PURPOSE
This procedure provides additional information regarding several different types of bidding approaches used by the Bureau of Engineering (BOE) to deliver capital improvement projects. Project Managers and Project Engineers must be aware of the available bidding approaches in order to utilize the approach most appropriate for the project.
REFERENCES
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RESPONSIBILITIES
Project Manager (PM): The PM is responsible, normally through the efforts of the Project Engineer, for the completion of the design documents within the schedule and to the satisfaction of the client. The PM is also responsible for insuring that quality assurance / quality control (QA/QC) procedures are followed and that the project remains within the approved budget and is consistent with the concept presented in the Pre-Design Report.
Project Engineer (PE): The PE will be responsible for the preparation, coordination, updating, and revision of the design and construction documents. The PE is required to follow the procedures outlined in this Chapter to protect public health, safety, welfare, and to ensure successful completion of the project. These procedures facilitate the production of accurate, consistent, complete, and understandable final plans and specifications to be used to initiate and complete the construction of a project. The PE is responsible for coordinating the design documents with all of the design disciplines that have contributed to the project.
PROCEDURE
Types of Bids
Unit Price Bids
Unit-price contracts are the most common Public Works bids and subdivide the work or parts of the work into like items and state approximate quantities for each item. The bidders use these quantities in preparing their bids. A price per unit of measurement (unit price) is quoted for each item. For example, concrete work and earthwork are typically measured in terms of cubic yards. As the work is completed, actual quantities are measured and the contractor is paid according to the contractor's quoted unit prices. The City pays only for the actual quantities of materials used.
Advantages of using unit price contracts are that they are flexible and can simplify change order negotiations and reduce the contractor’s risk. A disadvantage to this approach is that a contractor may artificially inflate the unit price on a particular item to increase the cost of a potential change order. See unbalanced bid below.
Lump Sum
The project is described in detail in the bid documents with any individual quantities or items. The bidders submit a single bid price to perform the work.
Lump Sum with Allowances
Same as a Lump Sum bid, however certain “set asides” are specified in the bid documents. Some examples of allowances are: $10,000 for permits; $100,000 for unforeseen conditions; or $80,000 for a construction trailer. The bidder includes these costs within the bid but the City will pay them the actual cost upon receipt of proof of the expense. Allowances can also be a part of Unit Price bids too.
Lump Sum with Add/Deduct Alternatives
The bid is evaluated based upon the major focus of the proposed project. Also included in the bid documents are alternative extras (for example another restroom, added storage building, etc.) and deducts (such as no kitchen, one less basketball court, tile vs. wood etc.) that will reduce the price. The Board of Public Works awards the project with the added alternatives or deducts desired based on available funding.
Evaluated Bids
Evaluated bids are used to consider the future costs of a piece of equipment or installation. A formula is used to determine energy, water, or other usage for a specific period of time. The bidders are given the formula to be used in the bid documents. The bids are evaluated based on the construction/installation or equipment cost plus the evaluated formula cost. The contract is awarded to the lowest combined (bid+ formula) cost.
Design/Build
See Procedure 2.3 for a discussion of the Design/Build process.
Bidding Irregularities
Front End Loading
Front end loading can be a problem with both unit price and lump sum bids. In the case of a lump sum bid, the contractor must give the Bureau of Contract Administration a breakdown of the cost of each step to be submitted for payment. These payments are negotiable and the object is to prevent the contractor from receiving a disproportional amount of money for minimal work performed at the beginning of a project.
With unit price bids, the Project Award and Control Division (PAC) must look for individual bid items that make the first payments too high based upon the amount of work to be accomplished. If this is the case, all bids can be rejected and the project re-bid.
Unbalanced Bids
Sometimes a bidder will notice a mistake or discrepancy in the bid quantities and bid a certain item extremely high in order to maximize change orders. PAC checks the individual bid items and compares them to bids from other bidders to find major differences that can be used to get unwarranted extra money. In cases like this, all bids can be rejected and the project re-bid.
RELATED PROCEDURES
LINKS / ATTACHMENTS
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