Pricing and Estimating

Updated 1/5/24

Pricing is at the core of what we do in estimating. The pricing documents we deliver are intended to be complete and exhaustively reviewed to the extent of allowing us to confidently go “at-risk” with our number and qualifications on the day of submittal—meaning that, if a client is able to accept our number, we would sign a contract on it that day.

These pricing documents are the joint products of the Preconstruction and Operations departments as, by the time of development, it is best for budgets to be reviewed by the project managers who will eventually build the jobs.

They typically take around 6 – 8 weeks to produce—a timeline we should constantly strive to improve. Re-bids should be substantially faster (4 – 6 weeks) as bidders already have familiarity with the project and we have typically already developed bidding scopes.

Here are some essential instructions to keep in mind when producing a pricing estimate:

• Stay organized! Group like items with like items, use section headings, be concise, and don’t duplicate information.

• Check your work! Wherever possible, include redundant checking functions in the Excel file to make sure you do not create calculation errors. Even the most meticulous people are prone to calculation errors in Excel so it is important to constantly double check your work.

• Pay attention to presentation! These are extraordinarily expensive documents for us and for our clients—often costing over $30,000 in staff time. Their professionalism and presentation quality should reflect this investment. Every document should be spellchecked. Formatting should be consistent (spacing, indentation, cell borders, fonts, cell shading, etc. should all be flawless). If colors are used to organize revisions and items, a legend must be provided to explain the meaning of each color and the colors must be used consistently.

• Don’t hide bids! For most of our projects—even the lump sum projects—we have an “open book” arrangement with our clients during preconstruction. For this reason it is critical that no information be hidden. It is possible that through nothing but good-faith errors we could appear to be withholding bid information from our clients. Therefore you must always make sure to note all bids received in the detail section of the budget and reflect their bid numbers accurately to the best of your ability.

• Avoid Bids that are Too Good to be True! Low bids that are drastically lower than the competition for a given trade are often too good to be true. It may make sense, depending on the project, to include contingencies to make up part of the difference between their bid and others’. If you carry “line item” contingencies like this, make sure to note what they are for. Sometimes it’s for a low bid. Sometimes it’s for a known unknown or a specific scenario. In any case, it should be clear.

• Pay attention to MWBE requirements! If Minority- and Women-Based Enterprise targets are actually requirements (i.e., if they are not simply “best efforts” or if they are tied to liquidated damages) a viable path to meeting the project’s goals must be considered.

• Be Careful with Bid Alternates! Not everything that is an alternate for a bidder is an alternate for us. For a variety of reasons, we may ask bidders from multiple trade categories to provide an alternate for a specific scope item. The master scoping process will automatically export “alternate” language into the detail of the budget in multiple sections, but estimators must use their judgement in choosing which section to use and editing the language to reflect Monadnock’s overall scope for the job without redundancy or unreasonable alternates.

• Remember the purpose of the document! Not everything from the trades’ scope checklists needs to be noted on the budget or pricing doc. For example, we will often ask bidders for takeoffs, second tier subcontractor names, material lead times, and engineering lead times. This is important information for us and the project managers, but often it does not need to be noted in the budget detail section. (The information will not be lost because it will remain in the bidders’ checklists.)

• Always Over-communicate with ITBs! When producing ITBs, always err on the side of too much information. If you are questioning whether bidders need a specific document or not, chances are that you should include it.

• Never Hard-Code in the Summing Column! In the detail section of the pricing estimate, avoid and beware “hard-coded” numbers in the summing column. The summing column numbers should be generated by a formula (i.e., unit quantity multiplied by unit rate). Hard-coded numbers in the summing column have led to innumerable Excel budget errors at this company.

• Don’t scattershot questions to the architect! To the greatest extent possible, we should be gathering the team’s questions together and sending them to the architect in a unified package. If project managers are already working on the project, it is up to them whether they would like to make your questions or the bidders’ questions a formal RFI or if they would like you or others to reach out to the architect informally.

• Always solicit subcontractor value engineering ideas! Value Engineering is one of the most important services we can provide and one that almost all our clients appreciate and value. Subcontractors are the ones who are the most able to provide value engineering that does not meaningfully decrease the appeal of the building to the client so their ideas should always be sought.

