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Author Message Ralph Liebing Senior Member Username: rliebing Post Number: 67 Registered: 02-2003 Posted on Thursday, April 01, 2004 - 03:33 pm:    Any one care to share how you list/show the markup percetages for Changes in the Work, in the Bid Form?-- i.e., listing of the markups, in percentile, that the contractor proposes, and includes with the bid in the bid form, for additions and deletions Tracy Van Niel Senior Member Username: tracy_van_niel Post Number: 74 Registered: 04-2002 Posted on Thursday, April 01, 2004 - 03:50 pm:    For private projects, we have fill in the blanks, example: OVERHEAD AND PROFIT All Bidders shall state the percentages to be used for Overhead and Profit on all change orders. For ADD Change Orders _______% For DEDUCT Change Orders ______% State projects require the use of the state's bid form, which doesn't include the above statement. Richard Howard, AIA CSI CCS Senior Member Username: rick_howard Post Number: 19 Registered: 07-2003 Posted on Thursday, April 01, 2004 - 03:59 pm:    This from one client's proposal form: OVERHEAD AND PROFIT ON CHANGE ORDERS. The undersigned agrees to complete all work added by written Change Orders for the actual cost of the Work added plus fifteen (15) percent to cover overhead and profit, except that work involving a Subcontractor will be completed for the actual cost of the work plus fifteen (15) percent for the Subcontractor and seven and one-half (7.5) percent for the Contractor, each to cover overhead and profit. The undersigned also acknowledges that, as stated in Article 7 of the General Conditions, overhead and profit for a given change will be based on the net increase, if any, when both addition(s) and credit(s) are involved in the change. John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 204 Registered: 03-2002 Posted on Friday, April 02, 2004 - 09:09 am:    This is from our Section 01250, though I prefer it to be in the General or Supplementary Conditions. (Though I've seen it in the bid form, I like to keep the bid form "cleaner", including only the certifications relating to the bid.) We, of course, get the owner's input and approval on the percentages to use. It's surprising how many owner's don't realize that this should be determined. I prefer to fix the percentages in the contract, rather than asking the bidder to give percentages. What if they say in their bid that their markup is going to be 30% on adds and 0% on deducts? Would you reject the bid? It would be preferable to that scenario to negotiate the percentages after the award. C. Overhead and Profit: For changes in the Work completed under Allowances or Unit Prices, refer to other Division 1 Sections for method of calculating changes in the Contract Sum. For changes in the Work completed by time and materials or by negotiation, the following mark-ups shall be used. 1. The Contractor shall be paid a mark-up of fifteen percent on Work completed by their own forces. 2. The Contractor shall be paid a mark-up of ten percent on Work completed by subcontractors. 3. Subcontractors shall be paid a mark-up of fifteen percent on the Work of their forces. Anonymous   Posted on Friday, April 02, 2004 - 10:10 am:    As an FYI, we include the percentages allowed in the Supplementary General Conditions to place everyone on an even playing/bidding field, and to avoid the problems that Mr. Bunzick notes. A couple of questions ... 1. In calculating the total cost of additions, do you typically see in the costs submitted by contractors the cost of the Peformance and Labor-Material Bonds included as a separate line item determining the total cost of the change, or should this be included in the cost of the OH? 2. Is 15 percent the typical allowance for OH/P for work by the Contractor's own forces? We've typically included 10 percent in MN. What is fair and reasonable? Or is this geographically influenced? Competitively set? 3. If these percentages are to be reviewed and approved by the owner, what do you do with a client that likes to pinch pockets and would prefer (unreasonably of course) a 1 or 2 percent allowance, if lucky? 4. In a deduct, we indicate that no allowance for OH/P is allowed ... essentially allowing the contractor to "keep" his OH/P from the bidding phase. Is this relatively standard, too? Thanks for the forum ... it is very informative, providing a link to the "outside" world (at least from this office). John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 206 Registered: 03-2002 Posted on Friday, April 02, 2004 - 01:03 pm:    1. Bonds can be included or not, as long as it's stated up front. I've frequently had it calculated separately. Note that with bonds, the rates are incremental, and reduce as the total dollar value of the contract goes up. So the first, say, $100,000 is at one rate, the next $500K at a lower rate, etc., frequently with five or so tiers of rates. So we require that the bond cost on a CO be calculated on the incremental rate, not the average rate (for the project) because the incremental rate is less, and that's what the GC is actually paying. 2. I have done projects with mark-ups as low as 7 percent and, very rarely as high as 20. Since the contractor cannot add in the cost of actually calculating and preparing CO's, I think that 7 percent is somewhat unfair to contractors. I'm not sure what the best way to determine the rate is. 10 or 15% is definitely most common. Maybe a contractor on this forum can illuminate this issue. 3. If the owner insists on an unfairly low markup, there's not much you can do execpt to recommend otherwise (in writing) and let the chips fall where they may. In this situation, you know that the contractor will negotiate that much more strenuously on each change, or pad hours in little ways to make it up. 4. While this provision is common here (I think it came from a state agency at one time), I don't see the logic in it if the percentages are otherwise fair. On balance, most projects have a positive change order total at the end, so requiring the contractor to give back the OH&P does not hurt in the big picture. However, if you have to delete a big chunk of work, it's certainly unfair to the owner. Richard Hird (Unregistered Guest) Unregistered guest Posted on Friday, April 02, 2004 - 02:31 pm:    With the exception of public projects, where the low bid lump sum price gets the job, percentages should be stated on the bid form. If the bidder does not propose the percentage, or agree to it by contract negotiation, in a serious dipute you will not make the percentage stick. For run of the mill change orders it is too easy to cheat on the direct cost, so it is not that important. Each Contractor markets, owns, rents and subcontracts in a manner that is different, and therefore overhead will vary. Also a project requiring significantly more capital equipment, roads for instance, require a higher mark-up than one that is primarily brokered. Each Contractor should include his own percentage. If the amount is unreasonable, on work where discretion is allowed in selecting the bidder, this is not a problem. You do not have to give a job to a Contractor that wants a 20% mark-up, and should not if another asks for a only a 7% mark-up. I never had a problem telling a contractor, if he wants the job the Contract will be for a ??% consistent with other bidders proposals. If he does not agree we will, and should, go to the next bidder. It is a legitimate reason for disqulification. Anne Whitacre, CCS CSI Senior Member Username: awhitacre Post Number: 83 Registered: 07-2002 Posted on Tuesday, April 06, 2004 - 05:38 pm:    just as a note: in some jurisdictions, the contractor markup and the subcontractor markup are legislated or part of a fee schedule. What is typical around here is 10-12% for GC markup, and then another 10% for sub-tiers. We have some owners who do ask that it be listed on the bid form and it becomes part of the contractor's competitive advantage. In general, also, while add alternates always have the overhead and profit added in, the deduct alternates don't usually include the applicable overhead and profit.