Development of Construction Cost Assessment Methods during Preparation for Tender

Abstract

Successful development of a construction company under the market economical conditions depends on the number of contracts for construction works awarded to the company, usually on the competitive basis. The winner of a tender is chosen from the participants that have previously proved their qualification at the prequalification stage, on the basis of two criteria: bid price and construction period. Bid price is the key factor which is of the most importance to the client. It is based on contractor’s estimation of construction cost. The most common construction cost assessment methods use the valid estimate norms calculated on the basis of the averaged work costs which do not consider fluctuation of actual market prices for different kinds of resources and the chosen methods and technologies of facility construction. This paper aims to provide the basis for the development of accurate cost assessment method which is based on the actual market prices for all kinds of resources and on the methods and technologies of facility construction chosen be the contractor, rather than on the valid estimate norms. The main task therefore is the development of the key principles and sequence of construction cost assessment during preparation for tender. The offered assessment method is based on construction schedule illustrating the time association of all construction processes and is the basis for determination of the actual volume of the required resources and funds at each time point of facility construction. Given the many-sidedness of the arising problems, construction cost assessment should be conducted based on the following principles: construction schedule optimization; accounting of market cost of resources; generating the best plan of construction resource provision; cost minimization and financial flow optimization; risk accounting; project approach. Using these principles during assessment of facility construction cost within the framework of bid preparation allows increasing its competitive ability according to the main winner choice criteria – construction cost and periods.