• Focus on Quality Bidders! Although it may sometimes be necessary, avoid carrying bidders who have not previously and successfully completed a job for Monadnock. Sometimes when it is unavoidable the risk can be mitigated by adding a specific trade contingency. When in doubt about a contractor’s history with Monadnock, refer to the bidder/prequalification database.

• Categorize your Costs! Every number factored into the budget should be categorized as either: a bidder proposal (“P”), an internal estimate (“E”), a contingency (“C”), or a subcontractor bond (“B”). This allows us to easily separate out the cost categories on the analysis sheet. Generally, the total for “P” should be well over 90% of the overall trade cost.

• Compare your Totals to Precedents and Comparable Projects! Pricing estimates should have a comparison on the analysis or trade payment breakdown to previous versions. This comparison should be done on a gross basis, not $/gross square feet. Where there is a large variance from the previous version, notes should be provided to explain the reasons.

• Review Related Internal Documents! Be sure to thoroughly review any drawing comment documents produced by Monadnock because many of the issues raised by these documents need to be addressed in turn on the pricing estimate by specific qualifications.

• Read Every Proposal (the bid Checklists are NOT enough!) Make sure to review every bid qualification for every bid carried. Some of them may be problematic for our own budget or need to be covered by qualifications on our end. This has historically been a big friction point between project manager and precon managers. You must review (and address if needed) the content of the proposal itself.

• Avoid Over-budgeting (except where intentional and understood by all)! Anyone can safely over-budget a project. The goal for us should instead be to accurately predict the ultimate profit margin (which may include some anticipated buyout savings) for the project. Towards this end, avoid so-called “feather bedding” and unnecessarily large allowances. 

• Be Careful with our Markups! Be mindful of the sequence of “below the line” costs such as bond, fee, insurance, contingency. The application of fee, insurance, and contingency markups to various other costs should match our arrangement/agreement with that client. At the time of this writing, our most typical arrangement is that fee should be calculated off the total of trade costs, general conditions costs, and the lump sum insurance line.  SDI is calculated off of trade costs.

Reprice Procedures Updated 5/9/22

Here’s a detailed timeline for repricing exercises. The total duration will vary based on the degree of changes, but this will be our starting point.

Bidder Communication

Updated 6/8/21

As a general contractor and construction manager that does not self-perform any of our own work, we live and die by our subcontractor relationships. It is essential that we return bidders’ calls, provide constant feedback, and develop productive working relationships with all. Their questions should be acknowledged and addressed. Most of all they want feedback on their bids. Whenever possible, they should be given this feedback without jeopardizing our negotiating position during buyout. When in doubt on this last point, bidders can be referred to the Director of Preconstruction for specific feedback on pricing that might affect Monadnock’s overall negotiating position with them or the essential fairness of the bidding process.

It is also crucial to remember that very few bidders will submit bids--and especially not in a timely fashion--without verbal contact. ITBs and email follow-up is insufficient. Bidders must be called, and called, and called again. There is no substitute for real verbal contact and relationships. Ideally, this occurs just before the ITB, just after the ITB, and weekly until the bid is received.

The following are pointers and policies related to bidder communication:

• Communication should be fair. When providing information as a response to a bidder’s question, always make sure to in turn provide that information to the rest of the bidders. This ensures that no necessary information is missed and that the bidding process is fair to all.

• Make them do their own takeoffs. In most (but not all cases), you should avoid providing bidders with your takeoff information as it is their responsibility (and risk) to interpret the drawings for quantities.

• Share bids when you get them. When bids are received, it is important to immediately circulate them via email to all the members of the project management team (if they are already assigned to the project). This must happen regardless of whether the bid has been filed on the server.

• Use verbal scope discussions with emailed confirmation followups. Although it is always best to get bidders’ commitments in writing, another useful technique when time does not allow is to call the bidder, get the confirmation verbally, and then send your own confirmation email to that bidder memorializing your conversations and asking them to speak up if they disagree with that memo. It is best to then file this email with the subcontractors’ proposal documents.

• Be helpful. If the bidders have questions or issues, try your best to be helpful. This will in turn help you in the long run.

