The question of whether the engineer's estimate for a public works project should be published in either the advertisement and/or the bidding documents is a question that many contracting professionals ask.
If your state laws require that the public agency publish the estimate, then it is obvious what needs to be done. It is less clear when your state law doesn't require it. For example, in Washington State, there is no requirement for publishing the engineer's estimate. However, RCW 39.04.020 does require that there be an estimate and that it be disclosed upon request.
What are the arguments as to why to publish or not publish the estimate?
Some people suggest that by publishing the estimate, it invites bidders to submit bids very close to the estimate amount, even if the cost of the work is less. That may be a more persuasive argument in a booming economy where contractors can more or less pick and choose what projects they will bid, and may inflate their prices. In our down economy, my experience recently has been that bids are coming in at significantly below the estimate, whether published or not. Even in a booming economy, however, there will always be bidders who want to remain competitive and will bid their actual costs. However, to mitigate against this concern, some public agencies will only publish a range of the estimate amount.
Those who suggest that the engineer's estimate should be always published in the advertisement and bidding documents point toward using the estimate as a marketing tool. It helps contractors understand whether it is a project within their price range and whether it is worth while for them to bid the project. In addition, publishing the estimate can help bidder understand the magnitude of the project and not overlook major key elements of the project.
Generally, I lean on the side of transparency and disclosing the engineer's estimate. I think the benefits far outweigh the potential risks. Besides, under the public disclosure laws of most states, even if the estimate is not published in the advertisement and/or bidding documents, it is public information and must be disclosed upon a formal request. So it's better in the first place just to make it available in the advertisement.
Tuesday, August 18, 2009
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1 comment:
I would have a disclosure of the estimates low-medium-high of the engineer’s estimates assuming they are using a cost estimating tool.
Engineers will always use a not to exceed value for the project they are working on so suppliers can easily hit the target below the estimates.
I find it difficult to understand how they arrive at the cost estimates without using a modeling tool. I assume they are engaging potential or approved suppliers in the business prior to the publication to create the estimates.
I have worked with some contractors that have tried to enter the bidding process and award process for State/City contracts. None of them were successful in completing the bid package in time for a submission. This means the primary companies are either very good at the process or knew about the project in advance and prepared accordingly.
In summary, I support the transparent process with a supporting modeling tool in use for the estimates.
Glyn Davis
American Native Consulting
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