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Cost Estimating

Cost Estimating. WSDOT Unit Bid Analysis. Outline. Construction organizations (review) Construction contracts (review) Contract documents Standard specifications Standard specifications for DOTs Unit prices Unit bid items WSDOT Unit bid items Short in-class exercise

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Cost Estimating

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  1. Cost Estimating WSDOT Unit Bid Analysis

  2. Outline • Construction organizations (review) • Construction contracts (review) • Contract documents • Standard specifications • Standard specifications for DOTs • Unit prices • Unit bid items • WSDOT Unit bid items • Short in-class exercise • Quality control/acceptance • Price adjustments

  3. Construction Organizations Construction Using Owner Forces Owner-Managed Construction

  4. Construction Organizations General Contractor Design/Build

  5. Construction Organizations Construction Management

  6. Construction Contracts • Method of award • Formally advertised contracts • Negotiated contracts • Method of pricing • Fixed-price • Lump sum contract • Unit price contract • Cost-plus • Cost plus percentage of cost • Cost plus fixed fee • Cost plus fixed fee with a guaranteed maximum cost • Cost plus incentive fee

  7. Contract Documents • General conditions • Defines responsibilities and rights • Supplementary conditions • Types: • Modification of general conditions • Additional information beyond general conditions • Technical Specifications • Drawings

  8. Contract Documents : What You Might See • Standard Specifications • General conditions • Technical specifications • Contract Provisions • Bid proposal forms and regulations • Required contract provisions (bond, DBE, etc.) • Amendments to the standard specifications • Special provisions • Wage rate documentation • Plans • Project drawings • Standard plans

  9. Standard Specifications • Construction Specifications Institute • MasterFormat 2004 Edition • 50 Divisions of construction information • Specifications-writing standard for most construction

  10. MasterFormat 2004 Example 32 12 16.13 Plant-Mix Asphalt Paving

  11. Standard Specifications for DOTs • Typically do not use MasterFormat 2004 • Generally use 9 Divisions: • General Requirements • Earthwork • Production from Quarry and Pit Sites and Stockpiling • Bases • Surface Treatments and Pavements • Structures • Drainage Structures, Storm Sewers, Water Mains, and Conduits • Miscellaneous Construction • Materials http://www.wsdot.wa.gov/Design/ProjectDev

  12. Unit Prices • Standard Units • Defined in Standard Specifications From 2010 WSDOT Standard Specifications

  13. Cost Estimating Guidance – Key Principles • Integrity • Contents • Year of expenditure dollars • Do not rely on historic records alone • Risk and uncertainty • Validation

  14. Cost Estimating Guidance – Key Principles • Integrity • Open and transparent • Explain uncertainty in laymen’s terms • Avoid false precision • Contents • Year of expenditure dollars • Do not rely on historic records alone • Risk and uncertainty • Validation

  15. Cost Estimating Guidance – Key Principles • Integrity • Contents • Account for what the public perceives the cost estimate to be • Not just construction costs • Do not include the cost of acquiring revenue • Year of expenditure dollars • Do not rely on historic records alone • Risk and uncertainty • Validation

  16. Cost Estimating Guidance – Key Principles • Integrity • Contents • Year of expenditure dollars • This is what people expect – state it explicitly • Assign an inflation rate to midpoint in project • Do not rely on historic records alone • Risk and uncertainty • Validation

  17. Cost Estimating Guidance – Key Principles • Integrity • Contents • Year of expenditure dollars • Do not rely on historic records alone • Best information available • Consider construction cost trends • Risk and uncertainty • Validation

  18. Cost Estimating Guidance – Key Principles • Integrity • Contents • Year of expenditure dollars • Do not rely on historic records alone • Risk and uncertainty • There are uncertainties related to cost • Contingency amounts reflect expected risk • Do not be overly optimistic (low early contingency amounts) • Validation

  19. Cost Estimating Guidance – Key Principles • Integrity • Contents • Year of expenditure dollars • Do not rely on historic records alone • Risk and uncertainty • Validation • Unbiased team should validate estimates • Periodic reviews of estimates

  20. Cost Estimating Guidance – Estimate Elements • Preliminary engineering • Right-of-way • External 3rd party • Miscellaneous design • Transportation demand/system management • Construction estimate • Construction contingencies • Construction administration • Estimated as a percentage • Public outreach • Management reserve

  21. Cost Estimating – Preliminary Engineering • Definition • The cost to prepare the construction documents • Guidance • Includes field investigation, testing, admin, environmental work, preparing plans/specs, ad/bid/award process, etc. • Can be estimated as a percentage of construction costs • WSDOT average for all types of projects = 15% • Help • Cost Estimating Manual for WSDOT Projects (July 2009) • http://www.wsdot.wa.gov/Publications/Manuals/M3034.htm • Table 3 and related text

  22. Cost Estimating – Right-of-Way • Definition • Cost to research and acquire ROW for the project • Guidance • Covers ROW for road, stormwater, wetland mitigation, etc. • Costs vary widely depending upon location • Partial vs. complete takes • Urban Seattle: $20-50/ft2 • Help • Real estate experts • Zillow (http://www.zillow.com)

  23. Cost Estimating – External 3rd Party • Definition • Costs associated with 3rd parties (e.g., utilities, railroads) • Guidance • High potential for risk and change • Utility adjustments • Located in WSDOT ROW by franchise or permit = utility pays costs • Located in WSDOT ROW by easement or outside ROW = WSDOT pays • Railroads • Take a LONG time to negotiate • Railroads were generally there first, roads cross by easement • Help • WSDOT Utilities Manual • http://www.wsdot.wa.gov/Publications/Manuals/M22-87.htm • Who pays for utility relocation? Section 200.02(2) • Railroads: Section 300.02