• Hold repeat subs to high standards. If we give subcontractors work, they owe us on time and complete bids. If you’re not getting that, call them out firmly but professionally. If that doesn’t work, escalate it to higher ups on both sides. Holding them to high standards trains them and will help you and your teammates in the future.

Due to MWBE requirements, bid communication must be fully documented by means of a Bidding Log. Without this log, we will be unable to prove compliance with these government requirements and would be outside the requirements of our contract. These logs also provide confirmation to the DOP that required bidder communication is taking place.

Estimating Methods/Cost Models

Updated 10/8/21

A good estimating method or cost model has to accomplish a variety of things and these goals sometimes conflict with each other.

1. It has to be accurate/reliable and relatively precise (more on this later) … but not to an extent unreasonable given our subcontractors’ estimating methods.

2. It has to be rational to decision makers. For example, we might find that carpentry costs are magically and perfectly correlated to the square footage of sidewalk and that we’re able to perfectly estimate carpentry every time just by taking off sidewalk square footage. But that wouldn’t be rational and intelligible to decision makers—the causation is not clear. They would see our estimate and think (a) we’re crazy and (b) that they can add gold stud framing and not expend any more money as long as the sidewalk stayed the same. Obviously this example is extreme. A more likely scenario is that we may find our rational method not especially more accurate or precise than an irrational method and that the latter is far easier. In those cases, we must still pick the former.

3. It has to be intelligible to decision makers. For example, we might be able to accurately and precisely predict costs for carpentry parametrically using a regression model on a bunch of variables (quantity takeoffs most likely). But if you put an equation in your estimate, our clients will either not understand it or think you have lost it altogether.

4. It should not rely on inputs that are too hard to come by. For example, we might be able to do an extremely precise estimate for carpentry if we count every screw, but it would be unreasonably difficult to do that takeoff.

Accuracy in estimating refers to how closely an estimate comes to predicting the “true” value. Precision in estimating refers to the replicability of the results (or the differences between the estimates). If you have an accurate estimate that is not precise, you might round your unit rate a lot. If you have an accurate and precise estimate, it might make less sense to round the unit rate.

When you know the method or model you are using is imprecise, you should round so that you do not present a false impression of precision.

Costs vs. Marginal Costs

Updated 10/8/21

The unit cost of something is unlikely to be the same as the marginal cost of more of something. This fact can often create confusion or lead to errors, especially when we are providing info to our clients regarding the cost impacts of their decisions.

Take elevators for example. We may estimate elevators at $25,000 per stop or a 10 story elevator at $250,000. That doesn’t mean that adding one stop to the building means $25,000 more in elevator costs (the marginal cost of an additional stop). That original $25,000 covered the entrances, rails, ropes, etc. that increase with another stop—but it also covered otherwise fixed costs like the machine, the buffer, the counterweight, and subcontractor general conditions that largely don’t change with the added stop. For that reason, the marginal cost of an added stop is probably substantially less than the original unit cost per stop.

Bid List Production

Updated 6/2/21

Bid lists will inevitably remain in flux throughout the budget and buyout process but it is still important to make sure everyone agrees (or was at least afforded the opportunity to comment) on the initial list. Try to strike a balance between having enough bid coverage for each trade and not wasting bidders’ time (either by using so many bidders that each of them has only a small chance of winning or by using bidders who are unlikely to be awarded the project regardless of the size of the bidding pool).

Bid lists should be produced by using the Bid List Matrix and by reference to the bidder/prequalification database (at the time of this writing, hosted in TradeTap). After you develop a draft bid list, circulate it to the President, Director and Associate Director of Preconstruction, and job-specific project management staff for their comments, additions, changes, and deletions. Best practice is to distribute the list including all the information from the bidder matrix (i.e., showing the bidders who are not going to receive ITBs as well). If you do this, reviewers can get a full picture of who is in and who is out without having to try to remember ever subcontractor we have ever spoken to.

Be sure to include enough bidders for chronically under-bid trades. For example, at the time of this writing we rarely have as many bids as we would like for Landscaping or Storefronts. Keep in mind that to get three bids you may have to invite five bidders (because some will inevitably drop out of bidding, especially in a hot market).

