MHIC NASCLA Contractors Practice Exam

What should contractors do to ensure accurate estimating of material costs?

1. Get several bids from each supplier

2. Choose the lowest bid available

3. Estimate costs based on past projects

4. Add all supplier bids together

The correct answer is: Get several bids from each supplier

To ensure accurate estimating of material costs, obtaining several bids from each supplier is essential. This practice allows contractors to compare prices, quality, and service levels, leading to more informed purchasing decisions. By seeking multiple bids, contractors can identify any outliers in pricing and ensure they are not overpaying for materials. This approach also fosters competition among suppliers, which can lead to better pricing and terms. Additionally, getting various bids helps to capture a broader perspective on market rates, as prices can vary significantly based on availability, demand, and supplier relationships. This method is a crucial step in the estimating process that not only enhances the accuracy of the cost estimates but also aids in budget planning and project forecasting. Comparatively, simply adding all supplier bids together would not necessarily provide a realistic estimate of costs, as it could include excessively high bids or duplicates. Estimates based on past projects might not reflect current market conditions or changes in material prices, while choosing the lowest bid without evaluating other factors could lead to compromises in quality or service. Thus, the practice of soliciting multiple bids ensures the contractor is making well-rounded decisions based on the best available data.