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adds a labor rate, from the published CDOT data, which gives a total, raw hourly cost for <br />operating each piece of equipment. This hourly cost represents the raw cost to operate <br />any given piece of equipment and does not include any costs required by the contractor <br />(such as profit, liability insurance or contract performance bond costs). <br />When a contractor is preparing a bid to complete a reclamation project, they must <br />calculate the raw cost of operating each piece of equipment then add in all of the other <br />costs they will incur in the completion of the project to come up with a final bid <br />(contract) amount. These raw costs are called the "direct costs" in the Division cost <br />estimate. The additional items a contractor must add in to their raw or direct costs are <br />liability insurance, performance bond, job superintendent costs and profit. Several of <br />these items are spelled out and required per the "General Bid Specifications" (IMP <br />Specs), Colorado Inactive Mine Reclamation Program, dated March 2009. <br />In the IMP Specs the first section is the "General Conditions of the Contract ". This <br />section provides requirements for all contractors bidding on Division reclamation <br />contracts. Article 2, on page GC -2, requires a "Performance and Payment Bond ". This <br />Article states "(t)he CONTRACTOR shall furnish a labor and material payment bond for <br />100 percent of the original contract price and a performance bond for 100 percent of the <br />original amount of the contract." The percentage rate for the performance bond was <br />derived from Means (Section 01 31 13.90 0010) and is set at 1.05% of the direct costs. <br />Article 3, on page GC -2, requires "Insurance ". This Article states "(t)he <br />CONTRACTOR shall obtain at his own expense, and maintain at all times during the <br />term of this contract, insurance... ". The percentage rate for insurance was also derived <br />from Means (Section 01 31 13.30 0600) and is set at 2.02% of the direct costs. Article <br />19, on page GC -7, requires "Superintendence of the Work" (Job Superintendent). This <br />Article states "(t)he CONTRACTOR shall keep a competent and reliable superintendent <br />on the job at all times that labor is being performed." This cost is derived from the <br />Means cost for a Job Superintendent (Laborer Foreman) and the hourly cost for a pick -up <br />truck. Finally, the contractor Profit is calculated as a base percentage of the direct costs. <br />This percentage is set at 10% and is based on a standard profit percentage given in Means <br />(this profit is less than the profit that would be added using the OSM profit chart in the <br />OSM Handbook for the Calculation of Reclamation Bond Amounts, which has 15% as <br />the lowest profit percentage). <br />The contractor costs discussed above are costs that a contractor must add to his direct <br />equipment operating costs (raw or direct costs) in order to run a profitable business. <br />Since all of these costs are incurred by the contractor, they are added in to the cost of the <br />contractor's bid prior to the bid being submitted to the Division for review. The total of <br />these costs is what becomes the contract amount or the project amount. <br />The Division then adds on additional indirect costs, based on this contract amount, for <br />engineering work and administrative expenses. These are costs that are above the cost of <br />performing the on the ground reclamation and are necessary to ensure the reclamation is <br />properly completed. <br />