Project Management for Construction_ Cost Estimation

4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 1/29GoUptoTableofContentsGoToChapter4(Labor,MaterialandEquipmentUtilization)GoToChapter6(EconomicEvaluationofFacilityInvestments)CostEstimationCostsAssociatedwithConstructedFacilitiesApproachestoCostEstimationTypeofConstructionCostEstimatesEffectsofScaleonConstructionCostUnitCostMethodofEstimationMethodsforAllocationofJointCostsHistoricalCostDataCostIndicesApplicationsofCostIndicestoEstimatingEstimateBasedonEngineer'sListofQuantitiesAllocationofConstructionCostsOverTimeComputerAidedCostEstimationEstimationofOperatingCostsReferencesProblemsFootnotes5.CostEstimation5.1CostsAssociatedwithConstructedFacilitiesThecostsofaconstructedfacilitytotheownerincludeboththeinitialcapitalcostandthesubsequentoperationandmaintenancecosts.Eachofthesemajorcostcategoriesconsistsofanumberofcostcomponents.Thecapitalcostforaconstructionprojectincludestheexpensesrelatedtotheinitalestablishmentofthefacility:Landacquisition,includingassembly,holdingandimprovementPlanningandfeasibilitystudiesArchitecturalandengineeringdesignConstruction,includingmaterials,equipmentandlaborFieldsupervisionofconstructionConstructionfinancingInsuranceandtaxesduringconstructionOwner'sgeneralofficeoverheadEquipmentandfurnishingsnotincludedinconstructionInspectionandtestingTheoperationandmaintenancecostinsubsequentyearsovertheprojectlifecycleincludesthefollowingexpenses:Landrent,ifapplicableOperatingstaffLaborandmaterialformaintenanceandrepairsPeriodicrenovationsInsuranceandtaxesFinancingcostsUtilitiesOwner'sotherexpensesThemagnitudeofeachofthesecostcomponentsdependsonthenature,sizeandlocationoftheprojectaswellasthemanagementorganization,amongmanyconsiderations.Theownerisinterestedinachievingthelowestpossibleoverallprojectcostthatisconsistentwithitsinvestmentobjectives.Itisimportantfordesignprofessionalsandconstructionmanagerstorealizethatwhiletheconstructioncostmaybethesinglelargestcomponentofthecapitalcost,othercostcomponentsarenotinsignificant.Forexample,landacquisitioncostsareamajorexpenditureforbuildingconstructioninhighdensityurbanareas,andconstructionfinancingcostscanreachthesameorderofmagnitudeastheconstructioncostinlargeprojectssuchastheconstructionofnuclearpowerplants.Fromtheowner'sperspective,itisequallyimportanttoestimatethecorrespondingoperationandmaintenancecostofeach4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 2/29alternativeforaproposedfacilityinordertoanalyzethelifecyclecosts.Thelargeexpendituresneededforfacilitymaintenance,especiallyforpubliclyownedinfrastructure,areremindersoftheneglectinthepasttoconsiderfullytheimplicationsofoperationandmaintenancecostinthedesignstage.Inmostconstructionbudgets,thereisanallowanceforcontingenciesorunexpectedcostsoccuringduringconstruction.Thiscontingencyamountmaybeincludedwithineachcostitemorbeincludedinasinglecategoryofconstructioncontingency.Theamountofcontingencyisbasedonhistoricalexperienceandtheexpecteddifficultyofaparticularconstructionproject.Forexample,oneconstructionfirmmakesestimatesoftheexpectedcostinfivedifferentareas:Designdevelopmentchanges,Scheduleadjustments,Generaladministrationchanges(suchaswagerates),Differingsiteconditionsforthoseexpected,andThirdpartyrequirementsimposedduringconstruction,suchasnewpermits.Contingentamountsnotspentforconstructioncanbereleasedneartheendofconstructiontotheownerortoaddadditionalprojectelements.Inthischapter,weshallfocusontheestimationofconstructioncost,withonlyoccasionalreferencetoothercostcomponents.InChapter6,weshalldealwiththeeconomicevaluationofaconstructedfacilityonthebasisofboththecapitalcostandtheoperationandmaintenancecostinthelifecycleofthefacility.Itisatthisstagethattradeoffsbetweenoperatingandcapitalcostscanbeanalyzed.Example51:Energyprojectresourcedemands[1]Theresourcesdemandsforthreetypesofmajorenergyprojectsinvestigatedduringtheenergycrisisinthe1970'sareshowninTable51.Theseprojectsare:(1)anoilshaleprojectwithacapacityof50,000barrelsofoilproductperday(2)acoalgasificationprojectthatmakesgaswithaheatingvalueof320billionsofBritishthermalunitsperday,orequivalenttoabout50,000barrelsofoilproductperdayand(3)atarsandprojectwithacapacityof150,000barrelsofoilproductperday.Foreachproject,thecostinbillionsofdollars,theengineeringmanpowerrequirementforbasicdesigninthousandsofhours,theengineeringmanpowerrequirementfordetailedengineeringinmillionsofhours,theskilledlaborrequirementforconstructioninmillionsofhoursandthematerialrequirementinbillionsofdollarsareshowninTable51.Tobuildseveralprojectsofsuchanorderofmagnitudeconcurrentlycoulddriveupthecostsandstraintheavailabilityofallresourcesrequiredtocompletetheprojects.Consequently,costestimationoftenrepresentsanexerciseinprofessionaljudgmentinsteadofmerelycompilingabillofquantitiesandcollectingcostdatatoreachatotalestimatemechanically.TABLE51ResourceRequirementsofSomeMajorEnergyProjectsOilshale(50,000barrels/day)Coalgasification(320billionsBTU/day)TarSands(150,000barrels/day)Cost($billion)2.5 4 8to10Basicdesign(Thousandsofhours)80 200 100Detailedengineering(Millionsofhours)3to4 4to5 6to8Construction(Millionsofhours)20 30 40Materials($billion)1 2 2.5Source:ExxonResearchandEngineeringCompany,FlorhamPark,NJBacktotop5.2ApproachestoCostEstimationCostestimatingisoneofthemostimportantstepsinprojectmanagement.Acostestimateestablishesthebaselineoftheprojectcostatdifferentstagesofdevelopmentoftheproject.Acostestimateatagivenstageofprojectdevelopmentrepresentsapredictionprovidedbythecostengineerorestimatoronthebasisofavailabledata.AccordingtotheAmericanAssociationofCostEngineers,costengineeringisdefinedasthatareaofengineeringpracticewhereengineeringjudgment4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 3/29andexperienceareutilizedintheapplicationofscientificprinciplesandtechniquestotheproblemofcostestimation,costcontrolandprofitability.Virtuallyallcostestimationisperformedaccordingtooneorsomecombinationofthefollowingbasicapproaches:Productionfunction.Inmicroeconomics,therelationshipbetweentheoutputofaprocessandthenecessaryresourcesisreferredtoastheproductionfunction.Inconstruction,theproductionfunctionmaybeexpressedbytherelationshipbetweenthevolumeofconstructionandafactorofproductionsuchaslabororcapital.Aproductionfunctionrelatestheamountorvolumeofoutputtothevariousinputsoflabor,materialandequipment.Forexample,theamountofoutputQmaybederivedasafunctionofvariousinputfactorsx1,x2,...,xnbymeansofmathematicaland/orstatisticalmethods.Thus,foraspecifiedlevelofoutput,wemayattempttofindasetofvaluesfortheinputfactorssoastominimizetheproductioncost.Therelationshipbetweenthesizeofabuildingproject(expressedinsquarefeet)totheinputlabor(expressedinlaborhourspersquarefoot)isanexampleofaproductionfunctionforconstruction.SeveralsuchproductionfunctionsareshowninFigure33ofChapter3.Empiricalcostinference.Empiricalestimationofcostfunctionsrequiresstatisticaltechniqueswhichrelatethecostofconstructingoroperatingafacilitytoafewimportantcharacteristicsorattributesofthesystem.Theroleofstatisticalinferenceistoestimatethebestparametervaluesorconstantsinanassumedcostfunction.Usually,thisisaccomplishedbymeansofregressionanalysistechniques.Unitcostsforbillofquantities.Aunitcostisassignedtoeachofthefacilitycomponentsortasksasrepresentedbythebillofquantities.Thetotalcostisthesummationoftheproductsofthequantitiesmultipliedbythecorrespondingunitcosts.Theunitcostmethodisstraightforwardinprinciplebutquitelaboriousinapplication.Theinitialstepistobreakdownordisaggregateaprocessintoanumberoftasks.Collectively,thesetasksmustbecompletedfortheconstructionofafacility.Oncethesetasksaredefinedandquantitiesrepresentingthesetasksareassessed,aunitcostisassignedtoeachandthenthetotalcostisdeterminedbysummingthecostsincurredineachtask.Thelevelofdetailindecomposingintotaskswillvaryconsiderablyfromoneestimatetoanother.Allocationofjointcosts.Allocationsofcostfromexistingaccountsmaybeusedtodevelopacostfunctionofanoperation.Thebasicideainthismethodisthateachexpenditureitemcanbeassignedtoparticularcharacteristicsoftheoperation.Ideally,theallocationofjointcostsshouldbecausallyrelatedtothecategoryofbasiccostsinanallocationprocess.Inmanyinstances,however,acausalrelationshipbetweentheallocationfactorandthecostitemcannotbeidentifiedormaynotexist.Forexample,inconstructionprojects,theaccountsforbasiccostsmaybeclassifiedaccordingto(1)labor,(2)material,(3)constructionequipment,(4)constructionsupervision,and(5)generalofficeoverhead.Thesebasiccostsmaythenbeallocatedproportionallytovarioustaskswhicharesubdivisionsofaproject.Backtotop5.3TypesofConstructionCostEstimatesConstructioncostconstitutesonlyafraction,thoughasubstantialfraction,ofthetotalprojectcost.However,itisthepartofthecostunderthecontroloftheconstructionprojectmanager.Therequiredlevelsofaccuracyofconstructioncostestimatesvaryatdifferentstagesofprojectdevelopment,rangingfromballparkfiguresintheearlystagetofairlyreliablefiguresforbudgetcontrolpriortoconstruction.Sincedesigndecisionsmadeatthebeginningstageofaprojectlifecyclearemoretentativethanthosemadeatalaterstage,thecostestimatesmadeattheearlierstageareexpectedtobelessaccurate.Generally,theaccuracyofacostestimatewillreflecttheinformationavailableatthetimeofestimation.Constructioncostestimatesmaybeviewedfromdifferentperspectivesbecauseofdifferentinstitutionalrequirements.Inspiteofthemanytypesofcostestimatesusedatdifferentstagesofaproject,costestimatescanbestbeclassifiedintothreemajorcategoriesaccordingtotheirfunctions.Aconstructioncostestimateservesoneofthethreebasicfunctions:design,bidandcontrol.Forestablishingthefinancingofaproject,eitheradesignestimateorabidestimateisused.1. DesignEstimates.Fortheowneroritsdesignateddesignprofessionals,thetypesofcostestimatesencounteredrunparallelwiththeplanninganddesignasfollows:Screeningestimates(ororderofmagnitudeestimates)Preliminaryestimates(orconceptualestimates)Detailedestimates(ordefinitiveestimates)Engineer'sestimatesbasedonplansandspecificationsForeachofthesedifferentestimates,theamountofdesigninformationavailabletypicallyincreases.2. BidEstimates.Forthecontractor,abidestimatesubmittedtotheownereitherforcompetitivebiddingornegotiationconsistsofdirectconstructioncostincludingfieldsupervision,plusamarkuptocovergeneraloverheadandprofits.Thedirectcostofconstructionforbidestimatesisusuallyderivedfromacombinationofthefollowingapproaches.SubcontractorquotationsQuantitytakeoffsConstructionprocedures.3. 3.ControlEstimates.Formonitoringtheprojectduringconstruction,acontrolestimateisderivedfromavailable4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 4/29informationtoestablish:BudgetestimateforfinancingBudgetedcostaftercontractingbutpriortoconstructionEstimatedcosttocompletionduringtheprogressofconstruction.DesignEstimatesIntheplanninganddesignstagesofaproject,variousdesignestimatesreflecttheprogressofthedesign.Attheveryearlystage,thescreeningestimateororderofmagnitudeestimateisusuallymadebeforethefacilityisdesigned,andmustthereforerelyonthecostdataofsimilarfacilitiesbuiltinthepast.Apreliminaryestimateorconceptualestimateisbasedontheconceptualdesignofthefacilityatthestatewhenthebasictechnologiesforthedesignareknown.Thedetailedestimateordefinitiveestimateismadewhenthescopeofworkisclearlydefinedandthedetaileddesignisinprogresssothattheessentialfeaturesofthefacilityareidentifiable.Theengineer'sestimateisbasedonthecompletedplansandspecificationswhentheyarereadyfortheownertosolicitbidsfromconstructioncontractors.Inpreparingtheseestimates,thedesignprofessionalwillincludeexpectedamountsforcontractors'overheadandprofits.Thecostsassociatedwithafacilitymaybedecomposedintoahierarchyoflevelsthatareappropriateforthepurposeofcostestimation.Thelevelofdetailindecomposingthefacilityintotasksdependsonthetypeofcostestimatetobeprepared.Forconceptualestimates,forexample,thelevelofdetailindefiningtasksisquitecoarsefordetailedestimates,thelevelofdetailcanbequitefine.Asanexample,considerthecostestimatesforaproposedbridgeacrossariver.Ascreeningestimateismadeforeachofthepotentialalternatives,suchasatiedarchbridgeoracantilevertrussbridge.Asthebridgetypeisselected,e.g.thetechnologyischosentobeatiedarchbridgeinsteadofsomenewbridgeform,apreliminaryestimateismadeonthebasisofthelayoutoftheselectedbridgeformonthebasisofthepreliminaryorconceptualdesign.Whenthedetaileddesignhasprogressedtoapointwhentheessentialdetailsareknown,adetailedestimateismadeonthebasisofthewelldefinedscopeoftheproject.Whenthedetailedplansandspecificationsarecompleted,anengineer'sestimatecanbemadeonthebasisofitemsandquantitiesofwork.BidEstimatesThecontractor'sbidestimatesoftenreflectthedesireofthecontractortosecurethejobaswellastheestimatingtoolsatitsdisposal.Somecontractorshavewellestablishedcostestimatingprocedureswhileothersdonot.Sinceonlythelowestbidderwillbethewinnerofthecontractinmostbiddingcontests,anyeffortdevotedtocostestimatingisalosstothecontractorwhoisnotasuccessfulbidder.Consequently,thecontractormayputintheleastamountofpossibleeffortformakingacostestimateifitbelievesthatitschanceofsuccessisnothigh.Ifageneralcontractorintendstousesubcontractorsintheconstructionofafacility,itmaysolicitpricequotationsforvarioustaskstobesubcontractedtospecialtysubcontractors.