Invitations to Bid (ITBs)

Updated 6/2/21

ITBs should be clear, concise, and grammatically correct. They should always include a list or log of all documents included for bidders’ review. They should also provide bidders with essential information about the project, especially when scopes or scope checklists are not readily available. At a minimum, that information must include:

• The labor status of the project (i.e., open-shop, prevailing wage/union, or union non-prevailing, etc.),

• The bid due date,

• The anticipated Project start date,

• The Tax status of the project (i.e., capital improvement, tax exempt, etc.),

• The Insurance status of the project (i.e., CCIP, conventional insurance, coverage requirements, etc.),

• and any Exotic sustainability requirements (such as Passive House certification) if applicable.

ITBs may be emailed. However, at the time of this writing we are transitioning to using Building Connected for ITBs and bidding management. When they are emailed, make sure that the recipient bidders are blind copied so that they do not see the names or quantity of the other bidders.

ITBs should be reviewed and accepted by the project management team if they have already been assigned.

Using the Master Scope and Scope Macro

Updated 4/29/22

When we send out a Drawing Set to subcontractors for pricing, one important aspect of the Precon Manager’s responsibilities is to review the Drawings/Specifications for all applicable scope across each applicable trade. While it is important to capture scope shown on the drawings, it is even more important to clarify, emphasize, and modify that scope in order to instruct bidders on how we want to build the project. Follow the below steps to produce the Master Scope Document and Trade SOW checklists. This will become the foundation for the bidding scopes, Client pricing deliverables and ultimately (after further modification during the buyout process) contract Scope of Work Exhibits.

Master Scope CONTENT Instructions:

• Open the file “moncon_master_scope_content”. This file is password protected, so open as “Read-Only”

  (Path to file on server: S:\Monadnock Construction\Precon\01 - Master Docs)

• “Save As” the file into your project specific Scope Folder with the name “projectname_scope_content_YYMMDD”

• Begin filling out the Scope Content document while reviewing the Drawings/Specifications. This document contains most of the relevant scope that you will encounter as it applies to each trade (Trades are in Master Format Order). This file does not have any macros, conditional formatting etc. (Keep in mind, you are able to add lines and modify the left-hand scope; however, it’s better to consult your supervisor or colleagues beforehand so as not to inadvertently add duplicate scope or general confusion). See below for instructions regarding each column:

  • Scope Columns 1-5: Unless you are modifying the left-hand scope or adding new lines (see note above), you do not need to modify these lines.

  • Note Column: In this column, you can expand on the left-hand scope and add your own, more specific, information. As a general rule, a note in this column should only be used to clarify the left-hand scope IFF (if and only if) it is not clear in the contract documents. Sometimes, adding notes can add to confusion rather than reduce it.

    • If the scope line is applicable to your project and there is a “MUFS” note in the “Instruction” Column, you always need to add a note to clarify.

    • Try to avoid unnecessary words and abbreviate where possible to shorten these notes. Long notes added to the end of the scope line item may cause readability issues. Remember that many people still review these documents in hard copy format.

    • All Trade Divisions have a "Job-Specific Section” where you can enter scope that is specifically applicable to your job and is not covered by the pre-filled scope. If you are using these rows, enter your item in the Note Column and NOT in the left-hand side. Always try to use lines that already exist so we don’t duplicate content and become disorganized. For example, rather than add a new note in a job specific section, can your content just be appended to an existing note?

  • Type Column: This column is used solely for macro-purposes. Unless you are adding new Job-Specific Line items, you do not need to modify this column.

  • Status Column: This column is used to distinguish between what scope is not applicable to the project from what is. Here, we also note what scope should be excluded from our base scope, and what should be requested as an alternate from the subcontractors. When filling out this column, it is important that you fill out every cell with one of the following options:

    • “NA”: Scope is not applicable to this job, and will not show up on the Pricing Doc/SOW

    • “Yes”: Scope IS applicable to this job, and will show up as base scope on the Pricing Doc/SOW

    • “ALTERNATE”: Scope should be excluded from subcontractors’ base bid; however, we are asking them to price as an add/deduct alternate.

    • “EXCLUDE”: Scope is shown on the drawings (or otherwise would typically [or accidentally] be picked up by the subcontractor), but we are specifically instructing the sub to exclude this.

    A few important notes regarding the above:

    • Be sure to follow the letter cases and spelling exactly as shown above.

    • Remember that an alternate for a subcontractor is not necessarily an alternate for us. (The same goes for exclusions.)

  • Trade Column: This column is used to separate the Pricing Document into different trades and generate Trade-Specific SOW checklists. Although the scope is already sorted by Master Format Trade code, you will enter the trade name for every line item that you have noted as “Yes”, “ALTERNATE”, or “EXCLUDE”. A few notes below:

    • Some Trades (for example, Div. 08 50 - Windows) have the scope related to the furnish and installation included under the same header. Monadnock often purchases material (e.g. UPVC windows) from a manufacturer/supplier of a manufacturer and awards the installation separately to an installer. This is why it is important to distinguish separate trade names in this column, so the trade scopes are separated.

    • When typing the trade name in, make sure you abbreviate (e.g. do not type out “Excavation and Foundations”; use “Excv Fdn” or similar). The macro uses this name as the Excel Worksheet name, and if the text entered in this column is too long, the macro will encounter a bug.

    • Make sure that spelling is consistent for all scope items that you want grouped into a trade. If the Trade Name spelling for is off by just one character (e.g. “Excv Fdn” vs “Exc Fdn”) for scope items you want grouped under one trade, the macro will create two separate trades.

  • TradeType Column: This column is used to separate Furnish Only trades from Furnish/Install Trades. We want to distinguish between these two types, so we are not sending installation-related “General” scope items (the first 83 lines of the content file) to a Furnish-only subcontractor. Enter the following as applicable for every line item that have noted as “Yes”, “ALTERNATE”, or “EXCLUDE”.:

    • “FI”: Furnish and Install Trade

    • “FO”: Furnish ONLY Trade

• Instruction Column: This column is for reference only. You do not need to modify this column. See below for acronym meanings:

  • “MUFS”: Meaningless Unless Further Specified--e.g., expand upon the prompt or don't use the note.

  • “FFUN”: Frequently Messed Up Note--e.g., be careful with this one and flag it if you are unclear.

  • “OIFR”: Only if Forced or Required--e.g., don't instruct the subs in this way unless it is a hard requirement of the contract docs/owner.

  • “ADC”: Avoid double counting--e.g., this item may show up in another trade.

  • “MCIS”: Moncon Standard/Very Likely to be Applicable for Trade

  A few tips when filling out this content file:

  • Because the scope sorts trades by CSI/Master Format, you can quickly fill out the “Status” Column for trades that you know are not applicable to your project (e.g. if Demolition and/or Abatement is not required on your project or if you’re only filling out the scope for one trade, you can enter “NA” for every line item under that heading). This makes the document smaller and more manageable.

  • If your project is New Construction, you can also enter “NA” in the “Status” Column for all Rehab-related scope items to make the document more manageable.

  • Be sure to fill out all cells as instructed above (if you leave a cell blank within the “Status” Colum or “Trade” Column, it will not be transferred over to your Pricing Document and Trade SOW checklists.

  • During your first few attempts at filling this document out, you will notice that you do not recognize a lot of the language and scope items included here. Don’t be intimidated – you will learn with experience. Keep track of those items that you do not understand and schedule a time to review with your supervisor or ask your colleagues.

• Once you have completed filling out the Scope Content File for your project, send the excel document to your supervisor for review. When you receive comments back, you will return to the Scope Content file and make the noted adjustments. Now, you are ready to generate the Pricing Document and Trade Scope checklists.

  • Although project managers won’t always be assigned or won’t always have time for review, all must be given the opportunity to review and not with an unreasonably fast turnaround. Best practice is to inform the team of what the checklist document will be circulated for review so they have notice to learn the drawings in advance. Sometimes we get a lot of comments, sometimes we get none.

Master Scoper Instructions:

Once you complete the Scope Content exercise for your project, you will first have to Generate the pricing doc. You CANNOT create the Trade Scopes directly from the scope content file!

