Subcontractors play a critical role in estimating the cost of construction projects, focusing on trade-specific scopes of work such as grading, HVAC, and electrical. They provide specific estimates for their work, which the general contractor then uses to compile a complete cost estimate for the full project.
Key Insights
- Subcontractors use the same estimating processes as the general contractor, focusing on their specific trade of work. This includes obtaining price quotes from vendors if required.
- The general contractor combines the individual estimates from subcontractors to compile a complete cost estimate for the entire project. The process involves incorporating estimates into estimates.
- Subcontractors often provide more accurate estimates for their specific scope of work, as demonstrated by an HVAC subcontractor bid example in which the subcontractor's bid was more accurate than the general contractor's initial estimate.
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Subcontractors use the same estimating processes as the general contractor, except that their scope of work is trade-specific. As previously mentioned, common subcontractor scopes of work include grading, HVAC, electrical, etc. It's the responsibility of the estimator to make sure that every segment of the project's scope is identified when first reviewing the plans and specifications.
This includes identifying any trades that will require price quotes or bids from other subcontractors. So you have to ask yourself, what services do each trade provide and which trades are required for the project? If you're a subcontractor, you may need separate price quotes or additional price quotes from multiple vendors as well. The subcontractor estimators put together a specific scope of work that they submit as a bid to the general contractor's estimator.
The general contractor selects all the estimates submitted for the individual trades by the subcontractors and then compiles them to provide a complete estimate for the entire project. Basically what we're doing is we're putting estimates inside of estimates. So you can see in the handout that we actually have an HVAC subcontractor bid and we have a single line item that has a total amount of $4,241.
The subcontractor priced out their scope of work and provided a quote for us or bid to us and now we're going to utilize their estimate inside the general contractor's estimate. Until I actually got a bid to replace it by another subcontractor, you can see that I went ahead and provided a budget price for the HVAC scope of work. I priced it out myself.
I did a conceptual estimate on it until I received bids from the subcontractor. My price, as you can see, was initially about $5,000. But lo and behold, when the bids came in, I saw that I actually received a bid at $4,241, which was better than my own budget number of $5,000.
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And therefore, I zeroed out my cost and replaced it with the subcontractor's estimate. Where the zeros are shown for the quantities, these were all quantified with unit prices initially. The reason why I left those lines in place is to make sure that it identifies what the scope of work may be.
I may have to actually ask the HVAC contractor if, in fact, they include the metal ductwork, if, in fact, they include the registers or the air supply. I actually have a list of the items that should be part of the subcontractor's bid. The alternate that you see below, alternate number one, is actually zeroed out for a different reason that we'll talk about later in the estimate.
But it's an add-on to the project if it's accepted by the client. So therefore, it's not part of the base bid, and therefore, it will remain to be a zero. Just note that alternates are independent of the subcontractor bids.
Subcontractor bids are not always alternates. Often, you'll have alternates that are what-ifs. And in this particular case, we have a rooftop air conditioning unit that, if required, that would also be X amount of dollars by that specific contractor.