Thus,thegeneralsubcontractorwillshifttheburdenofcostestimatingtosubcontractors.Ifallorpartoftheconstructionistobeundertakenbythegeneralcontractor,abidestimatemaybepreparedonthebasisofthequantitytakeoffsfromtheplansprovidedbytheowneroronthebasisoftheconstructionproceduresdevisedbythecontractorforimplementingtheproject.Forexample,thecostofafootingofacertaintypeandsizemaybefoundincommercialpublicationsoncostdatawhichcanbeusedtofacilitatecostestimatesfromquantitytakeoffs.However,thecontractormaywanttoassesstheactualcostofconstructionbyconsideringtheactualconstructionprocedurestobeusedandtheassociatedcostsiftheprojectisdeemedtobedifferentfromtypicaldesigns.Hence,itemssuchaslabor,materialandequipmentneededtoperformvarioustasksmaybeusedasparametersforthecostestimates.ControlEstimatesBoththeownerandthecontractormustadoptsomebaselineforcostcontrolduringtheconstruction.Fortheowner,abudgetestimatemustbeadoptedearlyenoughforplanninglongtermfinancingofthefacility.Consequently,thedetailedestimateisoftenusedasthebudgetestimatesinceitissufficientdefinitivetoreflecttheprojectscopeandisavailablelongbeforetheengineer'sestimate.Astheworkprogresses,thebudgetedcostmustberevisedperiodicallytoreflecttheestimatedcosttocompletion.Arevisedestimatedcostisnecessaryeitherbecauseofchangeordersinitiatedbytheownerorduetounexpectedcostoverrunsorsavings.Forthecontractor,thebidestimateisusuallyregardedasthebudgetestimate,whichwillbeusedforcontrolpurposesaswellasforplanningconstructionfinancing.Thebudgetedcostshouldalsobeupdatedperiodicallytoreflecttheestimatedcosttocompletionaswellastoinsureadequatecashflowsforthecompletionoftheproject.Example52:Screeningestimateofagroutingsealbeneathalandfill[2]OneofthemethodsofisolatingalandfillfromgroundwateristocreateabowlshapedbottomsealbeneaththesiteasshowninFigure50.Thesealisconstructedbypumpingorpressureinjectinggroutundertheexistinglandfill.Holesareboredatregularintervalsthroughoutthelandfillforthispurposeandthegrouttubesareextendedfromthesurfacetothebottomofthelandfill.Alayerofsoilataminimumof5ft.thickisleftbetween4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 5/29thegroutedmaterialandthelandfillcontentstoallowforirregularitiesinthebottomofthelandfill.Thegroutlinercanbebetween4and6feetthick.AtypicalmaterialwouldbePortlandcementgroutpumpedunderpressurethroughtubestofillvoidsinthesoil.Thisgroutwouldthenhardenintoapermanent,impermeableliner.Figure51:GroutBottomSealLinerataLandfillTheworkitemsinthisprojectinclude(1)drillingexploratoryboreholesat50ftintervalsforgrouttubes,and(2)pumpinggroutintothevoidsofasoillayerbetween4and6ftthick.Thequantitiesforthesetwoitemsareestimatedonthebasisofthelandfillarea:8acres=(8)(43,560ft2/acre)=348,480ft2(Asanapproximation,use360,000ft2toaccountforthebowlshape)Thenumberofboreholesina50ftby50ftgridpatterncovering360,000ft2isgivenby:Theaveragedepthoftheboreholesisestimatedtobe20ft.Hence,thetotalamountofdrillingis(144)(20)=2,880ft.Thevolumeofthesoillayerforgroutingisestimatedtobe:fora4ftlayer,volume=(4ft)(360,000ft2)=1,440,000ft3fora6ftlayer,volume=(6ft)(360,000ft2)=2,160,000ft3Itisestimatedfromsoilteststhatthevoidsinthesoillayerarebetween20%and30%ofthetotalvolume.Thus,fora4ftsoillayer:groutingin20%voids=(20%)(1,440,000)=288,000ft3groutingin30%voids=(30%)(1,440,000)=432,000ft3andfora6ftsoillayer:groutingin20%voids=(20%)(2,160,000)=432,000ft3groutingin30%voids=(30%)(2,160,000)=648,000ft3Theunitcostfordrillingexploratoryboreholesisestimatedtobebetween$3and$10perfoot(in1978dollars)4/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 