What’s Missing in that Roofing Bid?

October 7, 2014

The ability to evaluate a bid and the corresponding scope of work isn’t always about knowing what is included in the bid; it’s about being able to understand and assess what’s not in the bid.

Know What ISN’T Included
It can be difficult to know how thorough an estimate truly is. AACE International has published a Basis of Estimate recommended practice (No. 34R-05) that outlines what a well-written estimate should include: purpose of the estimate, project scope, pricing basis, allowances, assumptions, exclusions, cost risks and opportunities, and any deviation from standard practices. Instead of getting a short proposal, a quality estimate is more like a detailed report.

Assumptions and exclusions are generally known by the roofing professional and not the facility/plant manager, owner, or vice president. When these are not shared in the estimate, poor project planning and development (and change orders) result.

An exclusion could be that trade work by non-roofing trades (e.g. plumbing) is not included in the estimate. An assumption might be that the owner wants to meet the minimum R-value specified by the International Energy Conservation Code. The impact of a customer not knowing the contractor’s estimate is made with these assumptions and exclusions can be significant. Using the R-value example, the owner may not be aware of the impact that adding additional insulation above the minimum, could have on energy savings.

An estimate created without this methodology is risky, because it assumes certain things, and does not provide a means of enlightening the customer about what other options or alternate recommendations exist. Additionally, lack of definition in the estimate directly relates to the accuracy of project costs.

Gauge the Estimate’s Accuracy
The AACE 56-R-08: Cost Estimate Classification System-As Applied for the Building and General Construction Industries is a recommended practice for developing classes of estimates. Each class has varying estimate accuracy ranges, which are associated with the estimating methodology used and the end usage of the estimate, among other things. A Class 5 estimate will have a low accuracy range of -20 to -30 percent and a high accuracy range of +30 to +50 percent. Whereas, a Class 1 estimate has a low range of just -3 to -5 percent and a high range of +3 to +5 percent. An estimate that uses this classification system enables you to budget accordingly.