• Open the file “moncon_master_scoper_macro”. This file is password protected, so open as “Read-Only”
  (Path to file on server: S:\Monadnock Construction\Precon\01 - Master Docs)

• “Save As” the file into your project specific Scope Folder (very important to save in this folder) with the name “projectname_scoper_macro_YYMMDD”

  (Make sure this file is saved as a Macro-Enabled document)

• Open your reviewed, project-specific Scope Content file. Copy all columns from “Code” (Column A) to TradeType (Column K).

• Paste As-Value the copied contents into cell A1 of the “Scoper Macro” File. Make sure that all items were copied over correctly into the appropriate column. Save the document.

• Navigate to the “Precon Tools” ribbon in the Excel Header (if this ribbon does not appear, ask your supervisor or colleagues for assistance). As mentioned above, you must first run the “Generate Pricing Doc” Macro first BEFORE you create the Trade SOW’s.

• Once the macro runs you’ll see a dialog box appear asking the user to choose the printer which the documents will be adjusted for. Choose either “Bluebeam PDF” (if your computer has Bluebeam installed) or “Microsoft Print to PDF” (if not).

• Let the macro run (make take a few minutes depending on how many files you have open or how recently you restarted your computer). Once it completes, you should receive a Message Box notification to “Input Project Name in ‘Detail’ Worksheet. As it says, navigate to the Detail Sheet and update.

• Do a quick check to make sure that the Detail Page has your scope separated properly, and all the Trade Scopes have been produced as worksheets or tabs below. If it looks good, save the file.

  • Before continuing to Step 8, go to your printer setting (in Excel), and change your printer to Bluebeam PDF. Failure to do so will cause a bug when exporting your trade scopes.

• As the Message Box prompt says, update the Project Name in the “Detail” sheet. Be sure to flip through the SOW tabs to make sure that your Trade Scopes are formatted correctly, all notes have been carried over, etc. before sending. Then run the “Export Trade SOW’s” button in the “Precon Tools” Ribbon.

• You’ll receive a prompt asking if you updated the Project Name in the Detail Worksheet. If you completed this step, press “Yes” (Pressing “No” will terminate the macro so you can update).

• You’ll receive a separate prompt asking if you’ve reviewed the scopes to make sure that all formatting is correct, notes have carried over, alternates are separated, etc. If you completed this step, press “Yes” (Pressing “No” will terminate the macro so you can review).

• After the macro runs, you’ll receive a final prompt to input a file name for your Trade Scopes. Per the Message Box, the name should be “projectname_tradescopes”. You don’t need to input the date here, the macro will do that for you (the macro adds the date and time into the naming convention down to the second so that if you need to run the Export Macro a minute later, you won’t run into a bug where it needs to overwrite).

• Finally, you will receive a Message Box notification that the Trade Scopes have been generated in a separate folder within your Scope Folder. This macro generates the SOWs as both PDF and Excel in the sequence in which they were used when filling out the content. You will also notice that a new Excel file containing just the Trade Scopes have been created as well. This file is for reference only (the trade scopes are still located in your previous scoper file). You can supersede this file if you would like.

*If at any point, you realize that you had an error in your scoper file, you can always go back to the saved file that you created in Step 7 and delete all tabs EXCEPT the “Scope” worksheet (located at the very end). Here, you can make your changes, but you will have to re-run the “Generate Pricing Doc” macro FOLLOWED BY the “Export Trade SOW’s macro as detailed in Steps 5 and on.

• Assuming that the scope checklists are satisfactory, you are able to distribute these to the subcontractors. At the time of this writing, we utilize Building Connected for our bid process (subject to change). Separate the trade scopes by CSI/Master format-coded folders when sending out for easy navigation.

• Finally, you are able to move over to the Budget/Pricing Document (comprised of the Trade Payment Breakdown Sheet and the Pricing Detail Sheet). To do so, simply return to the Scoper File that you saved in Step 7, delete all Trade-Specific SOW and Scope Worksheets and “Save As” the file into your Project Specific “Budget & Client Deliverables” Folder (refer to your onboarding checklist for file naming conventions).

*Once the scopes are out with the subs, you will primarily work within the BUDGET/PRICING file and not the SCOPER file. Any changes that are made after the fact are typically handled by making the change directly in the budget file and discussing the change over the phone with the subs. If you need to completely revise the scope, you can repeat this process using the Scoper File that you saved in Step 7, but that is up to the user’s discretion (best to discuss with your immediate supervisor).

