Transportation Estimators Association Annual 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 Outline 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 Overview Problem Description ObjectivesFollow-upApproach Analysis Results Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Recommendations

Lack of systematic methodology to analyze and develop unit costs for construction projects Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Overview Problem Description ObjectivesFollow-upApproach Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Problem Description Follow-upApproach Analysis Results Recommendations

Approach Texas Department of Transportation (TxDOT) Survey One Question Online Survey Approach Structure Flowchart Results Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) ObjectivesOverview Problem Description Follow-up Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations

Online Survey - Results General Section Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations

Online Survey - Results General Section Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations

Online Survey - Results General Section Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Well documented process or procedure for developing unit construction cost estimating? Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations

Online Survey - Results Acquiring Unit Cost Information Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations Types of historical bid data acquired from bid details

Online Survey - Results Storing Unit Cost Information Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations Storing Historical unit cost information

Online Survey - Results Applying Unit Cost Information – Formal Process/Procedure Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Project Size, Location & Complexity Current Market Condition Impact of Inflation Approach ObjectivesOverview Problem Description Follow-up Analysis Results Recommendations

Follow-up Approach 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) ObjectivesOverview Problem Description Analysis Results Recommendations

Follow-Up Interviews - Approach Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Scoping Project Cost Estimating System (PCES) Design Trns*port Proposal and Estimates System (PES) PS&E Estimator, Info Tech Pvt. Ltd GENERAL Virginia Department of Transportation (VDOT) Cost Based Estimation (Rational Estimation) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Virginia Department of Transportation (VDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Virginia Department of Transportation (VDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Virginia Department of Transportation (VDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Planning Excel Spreadsheet, TRACER Scoping Excel Spreadsheet, TRACER Design Trns*port Estimator PS&E Trns*port Estimator GENERAL Historical Bid Based Estimation New York State Department of Transportation(NYSDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) - Preliminary Cost Estimation Spreadsheet - Bridge Feature Cost Estimate Summary Spreadsheet Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) New York State Department of Transportation(NYSDOT) Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 estimation Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) New York State Department of Transportation(NYSDOT) Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Planning Concept Cost Estimate Form – Excel Spreadsheet Scoping PDBS Design PDBS PS&E PDBS GENERAL Historical Bid Based Estimation Utah Department of Transportation (UDOT) PDBS – Project Development Business System Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Utah Department of Transportation (UDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) 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 Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Utah Department of Transportation (UDOT) Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Red Flag Analysis : aids the engineer in developing an Engineers Estimate that account for factors affecting projects cost Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Planning MP3, PLCE Scoping EBASE, Excel Spreadsheet Design EBASE, Excel Spreadsheet PS&E EBASE GENERAL Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Cost Based Estimation Washington State Department of Transportation (WSDOT) Historical Bid Based Estimation Follow-up ApproachObjectivesOverview Problem Description Analysis Results 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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Washington State Department of Transportation (WSDOT) Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

WSDOT - Unit Bid Analysis System Washington State Department of Transportation (WSDOT) Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Washington State Department of Transportation (WSDOT) WSDOT – Bid Tabs Pro Follow-up ApproachObjectivesOverview Problem Description Analysis Results Recommendations

Follow-up Analysis Results 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 ApproachObjectivesOverview Problem Description Recommendations Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI)

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 Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) Follow-up Analysis Results ApproachObjectivesOverview Problem Description Recommendations

Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) 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 Follow-up Analysis Results ApproachObjectivesOverview Problem Description Recommendations

Synthesis on Construction Unit Costs Development Texas Transportation Institute (TTI) 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 Follow-up Analysis Results ApproachObjectivesOverview Problem Description Recommendations

Follow-up Analysis Results ApproachObjectivesOverview Problem Description Recommendations

Thank You! Texas Transportation Institute (TTI) September 2009