  24. Cost Estimating– TDM/TSM • Definition • Costs for TDM/TSM strategies along construction corridor and in neighboring communities • Guidance • Can include items like signal retiming, ITS deployment, staffing at command centers, etc. • Help • ITS Big I optional reading • FHWA’s Developing and Implementing Transportation Management Plans for Work Zones (chapter 4) • http://ops.fhwa.dot.gov/wz/resources/publications/trans_mgmt_plans/trans_mgmt_plans.pdf • Laundry list of TDM/TSM items

  25. Cost Estimating– Construction Estimate • Definition • Cost of physically constructing the project in the time required • Guidance • Includes profit, costs of labor/materials/equipment, mobilization • Estimates are usually: • Bid-based (we will use this one) • Cost-based • Help • Historical bid prices: WSDOT Unit Bid Analysis • http://www.wsdot.wa.gov/Design/ProjectDev/EngineeringApplications/UnitBidHistory.htm • Mobilization: WSDOT Plans Preparation Manual (Dec 2009) • http://www.wsdot.wa.gov/Publications/Manuals/M22-31.htm • Section 800.03(1)

  26. Cost Estimating– Construction Contingencies • Definition • Cost to allow for the likelihood of additional construction work identified after design completion and project awarded • Guidance • Typically calculated as a percentage • Typical values are 5-10% but can be higher • Type and nature of contract can influence contingency estimate • May be higher for time-sensitive projects • Help • WSDOT Plans Preparation Manual (Dec 2009) • http://www.wsdot.wa.gov/Publications/Manuals/M22-31.htm • Section 800.03(2) – 4% max allowed

  27. Cost Estimating – Construction Administration • Definition • Cost of construction engineering, inspection, admin oversight during construction • Guidance • Can be estimated as a percentage • Depends on type of job, duration, size, etc. • Help • WSDOT Plans Preparation Manual (Dec 2009) • http://www.wsdot.wa.gov/Publications/Manuals/M22-31.htm • Section 800.03(2) – 8-20% based on construction cost

  28. Cost Estimating – Public Outreach • Definition • Costs incurred by agency with respect to public outreach • Guidance • Includes motorist information, advertising, publications, press releases, PR firm, etc. • Help • FHWA’s Public Information and Outreach Strategies • http://ops.fhwa.dot.gov/wz/publicinfostrategies.htm • Go to the “Project-level” page (second bullet point link)

  29. Cost Estimating – Risk Reserve • Definition • Money kept in reserve by the agency for high-risk projects to account for unforeseen circumstances • Guidance • WSDOT Risk Reserve • Base cost (assumes no risk – usually at the 40% confidence level) • Risk percentage (70% confidence level) for use with approval by Regional Program management – risk reserve • As risks are retired the risk reserve amount is adjusted • WSDOT Risk Management Plan worksheet (Excel) • Help • Project Risk Management Guidance for WSDOT Projects (Jul 2010) • http://www.wsdot.wa.gov/publications/fulltext/cevp/ProjectRiskManagement.pdf

  30. Risk-Based Estimate • Base cost estimate • Cost that can be reasonably expected if project goes as planned • Unbiased and neutral • Includes construction contingency • Does not include risks • Risk-based estimate • Risk elements applied to base cost and modeled to provide a probable range for cost and schedule

  31. Risks change throughout project development Evolution of project knowledge through project development From Project Risk Management Guidance for WSDOT Projects

  32. How WSDOT Does Risk-Based Estimates

  33. Some Extremely General Rules-of-Thumb Do NOT use these in place of actual numbers • Density • Gravel borrow, aggregate, soils: 1.85 tons/yd3 • HMA, PCC: 2.05 tons/yd3 • Mobilization • 5 to 15% of construction cost • Traffic control • 5 to 25% of construction cost • Urban freeway work costs more (up to 30%) • Design and construction engineering • Usually not included in bid • Can be 5 to 15% of construction cost • Clearing, grubbing, demolition • $5,000/acre

  34. Some Extremely General Rules-of-Thumb Do NOT use these in place of actual numbers • Right-of-way • Cost is per square foot ($20 to $50/ft2 in urban areas) • Administration cost for each take • Relocation costs • Detention and water treatment • $6/ft2 of roadway surface • $10/ft2 of roadway surface in pond area is purchased • Environmental permits and mitigation • $150,000/acre or $31/yd2 • Temporary water pollution and erosion control • 2% of construction cost • Traffic signals • Variable…but basic ones can cost in the neighborhood of $200,000 • Survey • Construction survey: 1.5% of construction costs • Design survey: 1.5% of construction costs

  35. Primary References • Nunnally, S.W. (2001). Construction Methods and Management. 5th edition. Prentice Hall, Upper Saddle River, NJ. • Construction Specifications Institute (CSI). (2010). CSI website. http://www.csinet.org • Washington State Department of Transportation (WSDOT). (2010). Unit Bid History website. http://www.wsdot.wa.gov/biz/contaa/uba/bid.cfm • WSDOT. (2010). Project Risk Management Guidance for WSDOT Projects. WSDOT, Olympia, WA. http://www.wsdot.wa.gov/publications/fulltext/cevp/ProjectRiskManagement.pdf • FHWA. (2007). Cost Estimating Guidance. http://www.fhwa.dot.gov/programadmin/mega/cefinal.cfm.

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