Supporting History

Bidder is Better: Removing Guesswork from Project Budgets

Originally published in Colorado History NOW, April 2004

Past columns in this publication have stressed the importance of supporting your State Historical Fund application with a well-conceived budget based on realistic and current bids and estimates.  But determining just how much a project is going to cost takes skill.  The creation of, and adherence to, a good workable budget is an important element of a successful grant-supported project.

Understanding the difference between bids and estimates will ease the pain of budget development.  An estimate is an informed opinion of costs that is based on experience and knowledge of the project itself, general construction techniques, and historic preservation concepts.  A bid is a bona fide, often competitive, offer to carry out a specific scope of work for a set price.

Just as the word implies, a cost “estimate” contains the numbers that can be used to build a project budget.  An incorrect estimate of probable cost at the conceptual and funding stage of a project can cause complications down the line in the way of overages, delays, and possible project cancellation.  A bid can nail down, so to speak, accurate construction numbers.

The nature of historic preservation often makes it difficult for a contractor to develop an actual bid.  While budgeting for new construction might be based on standardized cost guides using square footage, building type, and construction methods, budgeting for a project involving a historic building may not be so simple.  Considerations such as purchasing small versus large quantities of construction materials, working around (and with) existing historic materials, and occupancy of the structure during construction all figure in when estimating a rehabilitation project.  Preservation work might involve a higher level of detail and hand labor than conventional construction requires.

To safeguard against increases in project costs (remember, an SHF grant recipient is contracting for a scope of work, not a dollar amount) all applicants should include a contingency—usually calculated as a percentage of the construction costs—in their project budgets.  An estimating contingency can allow for variations between project estimates and bids, while a project contingency can provide extra funds for unforeseen conditions.  So when you hear your contractor say, “Gee, we took up the floor boards and look what we found,” you can look with curiosity, rather than consternation.

On-site visits are valuable because they provide all parties with an understanding of some of the conditions that will come into play when the project begins.  Conditions that the building steward deals with every day, and takes for granted, can present a huge challenge to someone else who has not learned the fine details of overcoming such obstacles.  Even non-construction restrictions, such as security badges and background checks at secure sites or non-traditional work schedules, can make the start-up process and daily operations more cumbersome.

A successful project begins with a clear understanding of the financial commitment involved.  The owner of a property should allow sufficient time and resources to study properly and comprehensively the project in the concept stage.  The design team needs to think beyond the initial scope of work to anticipate how the actual work will be accomplished and the cost implications in carrying it out.  That way, when all parties are poring over the construction documents and considering associated costs, they will truly be on the same page.

BY LYLE MILLER, Technical Advisor, State Historical Fund