6/29includingallexpenses.Thus,thetotalcostofboringwillbebetween(2,880)(3)=$8,640and(2,880)(10)=$28,800.TheunitcostofPortlandcementgroutpumpedintoplaceisbetween$4and$10percubicfootincludingoverheadandprofit.Inadditiontothevariationintheunitcost,thetotalcostofthebottomsealwilldependuponthethicknessofthesoillayergroutedandtheproportionofvoidsinthesoil.Thatis:fora4ftlayerwith20%voids,groutingcost=$1,152,000to$2,880,000fora4ftlayerwith30%voids,groutingcost=$1,728,000to$4,320,000fora6ftlayerwith20%voids,groutingcost=$1,728,000to$4,320,000fora6ftlayerwith30%voids,groutingcost=$2,592,000to$6,480,000Thetotalcostofdrillingboreholesissosmallincomparisonwiththecostofgroutingthattheformercanbeomittedinthescreeningestimate.Furthermore,therangeofunitcostvariesgreatlywithsoilcharacteristics,andtheengineermustexercisejudgmentinnarrowingtherangeofthetotalcost.Alternatively,additionalsoiltestscanbeusedtobetterestimatetheunitcostofpumpinggroutandtheproportionofvoidsinthesoil.Supposethat,inadditiontoignoringthecostofboreholes,anaveragevalueofa5ftsoillayerwith25%voidsisusedtogetherwithaunitcostof$7percubicfootofPortlandcementgrouting.Inthiscase,thetotalprojectcostisestimatedtobe:(5ft)(360,000ft2)(25%)($7/ft3)=$3,150,000Animportantpointtonoteisthatthisscreeningestimateisbasedtoalargedegreeonengineeringjudgmentofthesoilcharacteristics,andtherangeoftheactualcostmayvaryfrom$1,152,000to$6,480,000eventhoughtheprobabilitiesofhavingactualcostsattheextremesarenotveryhigh.Example53:Exampleofengineer'sestimateandcontractors'bids[3]Theengineer'sestimateforaprojectinvolving14milesofInterstate70roadwayinUtahwas$20,950,859.BidsweresubmittedonMarch10,1987,forcompletingtheprojectwithin320workingdays.Thethreelowbidderswere:1.Ball,Ball&Brosame,Inc.,DanvilleCA $14,129,7982.NationalProjects,Inc.,Phoenix,AR $15,381,7893.KiewitWesternCo.,Murray,Utah $18,146,714Itwasastoundingthatthewinningbidwas32%belowtheengineer'sestimate.Eventhethirdlowestbidderwas13%belowtheengineer'sestimateforthisproject.ThedisparityinpricingcanbeattributedeithertotheveryconservativeestimateoftheengineerintheUtahDepartmentofTransportationortoareacontractorswhoarehungrierthanusualtowinjobs.Theunitpricesfordifferentitemsofworksubmittedforthisprojectby(1)Ball,Ball&Brosame,Inc.and(2)NationalProjects,Inc.areshowninTable52.Thesimilarityoftheirunitpricesforsomeitemsandthedisparityinotherssubmittedbythetwocontractorscanbenoted.TABLE52:UnitPricesinTwoContractors'BidsforRoadwayConstructionItems Unit QuantityUnitprice1 2Mobilization ls 1 115,000 569,554Removal,berm lf 8,020 1.00 1.50Finishsubgrade sy 1,207,500 0.50 0.30Surfaceditches lf 525 2.00 1.00Excavationstructures cy 7,000 3.00 5.00Basecourse,untreated,3/4'' ton 362,200 4.50 5.00Leanconcrete,4''thick sy 820,310 3.10 3.00PCC,pavement,10''thick sy 76,010 10.90 12.00Concrete,ciAA(AE) ls 1 200,000 190,000Smallstructure cy 50 500 475Barrier,precast lf 7,920 15.00 16.00Flatwork,4''thick sy 7,410 10.00 8.004/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 7/2910''thick sy 4,241 20.00 27.00Slopeprotection sy 