SEDL / STP / STP789-EB / STP29488S

A Lump Sum, Unit-Price Bid Proposal Evaluation Method

McAllister, JD
Senior Engineer, American Electric Power Service Corporation, New York, N.Y.

Biggers, RK
Consultant, Owens-Corning Fiberglas Corporation, Shawnee Mission, Kans.

Pages: 6    Published: Jan 1983

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Abstract

A method is presented that permits evaluation of total job costs where 35 to 40 percent of the total scope of work will be done on a unit price basis supplemental to a firm price for well-defined initial scope of work. Plotting curves of unit prices for pipe sizes and insulation thicknesses will indicate anomalies in proposed unit prices that require correction prior to contract execution. By pricing a hypothetical piping run at the proposed unit prices and prorating the percentage of unscoped work at the cost of the hypothetical unit price piping run, it becomes possible to compare probable total cost of work from bids in which the firm price is low and unit prices are high with those proposals in which both firm price and unit price portions of the bid are rationally priced.