CC Estimating and Bidding 2 — Questions and Answers
Question 1: When a general contractor includes a subcontractor's price in a bid without the subcontractor's consent, this is known as:
- Bid peddling
- Bid shopping (Correct answer)
- Bid rigging
- Bid listing
Correct answer: Bid shopping
Bid shopping occurs when a general contractor uses a subcontractor's price in the bid and then, after winning, shops that price to other subcontractors to get a lower number.
Question 2: Which cost is considered a 'direct cost' in construction estimating?
- Office manager's salary
- Advertising expenses
- Labor to install drywall (Correct answer)
- Company vehicle insurance
Correct answer: Labor to install drywall
Direct costs are expenses that can be directly traced to a specific project, such as labor, materials, and equipment used for that project's specific tasks.
Question 3: What is the purpose of an addendum issued during the bidding period?
- To notify contractors the project has been awarded
- To modify or clarify the bidding documents before bids are submitted (Correct answer)
- To request additional pricing from the lowest bidder
- To extend the contractor's license
Correct answer: To modify or clarify the bidding documents before bids are submitted
An addendum is issued by the owner or architect during the bidding period to clarify, correct, or modify the original bidding documents, and all bidders must incorporate it into their proposals.
Question 4: The 'unit price' method of bidding is most commonly used when:
- The project scope is completely defined
- The quantity of work is uncertain but the type of work is known (Correct answer)
- The contractor wants to guarantee a fixed price
- The owner wants to negotiate the contract price
Correct answer: The quantity of work is uncertain but the type of work is known
Unit price bidding is used when the type of work is known but exact quantities may vary, allowing payment based on actual units of work completed rather than a fixed lump sum.
Question 5: A contractor submitting the lowest bid on a public project is typically awarded the contract unless:
- Another contractor protests the award
- The bid is unreasonably low or the contractor is not responsible (Correct answer)
- The owner prefers a different contractor
- The bid bond is less than 5%
Correct answer: The bid is unreasonably low or the contractor is not responsible
Public agencies must award to the lowest responsive and responsible bidder, but may reject a bid if it is unreasonably low (suggesting errors) or if the contractor is not qualified.
Question 6: What does 'markup' represent in a contractor's bid?
- The total cost of materials only
- The amount added to direct costs to cover overhead and profit (Correct answer)
- The cost of bonding and insurance
- The subcontractor's portion of the bid
Correct answer: The amount added to direct costs to cover overhead and profit
Markup is the percentage added to the direct costs of a project to cover the contractor's overhead expenses and desired profit margin.
Question 7: In a lump-sum contract, the contractor agrees to:
- Be paid based on time and materials used
- Complete the defined scope of work for a fixed total price (Correct answer)
- Share any cost savings with the owner
- Bill the owner monthly based on progress
Correct answer: Complete the defined scope of work for a fixed total price
A lump-sum (or fixed-price) contract commits the contractor to complete all work in the contract documents for one agreed-upon total price, regardless of actual costs incurred.
CC Estimating and Bidding 2
When a general contractor includes a subcontractor's price in a bid without the subcontractor's consent, this is known as: