1. 1 Cost Escalation Mitigation Florida DOT Approach Greg Davis State Estimates Engineer State Estimates Engineer October 20, 2006

2. 2 Reasons for Cost Escalation Material Prices Bidder Competition Saturated Construction Market Labor Shortages Hurricanes

3. 3 MATERIAL PRICES

4. 4 Earthwork - Statewide $4.96 $4.38 -11.7% $7.27 +66.0% $8.64 +18.8% NOTE: Lump Sum, Design/Build Contracts not included in this graph

5. 5 Earthwork Borrow Pit Availability Hauling Cost Real Estate Pressures

6. 6 Asphalt – Statewide $53.93$61.63 +14.3% $77.57 +25.9% $99.54 +28.3% NOTE: Lump Sum, Design/Build Contracts not included in this graph

7. 7 Asphalt Oil prices Bitumen Prices Aggregates

8. 8 Structural Concrete – Statewide $549.82 $564.12 +2.6% $760.89 +34.9% $868.90 +14.2% NOTE: Lump Sum, Design/Build Contracts not included in this graph

9. 9 Structural Concrete Global Demand Aggregates

10. 10 Structural Steel – Statewide $1.06 $1.48 +39.6% $1.57 +6.1% $1.72 +9.5% NOTE: Lump Sum, Design/Build Contracts not included in this graph

11. 11 Structural Steel Global Demand for Steel Fabrication Backlog Transportation Cost

12. 12 Reinforcing Steel - Statewide $0.52 $0.75 +44.2% $0.91 +21.3% $0.96 +5.5% NOTE: Lump Sum, Design/Build Contracts not included in this graph

13. 13 Reinforcing Steel Global Demand for Steel Production Backlog Transportation Costs

14. 14 Summary Statewide Weighted Average Prices Pay Item Group Unit20032004Change2005Change2006(Jan-Sept)Change EarthworkCY$4.96$4.38-11.7%$7.27+66.0%$8.64+18.8% AsphaltTN$53.93$61.63+14.3%$77.57+25.9%$99.54+28.3% Structural Concrete CY$549.82$564.12+2.6%$760.89+34.9%$868.90+14.2% Structural Steel LB$1.06$1.48+39.6%$1.57+6.1%$1.72+9.5% Reinforcing Steel LB$0.52$0.75+44.2%$0.91+21.3%$0.96+5.5%

15. 15 BID COMPETITION

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20. 20 FDOT STRATEGIES Deferred Projects –$1.0 Billion in projects (over 3-years) Refine Awards Criteria –Normal Criteria –Additional Criteria –Rejected Contracts

21. 21 FDOT STRATEGIES Revised Inflation Rates YearCurrent Past – 1 7.0%4.5% – 2 4.5%4.0% – 3 4.0%3.5% – 4 3.5%3.3% – 5 3.5%3.3%

22. 22 FDOT STRATEGIES Alternative Contracting Methods –Bid Alternates –Bid Options Bid Maximum Specification

23. 23 FDOT STRATEGIES Comprehensive Price Index DOT Borrow Pits Temporary/Portable Asphalt Plants

24. 24 Questions/Comments

25. 25 CONTACT INFORMATION Phillip “Greg” Davis, P.E. State Estimates Engineer phillipgreg.davis@dot.state.fl.us (850) 414-4170

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