Implementation Tips For Unit Price Estimating And Contracts

In the Heavy Highway and Utility construction market, Unit Price estimating and contracts are very common because for these types of projects it is difficult to establish precise quantities of materials or equipment time needed. If the design team or client (ex. government organization) does provide estimated quantities then they are often used for reference purposes only. The actual contract cost will not be determined until project completion when all invoices have been submitted for the placed or excavated quantities.

Business Scenario

  • Estimate and Contract Type: Unit Price
  • Unit Price or Bid Items: 3 Separate Fence Types

1. Implementation Plan: Contact Management

Make sure all firms involved on the project including the client are added in the Contact Management module.

Example Firms:

  • Client
  • Architect
  • Suppliers
  • Subcontractors

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2. Implementation Plan: Project

Create the Project.

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3. Implementation Plan: Estimates

Create estimates where bid items are used as the Work Breakdown Structure (WBS) Divisions.

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Estimate Work Breakdown Structure (WBS)—Set To Bid or Pay Items:

An estimate is organized into cost code sections that have internal grouping fields such as division and major. For Unit Price estimating, cost codes should represent Unit Price Bid Items. There can also be sub-sections (ex. Cost Code Internal Major) to represent the various elements of each Bid Item as shown in Option B.

Option A: Using Cost Code Only   Option B: Using Cost Code and Internal Grouping Fields
  • Cost Code: Unit Price Bid Item #1    (Cost Code Qty/Units = Est Project Qty)
    • Labor Items
    • Equipment Items
    • Material Items
  • Cost Code: Unit Price Bid Item #2    (Cost Code Qty/Units = Est Project Qty)
    • Labor Items
    • Equipment Items
    • Material Items
  • Cost Code: Unit Price Bid Item #3    (Cost Code Qty/Units = Est Project Qty)
    • Labor Items
    • Equipment Items
    • Material Items
  
  • Cost Code and Cost Code Internal Div: Unit Price Bid Item #1    (Cost Code Qty/Units = Est Project Qty)
    • Cost Code Internal Major: Excavating
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Concrete
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Fencing
      • Labor Items
      • Equipment Items
      • Material Items
  • Cost Code and Cost Code Internal Div: Unit Price Bid Item #2    (Cost Code Qty/Units = Est Project Qty)
    • Cost Code Internal Major: Excavating
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Concrete
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Fencing
      • Labor Items
      • Equipment Items
      • Material Items
  • Cost Code and Cost Code Internal Div: Unit Price Bid Item #3    (Cost Code Qty/Units = Est Project Qty)
    • Cost Code Internal Major: Excavating
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Concrete
      • Labor Items
      • Equipment Items
      • Material Items
    • Cost Code Internal Major: Fencing
      • Labor Items
      • Equipment Items
      • Material Items

4. Implementation Plan: Project Directory

The following companies should be added to the Project Directory.

  • Client
  • Architect
  • Your Firm
  • Suppliers
  • Subcontractors

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5. Implementation Plan: Job Cost Codes, Prime Contract and Original Budgets

The Estimated prepared in Sage Construction Management can be used by the Contract Admin Setup Wizard to cretate Job Cost Codes, Prime Contract, and Budgets. As an alternative to using a Sage Construction Management estimate, a spreadsheet could also be prepared that lists the bid items, unit price, and internal cost budgets.

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Example Unit Price Contract Import Files (Alternative to using Sage Construction Management Estimate):

Project / Prime Contract / Procurement Structure

  • Project
    • Prime Contract # 001 : All Phases Of Construction
      • PO or Subcontract # 001 : Vendor 1
      • PO or Subcontract # 002 : Vendor 2
      • PO or Subcontract # 003 : Vendor 3
      • Labor Timecards
      • Equipment Timecards

Job Cost Code Structure

Although Estimates can have a 2-tiered work breakdown structure as shown in option B above, job cost codes for the project management phase should only reflect the Bid Items. Thus, the WBS Divisions will become the job cost codes in either case. This is a requirement for the unit price specific financial dashboards.

Job Cost Code (JCC) JCC Description JCC Qty JCC Unit
01 Bid Item #1 Description Est. Bid Item Qty Est. Bid Item Units
02 Bid Item #2 Description Est. Bid Item Qty Est. Bid Item Units
03 Bid Item #3 Description Est. Bid Item Qty Est. Bid Item Units

6. Implementation Plan: Documenting Placed or Excavated Quantities

Unit Price Items referenced in the Prime Contract can be imported into Daily Logs so placed or excavated quantities can be documented. These entries are then summarized in the Unit Price Financial Dashboard that is shown below.

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7. Implementation Plan: POs and/or Subcontracts

Issue POs and Subcontracts for materials, equipment rental, and services required for the project.

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8. Implementation Plan: Enter and Approve Labor Timecards

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9. Implementation Plan: Prepare Client/Prime Contract Invoice

Prepare one or more progress invoices.

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10. Implementation Plan: Review Standard Job Cost Dashboards in Project Analytics

In Project Analytics, there are dashboards available to show financials rolled up by prime contract and by job cost code for cost tracking.

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See also

General Guidelines for Creating COs for Unit Price Contracts