CEE 404 Winter 2011

Cost Estimating
WSDOT Unit Bid Analysis

CEE 404 Winter 2011

Outline
Construction organizations (review) Construction contracts (review) Contract documents

Unit prices

Standard specifications Standard specifications for DOTs Unit bid items WSDOT Unit bid items Short in-class exercise

Quality control/acceptance Price adjustments

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CEE 404 Winter 2011

Construction Organizations
Construction Using Owner Forces
Owner

Owner-Managed Construction
Owner

Construction Staff

Construction Staff

Project Director

Project Director

Construction Forces 3

Hired Forces

Contractors

CEE 404 Winter 2011

Construction Organizations
General Contractor
Owner

Design/Build

Owner

Design Firm

Prime Contractor

Design/Build Firm

Subcontractors Design Force Contractor Work Force Construction Force

Subcontractors

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Construction Organizations
Construction Management
Owner

Construction Manager

Design Firm

Construction Firms

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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

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Cost Cost Cost Cost

plus plus plus plus

percentage of cost fixed fee fixed fee with a guaranteed maximum cost incentive fee

CEE 404 Winter 2011

Contract Documents
General conditions
Defines responsibilities and rights

Supplementary conditions
Types:
Modification of general conditions Additional information beyond general conditions

Technical Specifications Drawings

CEE 404 Winter 2011

Contract Documents : What You Might See Standard Specifications Contract Provisions

General conditions Technical specifications

Plans

Bid proposal forms and regulations Required contract provisions (bond, DBE, etc.) Amendments to the standard specifications Special provisions Wage rate documentation

Project drawings Standard plans

CEE 404 Winter 2011

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

CEE 404 Winter 2011

MasterFormat 2004
Example
32 12 16.13 Plant-Mix Asphalt Paving
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12 16 13

= Level 1 =
= Level 2 = = Level 3 = = Level 4 =

Division 32: Exterior Improvements

Flexible Paving Asphalt Paving 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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CEE 404 Winter 2011

Unit Prices
Standard Units
Defined in Standard Specifications

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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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CEE 404 Winter 2011

Cost Estimating Guidance Key Principles

Integrity
Open and transparent Explain uncertainty in laymens terms Avoid false precision

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

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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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 FHWAs Developing and Implementing Transportation Management Plans for Work Zones (chapter 4)
http://ops.fhwa.dot.gov/wz/resources/publications/trans_mgmt_pla ns/trans_mgmt_plans.pdf Laundry list of TDM/TSM items
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CEE 404 Winter 2011

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/UnitBi dHistory.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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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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CEE 404 Winter 2011

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
FHWAs 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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CEE 404 Winter 2011

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

Evolution of project knowledge through project development

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From Project Risk Management Guidance for WSDOT Projects

CEE 404 Winter 2011

How WSDOT Does Risk-Based Estimates

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CEE 404 Winter 2011

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
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CEE 404 Winter 2011

Some Extremely General Rules-of-Thumb

Do NOT use these in place of actual numbers

Right-of-way

Detention and water treatment

Cost is per square foot ($20 to $50/ft2 in urban areas) Administration cost for each take Relocation costs $6/ft2 of roadway surface $10/ft2 of roadway surface in pond area is purchased $150,000/acre or $31/yd2 2% of construction cost

Environmental permits and mitigation

Temporary water pollution and erosion control Traffic signals Survey

Variablebut basic ones can cost in the neighborhood of $200,000
Construction survey: 1.5% of construction costs Design survey: 1.5% of construction costs

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CEE 404 Winter 2011

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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