**As you run through this process, you may encounter some bugs with the macro. Please keep track of any errors and bring to the attention of the team so that the code can be fixed and updated.

Qualifications

Updated 6/8/21

When writing budget qualifications, it is important to avoid over-qualification. Qualifications should only be included if they are relevant to the project, accurate, and necessary. Besides the overall price, the qualifications are the most important document to our clients and must be produced and reviewed with care. Try to put yourself in the clients’ shoes and to avoid the practices that we dislike when used against us by subcontractors.

Here are some things to avoid:

Never qualify something as excluded that is in fact included in the budget. (It may sound obvious, but it occurs frequently.)

• Avoid specific exclusions and qualifications that don’t include a contract document reference. E.G.--DON’T write “Gold toilets are excluded”. DO write “Gold toilets are excluded (noted as required in the specifications, page 22 00 00 -14)”. If you can’t find a relevant reference in the contract documents for a qualification, maybe it doesn’t need to be qualified!

• Avoid qualifications out of step with our contractual agreement. E.G.—don’t write “Liquidated Damages are excluded” if we have already agreed to them as part of the contract.

• Avoid allowances when there is enough information to provide a firm number. (Also, just because we have used an allowance to cover a project requirement doesn’t mean it must be a so-called “Owner’s Allowance”—i.e., just because we don’t have a sub bid to corroborate a number does not mean we should not be at risk for it.)

• Avoid duplicates. (When both PMs and Precon Managers are adding items to qualifications, it is very easy for this to occur if you are not careful.)

• Avoid writing qualifications in a way that makes it appear that necessary scope is missing. For example, if you want to exclude 10,000 psi concrete DON’T write “10,000 psi concrete is excluded” and DO write “10,000 psi concrete is excluded (and 8,000 psi concrete is included instead)”.

• Never write qualifications in order to set up an inevitable change order. Monadnock does not view change orders as a profit center and the end goal when producing a budget should always be NO change orders aside from intentional owner upgrades.

• Avoid “artifacts” from previous files and projects. Former projects’ qualifications can be a useful guide but never rely on them to the extent that qualifications that are not applicable to the current project are carried forward.

Conceptual Budgets

Updated 6/2/21

Conceptual budgets are typically estimates prepared off of early drawing sets and typically without aid of subcontractor pricing. They are developed using historical costs and a variety of design assumptions to fill in the gaps on incomplete construction documents.

Because they are often prepared long before the availability of an actual bid set and the start of construction, it is almost impossible to gauge their accuracy. Not only does the subcontractor market change dramatically between conceptual budgets’ submittal and the start of construction, the size and design of the project typically also change too much to allow for meaningful comparison. Furthermore, subcontractor pricing is so volatile and timing-dependent that without the aid of bids it is very hard to accurately predict trade pricing for any one trade alone, even with complete drawings in hand.

For all these reasons, the most important aspect of conceptual budgets is not actually the price but the clarity, detail, and appropriateness of our assumptions. Demonstrating and explaining our underlying assumptions to the client allows us to clarify the implication of their design decisions and the changes they will no doubt make as design progresses.

Since subcontractor bids are not used, each trade is typically estimated using historical cost data. It is important to use the metric with the highest historical correlation to ultimate trade pricing. For example, electrical pricing is statistically more highly correlated with apartment count than gross square feet (at least at the time of this writing). Similarly, fire protection pricing is more highly correlated with sprinkler head count (which can often be gleaned from DD drawings) than square feet. When using historical data, it is important to choose relevant comparable projects. For certain trades, our expectation is that estimators preparing the conceptual budget will complete a full itemized trade budget. Some examples for these trades are foundations and carpentry.

It is important to compare conceptual budgets to (a) recent trade buyouts on similar projects as well as (b) conceptual budgets that the client may have recently seen.

Expectations for the 1st Pricing Draft

Updated 5/19/22

1. All received bids and SOWs are input in the file.

2. Open items are highlighted in red.

3. Conversations have been started with bidders for open items.

4. When no bids are available, carry the previous estimate value as a placeholder.

5. Draft Qualifications