AASHTOTechnical Committee on Cost Estimating

Annual ReportFrank Csiga, Nevada DOT

Committee Chair

2006 Action Plan1. Develop Guidance2. Review NCHRP 8-493. FHWA minimum standards4. FHWA Peer Review Program5. Final Guidance Cradle to Grave

Committee Focus1. Historical Bid-Based Estimating2. Cost Based Estimating3. Bid Analysis

Where does the TEA fit in:Chapters for review within the weekReturn comments within four weeksCommittee RevisionsPresentation to SCOD

A GUIDE FOR COST ESTIMATING

Draft Chapter for Review Historical Bid-Based

EstimatingTechnical Committee on Cost Estimating

IGENERAL OVERVIEWII.PROS & CONS OF USING HISTORICAL BID BASED ESTIMATINGIII.ESTABLISHING, MAINTAINING, AND UTILIZING A BID HISTORY DATABASE

IV.USING SPREADSHEETS FOR DATA ANALYSIS IN ESTIMATING COSTS

V.ESTIMATING LUMP SUM ITEMSVI.ESTIMATING PROJECT SPECIFIC OR UNIQUE ITEMSVII.BIDDING CLIMATEVIII.REFERENCE MATERIALIX.TOOLSX.SKILL SETS REQUIRED

Cost-Based Estimates

• Elements of a Cost Based Estimates– Time– Material– Labor– Time– Overhead & Profit

Cost-Based Estimates

• Example Carried Through Chapter– Culvert Pipe Replacement

• Earthwork Sample

• More to be added

Cost-Based Estimates

• Other Topics Discussed– Subcontract Items– Lump Sum Items– Software Applications

Cost-Based Estimates

• Information Sources– RS Means Cost Guide– Rental Rate Blue Book– Rental Rate Green Book– TEA

Cost-Based Estimates

• Information Sources – IN YOUR DOT!– Construction Division

• Production Rates• Equipment• Labor Staffing Levels

– Materials Division• Sources• Supplier Contacts

Cost-Based Estimates

– Value Added• More information to make Award/Reject

Decisions• Knowledge of details for Contractor dialogue• Generally more accurate estimates than bid-

based

Cost-Based Estimates

– Conclusion• May take more resources• Need some expertise in the area of

construction • Extra effort is worth it!• DOT can make more informed decisions

BID REVIEW – Document current bid review practices– Identify definitions and processes

currently in practice – Provide recommendations to the bid

review process

STATES REVIEW PROCESSES ARE VARIED

• Contract types vary– Low bid– A+b– Design build

• State laws vary• A common decision process is needed• Fhwa guidelines apply to many projects

FHWA CURRENTLY HAS GUIDANCE IN PLACE

• Provides a general guideline

• Includes evaluation elements

• Provides criteria for awarding high cost

projects

FHWA GUIDANCE DOCUMENTS

http://www.fhwa.dot.gov/programadmin/contracts/ta508046.htm#6

TCCE RECOMMENDATIONS:

• Provide a standard process for bid evaluation

• Organize the review methods

• Make the review process efficient

• Identify roles and eliminate conflicts

INITIAL CONTRACT REVIEW

• Bid document sufficiency review

– Completed bid form

– Subcontractor disclosures

– Minority requirements

• Bid data processing and summary

– Bid line item data processing

FAIR MARKET COST ANALYSIS

• Fair market economic analysis– Total price comparison– Line item comparison– Collusion review

• Bid document quality review– Bad quantities – Missing bid items– General bid document quality

• Constructability review– Bid schedule– Site location and access

COST/ECONOMICANALYSIS

• Which bidders provide qualified bids

• Compare total prices to the ee

• Compare line items to ee and each other

• Document quality (quantities/items missed)

• Recommendation based on fair value and document quality

PROJECT SPONSOR REVIEW

• Project budget– Available funding– Reduction in work scope– Project redesign (bridges)

• Document quality – design corrections– Quantity errors– Missing items– Risk transfer to contractor

• Project need– Emergency work– Closing gaps in facility construction

PROJECT SPONSOR DECISION

• Evaluate the content of the cost review

• Determine document improvements

• Compare risk costs to available budget

• Decision point – Cancel project– Redesign and rebid– Delay and rebid– Recommend award with justification to higher

authority

DOT FINAL RECOMMENDATION OF AWARD BY HIGHEST AGENCY

DELEGATED AUTHORITY• Delegated final authority

• Weights all review information

• Represents the entire organization

• Direct report to federal and legislative decision oversite

• Make independent final decisions – not participate in development of bid review

OVERVIEW OF REVIEW PROCESSFINAL AUTHORITY – AWARD

RECOMMENDATION • Considers economic review

• Considers project sponsor information

• Evaluates federal guidance

• Carries agency authority in making final

decision

• Is responsibility for agency program delivery