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AASHTO Subcommittee on Construction Summer Meeting Synthesis on Construction Unit Cost Development

AASHTO Subcommittee on Construction Summer Meeting Synthesis on Construction Unit Cost Development. Stuart D. Anderson, PhD, PE Texas Transportation Institute (TTI) August 5, 2009. Synthesis on Construction Unit Cost Development. Outline.

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AASHTO Subcommittee on Construction Summer Meeting Synthesis on Construction Unit Cost Development

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  1. AASHTO Subcommittee on ConstructionSummer MeetingSynthesis onConstruction Unit Cost Development Stuart D. Anderson, PhD, PE Texas Transportation Institute (TTI) August 5, 2009

  2. Synthesis onConstruction Unit Cost Development Outline Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Overview Problem Description Objectives Synthesis Approach Follow-Up Analysis and Results Recommendations

  3. Project cost estimating – Important component of the project development process Planning Scoping Design PS&E Common estimating approaches Historical Bid Based Estimation Cost Based Estimation Project estimates adjusted based on project type and size (i.e., complexity), market conditions, location and time Recommendations Overview Problem Description Objectives Approach Follow-up Analysis Results Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  4. Lack of systematic methodology to analyze and develop unit costs for construction projects Recommendations Overview Problem Description Objectives Approach Follow-up Analysis Results Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  5. Explore the current state of practice followed by other state agencies for developing construction Provide summary of the estimation practices followed by different state agencies Compare estimation practice of TxDOT with other state agencies Recommendations Approach Follow-up Analysis Results Overview Problem Description Objectives Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  6. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results • Texas Department of Transportation (TxDOT) Survey • One Question • Online Survey • Approach • Structure • Flowchart • Results Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  7. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results TxDOT Survey • “Do you have a formal process that uses a systematic tool for developing unit prices that categorizes for issues such as complexity, total quantities, difficulty, and type of project?  Please point us to your system on the web or transmit electronically or by mail” • Sent to all state construction engineers • Replies received from 37 state agencies • No state stated that they had any formal process for construction unit price development • 14 state agencies stated they use a systematic tool for developing unit prices to support project estimation Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  8. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Approach • Divided into two sections: • Section I – Construction Unit Cost • Section II – Maintenance Unit Cost • Survey request sent to Subcommittee on Construction and Subcommittee on Design membership list (one survey per state per subcommittee) • A total of 104 online survey request sent to state agencies • Received a total of 38 responses from 36 state agencies Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  9. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Structure • Section I – Construction Unit Cost • General • Identifying estimating techniques that are coupled with unit cost development procedures • Acquiring Unit Cost Information • System used in extraction of unit costs from past contract details • Storing Unit Cost Information • Methods used in storing unit cost details in the database • Accessing Unit Cost Information • Mechanism to access unit cost information • Applying Unit Cost Information • Use of unit cost information in estimation process Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  10. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Results • General Section Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  11. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Results • General Section Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  12. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Results • General Section • Well documented process or procedure for developing unit construction cost estimating? Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  13. Overview Objectives Approach Recommendations Problem Description Follow-up Analysis Results Online Survey - Results • Acquiring Unit Cost Information • Types of historical bid data acquired from bid details Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  14. Overview Objectives Approach Recommendations Problem Description Follow-up Analysis Results Online Survey - Results • Storing Unit Cost Information • Storing Historical unit cost information Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  15. Overview Objectives Problem Description Approach Recommendations Follow-up Analysis Results Online Survey - Results • Applying Unit Cost Information – Formal Process/Procedure • Impact of Inflation • Project Size, Location & Complexity • Current Market Condition Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  16. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Selection criteria for follow-up interviews • Estimating approach • Historical Bid Based Estimating • Cost Based Estimating • Trns*port Users • Proposal Estimating System (PES), Cost Estimating System (CES), Estimator • Non – Trns*port Users • Innovative approach to estimating • Sophisticated databases for historical unit costs • Guidance on developing project estimates Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  17. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Follow-Up Interviews - Approach • Telephone Interviews • California Department of Transportation • Florida Department of Transportation • New York State Department of Transportation • Utah Department of Transportation • Virginia Department of Transportation • Washington State Department of Transportation • Texas Department of Transportation • Dallas District • Fort Worth District • Personal Interviews • Minnesota Department of Transportation • Texas Department of Transportation – Bryan District Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  18. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results GENERAL Virginia Department of Transportation (VDOT) Cost Based Estimation (Rational Estimation) Planning Planning Cost Estimate Excel Scoping Project Cost Estimating System (PCES) Design Trns*port Proposal and Estimates System (PES) PS&E Estimator, Info Tech Pvt. Ltd Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  19. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Virginia Department of Transportation (VDOT) • VDOT updates equipment, labor and material rates periodically • Over five years of historical data are maintained in its BAMS/DSS database • Comprehensive two year historical bid price listing providing three low bidders available on their internet Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  20. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Virginia Department of Transportation (VDOT) • Factors VDOT considers when adjusting unit prices • Project site conditions • Time limit • Sequence of construction • Seasonal Limitations • Regional conditions • Current market conditions • Quantities/price relationships • Inflation and risks associated with project Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  21. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Virginia Department of Transportation (VDOT) • Unit prices adjusted based on the recent bids received as well • Labor rates increased by 50% - 52% to reflect labor burden • Production rates calculated using • Site Manager • Bid Item Duration Data System (BIDDS) • Experience • VDOT considers 24 months data for establishing unit prices • Regression analysis carried out if sufficient historical data are available, else weighted average is used Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  22. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results GENERAL New York State Department of Transportation(NYSDOT) Historical Bid Based Estimation Planning Excel Spreadsheet, TRACER Scoping Excel Spreadsheet, TRACER Design Trns*port Estimator PS&E Trns*port Estimator • Preliminary Cost Estimation Spreadsheet • Bridge Feature Cost Estimate Summary Spreadsheet Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  23. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results New York State Department of Transportation(NYSDOT) • Tracer - Preliminary estimates, flexible to adapt to special requirements of NYSDOT • Bridge costs are estimated using the ‘Bridge Shoulder Break Area methodology’ developed by NYSDOT • Estimates are validated against current project or recently completed projects of similar scope • Letting and Award System (LAS) extracts all bid information to be stored in BAMS/DSS • 7 to 12 months of historical data used for establishing unit prices Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  24. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results New York State Department of Transportation(NYSDOT) • Historical unit costs are made available as: • Weighted Average Item Price Report (WAIPR) • Provides weighted averages of three low bidders for each line item based on the region and year of letting • Regional and Statewide Average Award Price Report (RSWAAPR) • Generated using Crystal Reports Software • Provides average award price for each line item at the regional and statewide level • NYSDOT performs a check on unit prices for major items of work using cost based estimation Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  25. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results GENERAL Utah Department of Transportation (UDOT) Planning Concept Cost Estimate Form – Excel Spreadsheet Scoping PDBS Design PDBS PS&E PDBS PDBS – Project Development Business System Historical Bid Based Estimation Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  26. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Utah Department of Transportation (UDOT) • UDOT maintains guidelines for determining unit prices while estimating • Guidelines outline the methods available for developing estimates at various phases of project • UDOT stores all bid information in its PDBS database • PDBS allows users to search bid data based on date range, quantity range, funding source, awarded bid and units • UDOT uses weighted average for a duration of 3 months and 12 months to determine unit prices Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  27. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Utah Department of Transportation (UDOT) • Red Flag Analysis : aids the engineer in developing an Engineer’s Estimate that account for factors affecting project’s cost Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  28. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results GENERAL Washington State Department of Transportation (WSDOT) Cost Based Estimation Planning MP3, PLCE Scoping EBASE, Excel Spreadsheet Design EBASE, Excel Spreadsheet PS&E EBASE Historical Bid Based Estimation Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  29. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Washington State Department of Transportation (WSDOT) • WSDOTuses a combination of cost base estimating and historical bid based estimating for preparing final Engineers Estimate • Work items comprising largest dollar value of project estimated using cost based estimating (80-20 Rule) • WSDOT maintains cost estimating guidelines which outlines the: • Estimating Techniques to be used at different project phases • Factors influencing the unit prices • WSDOT stores all the bid information from the submitted bids into its EBASE database • WSDOT considers three to six months of historical data for establishing unit price Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  30. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Washington State Department of Transportation (WSDOT) • WSDOT -Unit Bid Analysis System

