Conceptual and parametric estimating, and capstone: a complete bid

This final lesson does two things. First, it covers conceptual and parametric estimating at a level beyond CON-200: adjusting historical costs for time, location, size and design, building an elemental estimate by systems, and using parametric checks to test a detailed bid. These skills matter to contractors on design-build, construction management and negotiated work, where they price projects before the drawings are complete, and on every hard bid, where a parametric check is the last defense against a large error. Second, it brings the whole course together in a capstone: a complete bid for an invented small commercial building, from bid decision to the final number.

From historical cost to a new project

A parametric estimate predicts cost from a few key parameters, most often gross floor area, using cost data from completed projects. The raw historical cost per unit area must be adjusted before it can be applied to a new project: for the change in construction prices since the historical project was bid (a time adjustment), for the difference in costs between its location and the new location (a location adjustment), and for differences in size, shape, quality and specification.

Time and location indexes in the United States include the city cost indexes and historical cost indexes published with RSMeans data, the building cost index and construction cost index published by ENR, and the Producer Price Index series for construction inputs from the Bureau of Labor Statistics. Location factors are often expressed relative to a national average of 100: a city with a factor of 112 is about 12 % more expensive than average, and one with a factor of 91 about 9 % cheaper.

Size, shape and story height

Cost per unit area is not constant. Larger buildings usually cost less per unit area, because fixed costs such as site establishment, mechanical plant, elevators and design are spread over more area, and because the ratio of exterior wall to floor area falls as a building grows. Shape matters for the same reason: a long, thin or irregular plan has more exterior wall per unit of floor area than a compact one, and exterior wall is expensive. Taller story heights increase wall, partition, column and vertical services quantities. Good parametric estimators adjust for these effects explicitly, often with the wall-to-floor ratio as a measure of shape.

Elemental estimates by system

Between a single parametric number and a detailed bid lies the elemental (systems) estimate, organized by building element rather than by trade. UniFormat II, introduced in CON-200, groups costs into substructure, shell, interiors, services, equipment and furnishings, special construction and sitework. Each element is priced with a quantity that makes sense for it, such as the area of roof, the area of exterior wall, the number of plumbing fixtures or the floor area served by HVAC, and a unit rate from history or cost guides. Because elemental estimates follow design decisions, they are well suited to comparing options and tracking cost as design develops, and they let a contractor show an owner where the money goes.

Parametric checks on a detailed bid

On a hard bid, parametric and elemental checks guard against large errors. After the detailed estimate is built, the estimator compares its total cost per unit area, and the cost per unit area or per element of each major package, with adjusted historical data. A package far outside its usual range is a prompt to look for missing scope, doubled scope, a wrong unit or a quote that excludes something. Checking the share of total cost in each element against typical ranges catches different errors. Neither check proves the estimate right, but a detailed bid that fails both is almost certainly wrong.

Capstone: a complete bid for Maple Court

The capstone project is Maple Court, an invented two-story commercial building with retail on the ground floor and offices above: 20,000 ft² of gross floor area, a steel frame on spread footings, a slab on grade and composite steel deck, a brick and metal panel envelope with aluminum storefront, a modified bitumen roof, two rooftop units with variable air volume distribution, and a small site with parking. The owner is a private developer calling lump sum bids from five invited general contractors under AIA A101 and A201, with a 10 % bid bond and 100 % performance and payment bonds. The project is in a state that treats contractors as consumers of materials, construction starts four months after bid and lasts 12 months, and bids close in three weeks.

Northline's team works through the course in order. The go or no-go score is 3.7, above its threshold, because the project fits its experience and it has a superintendent available (Lesson 1). The bid plan assigns two estimators, decides to self-perform concrete, rough carpentry and door installation, and subcontracts everything else in 24 packages, with scope sheets issued on day three (Lessons 2 and 7). Self-performed work is priced by method, with two wall form sets and winter protection for footings poured in February (Lessons 3 and 4). Mechanical and electrical quotes are checked against fixture counts, duct weight, device counts and unit costs (Lessons 5 and 6). General conditions are built from a 52-week schedule including closeout (Lesson 8). Taxes, escalation and contingency are added according to Lesson 9, and the bid-day process of Lesson 10 is followed. The final markup reflects the competition and the risk register (Lesson 11).

# Maple Court bid summary (illustrative figures, $; sales tax on materials is in the trade prices)
self_performed = {"Concrete (incl. winter protection)": 612_000,
                  "Rough carpentry and door installation": 148_000}
subcontracts = {"Structural steel and deck": 742_000, "Masonry and metal panels": 688_000,
                "Roofing": 214_000, "Storefront and windows": 356_000,
                "Drywall and ceilings": 498_000, "Flooring and painting": 262_000,
                "Mechanical and plumbing": 1_266_000, "Fire protection": 118_000,
                "Electrical": 846_000, "Elevator": 152_000, "Sitework and paving": 534_000,
                "Other trades (13 packages)": 641_000}
general_conditions = 812_000
escalation = 0.012       # on costs not covered by firm quotes, applied here to the cost of work
contingency = 0.020
markups = [("Overhead", 0.040), ("Profit", 0.040), ("Bonds and insurance", 0.0135)]
gfa = 20_000             # ft2

direct = sum(self_performed.values()) + sum(subcontracts.values())
cost = direct + general_conditions
cost *= 1 + escalation
cost *= 1 + contingency
price = cost
for name, r in markups:
    price *= 1 + r
bid = round(price, -3)
print(f"Direct cost ${direct:,.0f}; general conditions ${general_conditions:,.0f}")
print(f"Cost of work with escalation and contingency ${cost:,.0f}")
print(f"Bid price ${bid:,.0f}  (${bid / gfa:,.2f} per ft2)")
print(f"General conditions share of direct cost {general_conditions / direct:.1%}")
print(f"Mechanical, plumbing, fire and electrical share {(1_266_000 + 118_000 + 846_000) / direct:.1%}")

Direct cost $7,077,000; general conditions $812,000
Cost of work with escalation and contingency $8,143,341
Bid price $8,927,000  ($446.35 per ft2)
General conditions share of direct cost 11.5%
Mechanical, plumbing, fire and electrical share 31.5%

The bid comes to about $8.93 million, or about $446 per ft². That is about 7 % above the parametric estimate of $8.37 million from earlier in this lesson, a reasonable result given the class 4 accuracy of the parametric number, the winter work and escalation it did not include, and the overhead, profit and bonds that a cost-per-unit-area figure may or may not contain. General conditions are about 11.5 % of direct cost, in the usual range for a building of this size and duration, and the mechanical, electrical and fire protection packages together are about 31.5 % of direct cost, consistent with the element shares in the table above.

The capstone assignment asks you to reproduce this process for a project of your own choosing or one provided by your instructor: write a bid plan and go or no-go assessment, price one self-performed package by method, write scope sheets and level quotes for at least three packages (including mechanical or electrical), build general conditions from a schedule, apply taxes, escalation, contingency and markups with stated bases, document the bid-day adjustments, and check the result against a parametric estimate and element shares. Present the bid summary with a one-page memo explaining the main risks and the markup decision.