Transportation Estimators Association Annual Conference Synthesis on Construction Unit Cost Development Stuart D. Anderson, PhD, PE Texas Transportation.

Transportation Estimators AssociationAnnual Conference

Synthesis on

Construction Unit Cost Development

Stuart D. Anderson, PhD, PE

Texas Transportation Institute (TTI)September 2009

Overview Problem Description Objectives Synthesis Approach Follow-Up Analysis and Results Recommendations

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Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

Synthesis on

Construction Unit Cost Development

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

OverviewProblem

DescriptionObjectives Follow-upApproach

AnalysisResults


Recommendations

Lack of systematic methodology to analyze and develop unit costs for construction projects


OverviewProblem

DescriptionObjectives Follow-upApproach

AnalysisResults

Recommendations

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

Overview Objectives


Problem Description

Follow-upApproachAnalysisResults

Recommendations

Approach

Texas Department of Transportation (TxDOT) Survey One Question

Online Survey Approach Structure Flowchart Results


ObjectivesOverview Problem Description Follow-up

AnalysisResults

Recommendations

“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

TxDOT Survey


ApproachObjectivesOverview Problem Description Follow-up

AnalysisResults

Recommendations

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

Online Survey - Approach



AnalysisResults

Recommendations

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

Online Survey - Structure



AnalysisResults

Recommendations

Online Survey - Results

General Section



AnalysisResults

Recommendations


General Section



AnalysisResults

Recommendations


General Section


Well documented process or procedure for developing unit construction cost estimating?


AnalysisResults

Recommendations


Acquiring Unit Cost Information


ApproachObjectivesOverview Problem Description

Follow-upAnalysisResults

Recommendations

Types of historical bid data acquired from bid details


Storing Unit Cost Information




Recommendations

Storing Historical unit cost information


Applying Unit Cost Information – Formal Process/Procedure


Project Size, Location & Complexity

Current Market Condition

Impact of Inflation


AnalysisResults

Recommendations

Follow-upApproach

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


ObjectivesOverview Problem Description

AnalysisResults

Recommendations

Follow-Up Interviews - Approach


Follow-upApproachObjectivesOverview Problem Description

AnalysisResults

Recommendations

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

Planning Planning

Cost Estimate

Excel

ScopingProject Cost Estimating

System (PCES)

DesignTrns*port Proposal

and Estimates

System (PES)

PS&EEstimator, Info Tech Pvt. Ltd

Virginia Department of Transportation (VDOT)

Cost Based Estimation(Rational Estimation)



AnalysisResults

Recommendations

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




AnalysisResults

Recommendations

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




AnalysisResults

Recommendations

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




AnalysisResults

Recommendations

Planning Excel

Spreadsheet, TRACER

ScopingExcel

Spreadsheet, TRACER Design

Trns*port Estimator

PS&ETrns*port Estimator

Historical Bid Based Estimation

New York State Department of Transportation(NYSDOT)


- Preliminary Cost Estimation Spreadsheet

- Bridge Feature Cost Estimate Summary Spreadsheet


AnalysisResults

Recommendations

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




AnalysisResults

Recommendations

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 estimationSynthesis on Construction Unit Costs Development

Texas Transportation Institute (TTI)



AnalysisResults

Recommendations

Planning Concept

Cost Estimate

Form – Excel Spreadsheet Scoping

PDBS

DesignPDBS

PS&EPDBS


Utah Department of Transportation (UDOT)

PDBS – Project Development Business System



AnalysisResults

Recommendations



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


AnalysisResults

Recommendations



Red Flag Analysis : aids the engineer in developing an Engineer’s Estimate that account for factors affecting project’s cost


AnalysisResults

Recommendations

Planning MP3, PLCE

ScopingEBASE, Excel

Spreadsheet

DesignEBASE, Excel

Spreadsheet

PS&EEBASE


Cost Based Estimation

Washington State Department of Transportation (WSDOT)



AnalysisResults

Recommendations

WSDOT uses 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




AnalysisResults

Recommendations

WSDOT - Unit Bid Analysis System



AnalysisResults

Recommendations



WSDOT – Bid Tabs Pro


AnalysisResults

Recommendations


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


Recommendations


Research Findings

Few agencies like FDOT and Caltrans have their historical bid data based on Market Area

Preferred form of storing historical bid data:

1. Standard Construction Line Item

2. Project Types

3. Work Categories

Preferred statistical technique to apply on historical data:

1. Weighted Average

2. Simple Average

3. Scatter Plot with best fit

Agencies like UDOT and TxDOT use moving averages (One month & Twelve months) for determining unit prices




Recommendations


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



Recommendations


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



Recommendations

Submitted Bids

Acquiring Unit Cost

- Information Systems- Type of Historical Bid Data

Storing Unit Cost

- Information Systems- Calendar Duration

- Listing of Historical Data- Categories of Historical Data

Historical database

Accessing Unit Cost

- Information Systems

Applying Unit Cost

- Calendar Duration- Statistical Technique

- Number of Bids- Factors influencing Unit Prices

General

- Estimating Techniques & Tools- Innovative Approach

Prepare Base Estimates

Determine Risk/Contingency

Unit Cost Development Framework



Recommendations

Thank You! http://tti.tamu.edu/documents/0-6023-1.pdf

Texas Transportation Institute (TTI)September 2009

Transportation Estimators Association Annual Conference Synthesis on Construction Unit Cost Development Stuart D. Anderson, PhD, PE Texas Transportation.

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