.

Contractors’ estimates of time and cost are directly or indirectly charged to a project owner; these costs might be considered “soft costs”, in that they do not directly relate to the actual performance of in-place construction work. These estimating costs are “insurance costs” charged to a project owner to cover the risk of the many uncertainties that characterize the construction process. To illustrate, let us assume that a project owner puts out a projected $1,000,000 project for bid to 10 potential general contractors and that each of these 10 summits a bid. However, none of the potential general contractors can perform all the projected construction work. Each general contractor plans to subcontract one-half of the work to specially contractors. This subcontracted work is to be awarded through 10 separate specialty subcontracts. In other words, the project will be built by a general contractor and 10 specialty contractors. To find the lowest-cost subcontractors, each general contractor solicits, from a separate group of contractors,3 subcontractor bids for each of the 10 subcontracts.

Using a general guideline that each $100,000 of construction work requires 20 hours of time for quantity takeoff, pricing, and other steps necessary to preparing an estimate, and assuming that each person-hour of estimating equates to a $20 cost, calculate the total time and cost of estimating by all contractors involved.


Assuming these types of projects: (a) residential, (b)commercial and industrial, and (c) public works and highway, evaluate each benefit of the CM process outlined in this chapter with respect to each type of project. Rate each benefit a 3 for the most favorable effect, a 2 for some favorable effect, and a 1 for little no effect. For example, you might rate the benefit of a systems approach a 3 for commercial and industrial projects, and a 1 for heavy and highway projects.