Estimating: Strategy & Procedures

Notes taken from an AISC Steel Conference session. Material by Hillsdale Fabricators.

Types of Estimates

  1. Lump Sum
  2. Design Build
  3. GMP = Guaranteed Maximum Price
  4. T&M = (know what your costs really are!)
  5. Budgetary

Go vs. No-Go Decision Process

Rate each bid opportunity on a scale from 1-10.
Compare and rate each bid opportunity to past jobs.
Two stages of decision.

  1. Identify
  2. Data collect

Review the following:

  1. Immediate Factors
    1. Is this a “real” job? Will it happen. Is it a legitimate opportunity. Are they just kicking tires?
    2. Are there less than 7 bidders?
  2. Heaviest Weight Factors
    1. Cost to pursue the bid
    2. Risks
    3. Historical success at this type of project
    4. Design Team involved
    5. Drawings, are they complete?
    6. Resources available. Estimating, PM, detailing, fabrication, etc.
    7. Impact on other bids and current jobs
  3. Medium Factors
    1. Understand the client needs
    2. Who are the contractors bidding
  4. Light Factors
    1. Can the client/owner pay?
    2. Does the contractor pay?
    3. Relationship with the bidding contractor(s)

Bidding Processes

Estimating Team Leader

  • Determines bid strategy
  • Estimate checklist
  • Delivery timeline
  • Proposed format
  • Units & quantities
  • Get drawings & specs to the right people
  • DBE/MBE requirements
  • Sales Tax requirements
  • Final Estimate Summary
  • Archive Estimate (after completion)
  • Bid delivery execution strategy

Support Staff

  • Initial all pages taken off.
  • Supplier/sub coordination & analysis
  • Preliminary construction schedules. Can you meet the time line?
  • Bid delivery timeline
  • Have two bid runners


General Practices and Successful Methods of Estimating 

  1. Understand the scope and project
  2. Organization
  3. Computer programs and drawings
  4. Subcontractor, supplier and material evaluation
  5. Scope letters. Detailed and sent early.
  6. Rules of thumb. Have rule of thumb guidelines to follow and for double check.
  7. Addendum
  8. Things to remember
  9. Profit & overhead

Understanding the Scope

  • Read the ITB and/or RFP
  • Review the documents
  • Review general conditions and supplemental conditions

Organization Opportunities

  • Take-off
  • Scope reviews
  • Transfer to operations

Scope Should Contain

  • Letterhead
  • Contract & terms
  • Project name
  • Scope of work
  • Qualifications, inclusions, exclusions
  • Contact info
  • Identify if sales tax is included or excluded
  • Address proposal to the customer
  • Be available for questions

Rules of Thumb

  • Book of means
  • Pounds of steel per square foot
  • Cost per ton
  • Cost per square foot


  • Make time for in-depth review
  • Look at the forest and the trees
  • Look at individual parts versus the whole project
  • An estimate is only as good as the time spent on it
  • Large print giveth, small print taketh away.
  • Low price or the right price?
  • Relationship or commodity? What is the bid based on. You don’t want to be a commodity.

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