Bidding Strategies Help Manage Construction Budgets: A Case History of the Nacimiento Water Project

Abstract

Management of a project's construction budget cannot be limited to managing the content of its design; consideration must be given to the project's bidding process. Taking a strategic approach to a project's bidding process can significantly increase the success of the management of the project's construction budget. Case history of the bidding of the Nacimiento Water Project proves this point. The Nacimiento Water Project (Project) consists of a sloping multi-port intake facility and pump station, two intermediate pump stations, three storage tanks, control center, and approximately 45 miles of transmission pipeline ranging in diameter from 36-inches to 12-inches, with the goal of delivering 15,750 acre-feet of raw water to communities spread across the County of San Luis Obispo, California. The Project is owned and managed by the San Luis Obispo County Flood Control and Water Conservation District (District) and began its design phase in 2004. In 2007, the engineer's estimate predicted a construction value of $140.5-million; however, bids for the Project, opened in the fall of 2007, resulted in a construction value of $123.8-million. To date, the Project's construction is within budget. This paper discusses the District's bidding of the Project. Specifically, the paper addresses how the District's implementation of bidding strategies such as division of project into contracts, bid timing, contractor outreach, contractor pre-qualification, bid packaging, and bid advertising improved the management of the Project's construction budget and positioned the Project to obtain favorable bids, quality contractors, and a stable budget throughout construction.