  31. Overview Objectives Approach Follow-up Recommendations Problem Description Analysis Results Washington State Department of Transportation (WSDOT) • WSDOT –Bid Tabs Pro Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  32. Overview Objectives Approach Follow-up Analysis Results Recommendations Problem Description Research Findings • Historical bid based estimating is still preferred form of estimating for almost all the agencies • Cost Based Estimating is used only for preparing Engineers Estimate by very few agencies (VDOT, MnDOT) • Most state agencies rely on Excel Spreadsheet to prepare Planning and Scoping Level Estimates • Agencies like FDOT, Caltrans, VDOT have devised their own system to compute preliminary estimates based on Cost-Per-Mile values of typical sections • Sophisticated systems like Trns*port CES, Estimator and PDBS are used for developing the final Engineers Estimate Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  33. Overview Objectives Approach Follow-up Analysis Results Recommendations Problem Description Research Findings • Few agencies like FDOT and Caltrans have their historical bid data based on Market Area • Preferred form of storing historical bid data: • Standard Construction Line Item • Project Types • Work Categories • Preferred statistical technique to apply on historical data: • Weighted Average • Simple Average • Scatter Plot with best fit • Agencies like UDOT and TxDOT use moving averages (One month & Twelve months) for determining unit prices Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  34. Overview Objectives Approach Follow-up Analysis Results Recommendations Problem Description Conclusions • State agencies have different approaches for developing unit costs • Some state agencies have systematic approaches to prepare project estimates, but have no written documentation on the entire process including documentation for developing unit costs • State agencies do not have a systematic process with respect to adjustment of unit costs • Adjustments to unit costs are mainly based on experience and engineering judgment in state highway agencies Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  35. Overview Objectives Approach Follow-up Analysis Results Recommendations Problem Description Recommendations - General • Consider Cost-Based Estimating for items of work related to Hot Mix Asphalt, Steel, and Concrete • Consider the use of Cost-Based Estimating for project estimation in the Design and PS&E phases or a combination of both cost-based estimating and historical bid-based estimating, with cost-based estimating used to estimate major items of work • Consider using information systems with powerful searching and reporting capabilities to access historical bid data • Consider developing an approach similar to the Red Flag Analysis of UDOT to adjust estimates based on unique project and site characteristics Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

  36. Overview Objectives Approach Follow-up Analysis Results Recommendations Problem Description

  37. Thank You!http://tti.tamu.edu/documents/0-6023-1.pdf Texas Transportation Institute (TTI) August 2009

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