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Cost Estimating

WSDOT Unit Bid Analysis

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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

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Construction Organizations

Construction UsingOwner Forces

Owner-ManagedConstruction

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Construction Organizations

General Contractor Design/Build

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Construction Organizations

Construction Management

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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

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Contract Documents

• General conditions– Defines responsibilities and rights

• Supplementary conditions– Types:

• Modification of general conditions• Additional information beyond general conditions

• Technical Specifications• Drawings

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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

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Standard Specifications

• Construction Specifications Institute– MasterFormat 2004 Edition

• 50 Divisions of construction information• Specifications-writing standard for most

construction

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MasterFormat 2004

Example

32 12 16.13 Plant-Mix Asphalt Paving

32 = Level 1

= Division 32: Exterior Improvements

12 = Level 2

= Flexible Paving

16 = Level 3

= Asphalt Paving

13 = Level 4

= Plant-Mix Asphalt Paving

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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

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Unit Prices

• Standard Units– Defined in Standard Specifications

From 2010 WSDOT Standard Specifications

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Cost Estimating Guidance – Key Principles

• Integrity• Contents• Year of expenditure dollars• Do not rely on historic records alone• Risk and uncertainty• Validation

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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

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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

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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

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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

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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

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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

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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

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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

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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)

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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

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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_mg

mt_plans/trans_mgmt_plans.pdf

• Laundry list of TDM/TSM items

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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)

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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

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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

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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)

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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

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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

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Risks change throughout project development

From Project Risk Management Guidance for WSDOT Projects

Evolution of project knowledge through project development

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How WSDOT Does Risk-Based Estimates

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Some Extremely General Rules-of-Thumb

• 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

Do NOT use these in place of actual numbers

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Some Extremely General Rules-of-Thumb

• 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

Do NOT use these in place of actual numbers

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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.