Using spreadsheets to optimally unbalance a construction bid

The use of spreadsheets in construction is increasing because of their robustness and versatility in automating a number of everyday tasks in the construction industry. A number of spreadsheet applications have been suggested to accomplish a wide array of tasks, including developing estimates quickly and accurately, summarizing costs, presenting cost estimates details, analyzing and controlling costs, as well as data validation. This article presents another useful use of spreadsheets to optimally unbalance construction bid prices. Unbalancing the bid is defined here as bidding the cost items that are completed earlier on in the project at higher than the original marked up bid (i.e., balanced bid), while bidding the items that are completed later on in the project at lower than the original balanced bid. The proposed spreadsheet formulation call be used in real life, as well as in teaching students about bid unbalancing. The model can be used by professionals to increase the profitability of their projects. By varying the different parameters in the model, such as the interest rate and the construction schedule, students can examine the effect of all these variables on the total project's revenues.