5.4 Prices
5.4.1 Estimated Bid Price Determination
Unit prices are usually determined by evaluating previously submitted low bid prices or average low bid prices and adjusting them to fit the project being estimated. All projects are different, and the bid prices for one project can vary substantially between projects.
Previously submitted bid prices or average low bid prices should only be used as a starting point from which a more accurate unit bid price can be derived with good engineering judgment.
Further guidance on developing bid prices can be found in TxDOT’s
.
5.4.1.1 Bid Tabs
Each month during and after letting, CST inputs all the bids received for every item on every project into the TxDOT.gov
. Once the bids have been verified by CST, project bid tabs are made publicly available on the dashboard. An estimator can use a tabulation of bids report for a recent contract similar in scope and location to the project being estimated to derive unit prices.
5.4.1.2 Average Low Bid Unit Prices
After the Commission awards the low bids, TxDOT compiles the bid prices for each bid item into the
. An estimator can filter the data to generate a tabulation of average bid unit prices for contracts similar in scope and location to derive unit prices.
The determination of unit bid prices is based on experience and past trends. The designers should gather all the statistical data and information available and evaluate it. Based on their knowledge and experience, the designer can establish the most accurate estimated unit bid price.
5.4.1.3 Factors Affecting Unit Bid Prices
Consider the following rules of thumb when determining the unit bid price:
- Project size. Projects with large quantities will tend to have lower unit bid prices than a project with small quantities.
- Project location. The location of a project, such as a rural project with long material hauls and no commercial asphaltic concrete hot-mix plants or ready-mix concrete plants available, most likely will have higher unit bid prices than an urban project where these facilities are readily available.
- Traffic conditions. Traffic conditions can have a significant effect on the unit prices bid. Due to delays caused by traffic, contractors will typically raise prices to reflect these conditions. Projects with complex sequences of work and high traffic volumes will command higher prices than uncomplicated projects with low traffic volumes.
- Construction season. The time of year that a project is to begin construction and the estimated time required for completion may have an impact on unit bid prices. The contractor may factor in price increases during times of the year when inclement weather may be more prominent, e.g., factoring delay claims or overtime into bid prices if a contractor knows there is not enough time on the construction timeline.
- Accessibility. Accessibility to the work area and the existing terrain may impact unit bid prices. For example, construction on an existing rural interchange without easy access may require excessive travel movements by workers and equipment, or an unusual TCP plan. If material hauling must be accomplished under these conditions, it can contribute to higher bid prices. The type of terrain where the project is located may affect the unit bid prices. Work normally easy to accomplish on level terrain or gentle slopes versus the extra labor or equipment needed to accomplish construction on steep slopes or uneven terrain can add to the project's cost.
- Restrictive conditions. Restricting the working hours or method of work on a project can have a significant effect on unit bid prices. If the specifications limit work to nighttime or short shifts, unit prices may need to be increased to reflect the higher costs involved.
- Availability of materials. The availability of materials also influences unit bid prices. An example is the fluctuation of unit bid prices received for asphalt which is directly related to the availability or use of crude oil.
- Experimental or research items. Projects which include experimental or research items usually receive higher bids. Since the bidders cannot foresee all the difficulties associated with these items, they usually increase their bids to allow for contingencies, thus resulting in higher bids.
- Specifications. The estimator must also be aware of Special Specifications and Special Provisions which may dictate materials or procedures more costly to the contractor than the conventional items.
- Construction time. Projects requiring long periods of construction, a year or longer, will likely reflect higher unit bid prices for items which must be purchased from suppliers in the future, when prices are unknown and may fluctuate. Especially noteworthy are large quantity items or expensive items which will be constructed during the later stages of the project, since suppliers are usually unwilling to guarantee prices for extended periods of time. The Contractor(s), for protection against any increase in prices, will usually adjust their bid on this type of item, resulting in higher prices than in projects with shorter completion times.
- Plan clarity. Plans which are neat, clear, and accurate will usually contribute to lower overall unit bid prices.
- Bidder competition. The number of bidders bidding on a project may contribute to the unit bid prices received. The general rule is the greater the number of bidders on a project, the lower the bids received. This is due to the increased competition necessary among bidders in order to be awarded the contract. In determining the unit bid prices, the designer should account for the anticipated amount of bidding competition.
All assumptions and considerations made in selecting the bid item price must be documented in the estimating spreadsheet to provide a history of changes in the price as the project progresses through development.
5.4.1.4 Unbalanced Bidding
Since the TxDOT low bid prices are actual contract bid prices, the estimator must realize that if a contractor has unbalanced a bid, only the estimator’s experience and judgment can identify if the prices truly reflect the conventional bid prices for the items. Unbalanced bidding is the practice of a contractor setting higher-than-conventional bid prices on items which will yield large payouts early in the construction process. The front-end loading represented by the higher bid prices are then compensated for by the contractor with lower-than-conventional bid prices for items to be accomplished later in the project. It will be to the estimator’s advantage to keep a running record of the unit bid prices received on projects by area office. The concept of unbalanced bidding is most relevant when comparing bid tabs from a specific similar project as opposed to the average unit prices. If using the average low bid unit prices, it will be difficult to identify unbalanced bid items.
5.4.1.5 Project Variations
The estimator can use the average low bid unit prices in arriving at a unit bid price but should keep in mind that every project will differ from all other projects in some way. These variations must be identified by the estimator and considered during the price selection process.
5.4.1.6 Importance of Good Estimating
The consequences of poor estimating can be substantial. No one can predict exactly how the contractors will bid, but by using effective estimating aids and good judgment, reasonably accurate unit prices can be determined. Each project requires individual consideration, and the estimating aids provide a starting point from which unit prices suitable for a project can be derived.