2,104 25.00 30.00Metal,endsection,15'' ea 39 100 12518'' ea 3 150 200Post,rightofway,modification lf 4,700 3.00 2.50Salvageandrelaypipe lf 1,680 5.00 12.00Looseriprap cy 32 40.00 30.00Bracedposts ea 54 100 110Delineators,typeI lb 1,330 12.00 12.00typeII ea 140 15.00 12.00Constructivesignsfixed sf 52,600 0.10 0.40Barricades,typeIII lf 29,500 0.20 0.20Warninglights day 6,300 0.10 0.50Pavementmarking,epoxymaterial Black gal 475 90.00 100Yellow gal 740 90.00 80.00White gal 985 90.00 70.00Plowable,onewaywhite ea 342 50.00 20.00Topsoil,contractorfurnished cy 260 10.00 6.00Seedling,methodA acr 103 150 200Excelsiorblanket sy 500 2.00 2.00Corrugated,metalpipe,18'' lf 580 20.00 18.00Polyethylenepipe,12'' lf 2,250 15.00 13.00Catchbasingrateandframe ea 35 350 280Equalopportunitytraining hr 18,000 0.80 0.80Granularbackfillborrow cy 274 10.00 16.00Drillcaisson,2'x6'' lf 722 100 80.00Flagging hr 20,000 8.25 12.50Prestressedconcretemember typeIV,141'x4'' ea 7 12,000 16.00132'x4'' ea 6 11,000 14.00Reinforcedsteel lb 6,300 0.60 0.50Epoxycoated lb 122,241 0.55 0.50Structuralsteel ls 1 5,000 1,600Sign,covering sf 16 10.00 4.00typeC2woodpost sf 98 15.00 17.0024'' ea 3 100 40030'' ea 2 100 16048'' ea 11 200 300Auxiliary sf 61 15.00 12.00Steelpost,48''x60'' ea 11 500 700type3,woodpost sf 669 15.00 19.0024'' ea 23 100 12530'' ea 1 100 15036'' ea 12 150 18042''x60'' ea 8 150 22048'' ea 7 200 270Auxiliary sf 135 15.00 13.00Steelpost sf 1,610 40.00 35.0012''x36'' ea 28 100 1504/4/2015 ProjectManagementforConstruction:CostEstimationhttp://pmbook.ce.cmu.edu/05_Cost_Estimation.html 8/29Foundation,concrete ea 60 300 650Barricade,48''x42'' ea 40 100 100Woodpost,roadclosed lf 100 30.00 36.00Backtotop5.4EffectsofScaleonConstructionCostScreeningcostestimatesareoftenbasedonasinglevariablerepresentingthecapacityorsomephysicalmeasureofthedesignsuchasfloorareainbuildings,lengthofhighways,volumeofstoragebinsandproductionvolumesofprocessingplants.Costsdonotalwaysvarylinearlywithrespecttodifferentfacilitysizes.Typically,scaleeconomiesordiseconomiesexist.Iftheaveragecostperunitofcapacityisdeclining,thenscaleeconomiesexist.Conversely,scalediseconomiesexistifaveragecostsincreasewithgreatersize.Empiricaldataaresoughttoestablishtheeconomiesofscaleforvarioustypesoffacility,iftheyexist,inordertotakeadvantageoflowercostsperunitofcapacity.Letxbeavariablerepresentingthefacilitycapacity,andybetheresultingconstructioncost.Then,alinearcostrelationshipcanbeexpressedintheform:(5.1)whereaandbarepositiveconstantstobedeterminedonthebasisofhistoricaldata.NotethatinEquation(5.1),afixedcostofy=aatx=0isimpliedasshowninFigure52.Ingeneral,thisrelationshipisapplicableonlyinacertainrangeofthevariablex,suchasbetweenx=candx=d.Ifthevaluesofycorrespondingtox=candx=dareknown,thenthecostofafacilitycorrespondingtoanyxwithinthespecifiedrangemaybeobtainedbylinearinterpolation.Forexample,theconstructioncostofaschoolbuildingcanbeestimatedonthebasisofalinearrelationshipbetweencostandfloorareaiftheunitcostpersquarefootoffloorareaisknownforschoolbuildingswithincertainlimitsofsize.Figure52:LinearCostRelationshipwithEconomiesofScaleAnonlinearcostrelationshipbetweenthefacilitycapacityxandconstructioncostycanoftenberepresentedintheform:(5.2)whereaandbarepositiveconstantstobedeterminedonthebasisofhistoricaldata.For0