To get bids within our budget, can we share our estimate when advertising for a construction contract?
Section 12.12 of the LAPM addresses this question:
This is a confidential document, which represents the local agency’s best estimate of a fair and reasonable price for the items or work to be performed. As such, the Engineer’s Estimate should not be made available to contractors and the general public prior to opening bids.
While the actual engineer’s estimate should kept secret to create the best possible environment for open competition, a local agency could consider provided a range of the project cost in the bid proposal document. FHWA addressed the topic in their Guidelines on Preparing Engineer’s Estimate, Bid Reviews and Evaluation:
For those agencies that believe total secrecy from the public is not realistic in their State, as a minimum attempt of confidentiality, a range for the estimated project cost could be provided and included in the bid proposal document. For example, a range could be established as follows:
Project Classification Project Cost A $ 0 - $100,000 B $100,000 - $250,000 C $250,000 - $500,000 D $500,000 - $1,000,000 E $1,000,000 - $2,500,000 F $2,500,000 - $5,000,000 G $5,000,000 - $10,000,000 H $10,000,000 - $15,000,000 I $15,000,000 - $25,000,000 J $25,000,000 or greater
A policy of providing a specified dollar amount for a bid bond could indicate the amount of the estimate. This procedure should be revised to specify a percentage of the bid submitted, thus maintaining the confidentiality of the estimate.