Chapter 10 - Bid assurance

Abstract

The “optimum bid” or the “best bid” will result in a successful bid. When the bid leads to winning a job, then there is an opportunity to verify the estimate’s accuracy, reliability, and quality. This chapter describes unbalanced bidding strategy, analysis of estimates, estimate errors, and estimate assurance. One of the figures has been normalized using regression analysis. Deviations in the cost estimates are expressed by the ratio Cᵦₑ/Cₔ. This ratio equals 1 when actual cost equals the estimated cost and the ratio is the break-even point. Points to the left of the x axes are negative because the contractor is operating at a loss. Depending on bid strategy and objectives, contractor will profit to the right of the break-even point. The contractor’s survival depends on balanced unit estimates.