LADOTD CONSTRUCTION COST ESTIMATING Charles Nickel, P.E. Cost Estimate & Value Engineering Director Office: (225) 379-1078 E-mail: [email protected]

LADOTD LADOTD CONSTRUCTIONCONSTRUCTION

COST ESTIMATINGCOST ESTIMATING

Charles Nickel, P.E.

Cost Estimate &

Value Engineering DirectorOffice: (225) 379-1078

E-mail: [email protected]

Cost Estimating ProcessCost Estimating Process

GOAL:GOAL:

To provide guidance in To provide guidance in developing and maintaining developing and maintaining accurateaccurate, , consistentconsistent, and , and reliablereliable project cost estimates.project cost estimates.

Project Management Body of Project Management Body of Knowledge (PMBOK)Knowledge (PMBOK)

Cost Management Involves 3 Cost Management Involves 3 Processes:Processes:

1)1) Cost EstimatingCost Estimating

2)2) Cost BudgetingCost Budgeting

3)3) Cost ControlCost Control

Project Management Body of Project Management Body of Knowledge (PMBOK)Knowledge (PMBOK)

Cost Management Involves 3 Cost Management Involves 3 Processes:Processes:

1)1) Cost EstimatingCost Estimating2)2) Cost BudgetingCost Budgeting

3)3) Cost ControlCost Control


Types of Project Cost Estimates:Types of Project Cost Estimates:

1.) Engineering1.) Engineering2.)2.) ConstructionConstruction3.) Right-of-Way3.) Right-of-Way4.) Utilities4.) Utilities5.) Mitigation (Permits, Approvals, etc.)5.) Mitigation (Permits, Approvals, etc.)


Types of Project Cost Estimates:Types of Project Cost Estimates:

1.) Engineering1.) Engineering2.) Construction2.) Construction3.) Right-of-Way3.) Right-of-Way4.) Utilities4.) Utilities5.) Mitigation (Permits, Approvals, etc.)5.) Mitigation (Permits, Approvals, etc.)


Some common methods of Cost Some common methods of Cost Estimating:Estimating:

Historical Bid BasedHistorical Bid Based Cost BasedCost Based ParametricParametric Risk BasedRisk Based


Some common methods of Cost Some common methods of Cost Estimating:Estimating:

Historical Bid BasedHistorical Bid Based Cost BasedCost Based ParametricParametric Risk BasedRisk Based

Historical Bid Based EstimatingHistorical Bid Based Estimating

Uses previous bid data as a basis for Uses previous bid data as a basis for cost estimating.cost estimating.

Items with little or no bid history are Items with little or no bid history are much more difficult to estimate with much more difficult to estimate with this method, if not impossible.this method, if not impossible.

Historical Bid Based EstimatingHistorical Bid Based Estimating

Long Range EstimatesLong Range Estimates

Detailed EstimatesDetailed Estimates

Historical Bid BasedHistorical Bid BasedLong Range EstimatingLong Range Estimating

Estimating UsingEstimating UsingMajor Item Cost GroupsMajor Item Cost Groups

Historical Bid Based:Historical Bid Based:Long Range EstimatingLong Range Estimating

AsphaltAsphalt BaseBase ConcreteConcrete DrainageDrainage EarthworkEarthwork Erosion Erosion ControlControl

Cost groups are based on line items Cost groups are based on line items classified into major item categories classified into major item categories such as:such as:

Gates & FencesGates & Fences GuiderailGuiderail LandscapingLandscaping MobilizationMobilization Pavement Pavement markingmarking etc.etc.


Item Group Cost = XX% Project CostItem Group Cost = XX% Project Cost

Project Cost = Item Group Cost / XXProject Cost = Item Group Cost / XX%%


For example, for a particular type of For example, for a particular type of roadway project, historically; roadway project, historically;

Asphalt Items:Asphalt Items: 58% of Project 58% of Project CostCost

Base Items:Base Items: 12% of Project 12% of Project CostCost

Mobilization:Mobilization: 10% of Project 10% of Project CostCost

Other Items:Other Items: 20% of Project 20% of Project CostCost


Item Group Cost = Quantity ∙Item Group Cost = Quantity ∙ Unit Price


Quantities for cost groups can be Quantities for cost groups can be estimated based on early project estimated based on early project measurements such as:measurements such as:

Length of roadwayLength of roadwayWidth of roadwayWidth of roadwayDepth of pavementDepth of pavementNumber of intersectionsNumber of intersectionsEtc.Etc.


Once the quantities are estimated, Once the quantities are estimated, Unit Prices can be determined based Unit Prices can be determined based on historical bid data.on historical bid data.


Estimate of Asphalt Group:Estimate of Asphalt Group: $1.5 M$1.5 M

Estimate of Base Group:Estimate of Base Group: $1.2$1.2 M M

$2.7 M$2.7 M

$2.7 M / (58% + 12%) = $3.8 M$2.7 M / (58% + 12%) = $3.8 M

Construction Cost = $3.8 M + Construction Cost = $3.8 M + contingenciescontingencies

Detailed EstimatesDetailed Estimates

Historical Bid Based:Historical Bid Based:Detail EstimatingDetail Estimating

Involves past item level Involves past item level relationships between the unit price relationships between the unit price and other measurable parameters and other measurable parameters of the item such as:of the item such as:

QuantityQuantity Letting DateLetting Date Number of Number of BiddersBidders

LocationLocation SizeSize Type of WorkType of Work

Etc., Etc., Etc., Etc., Etc., Etc., ……


Modeling Unit Price relationshipsModeling Unit Price relationships

Simple Linear Regressions

Not so Simple Linear Regressions

Simple Linear Regression ModelsSimple Linear Regression Models

For example:For example:

Unit Price = Unit Price = 00 + + 1 1 ∙∙ (Bid Date)(Bid Date)

Log(Unit Price) = Log(Unit Price) = 00 + + 1 1 ∙∙ Log(Quantity)Log(Quantity)


More Complex Linear Regression More Complex Linear Regression ModelsModels

For example:For example:

Log(Unit Price) = Log(Unit Price) =

00 + + 1 1 ∙∙ Log(Quantity) + Log(Quantity) + 2 2 ∙∙ (Bid Date)(Bid Date)



Adjust the bid points to reflect only Adjust the bid points to reflect only one relationship at a time.one relationship at a time.


The more relationships that can be identified and modeled, the closer the adjusted bid points will be to the trend lines.

The amount of time and resources spent identifying and modeling these relationships will determine the level of accuracy achievable.

Estimating Tools:Estimating Tools:

Excel SpreadsheetsAccess Database ApplicationsTrns*port CES

All these tools rely on the EXPERIENCE of the ESTIMATOR to use them wisely to develop the Construction Cost Estimate.

QUESTIONS?QUESTIONS?Charles Nickel, P.E.

Cost Estimate &

Value Engineering Director

Office: (225) 379-1078

E-mail: [email protected]

Documents

LADOTD CONSTRUCTION COST ESTIMATING Charles Nickel, P.E. Cost Estimate & Value Engineering Director Office: (225) 379-1078 E-mail: [email protected]