LADOTD COST ESTIMATING PROCESS

Charles Nickel, P.E. Value Engineering & Cost Estimate Director Office: (225) 379-1078 E-mail: Charles.Nickel@la.gov

Project Management Body of Knowledge (PMBOK)
Cost Management Involves 3 Processes: 1) Cost Estimating 2) Cost Budgeting 3) Cost Control

Project Management Body of Knowledge (PMBOK)
Cost Management Processes:

1) Cost Estimating
2) Cost Budgeting 3) Cost Control

Cost Estimating Process
Types of Project Cost Estimates: 1.) 2.) 3.) 4.) 5.) Engineering Construction Right-of-Way Utilities Environmental (Mitigation, Documents, etc.)

Cost Estimating Process
Types of Project Cost Estimates: 1.) Engineering

2.) Construction

3.) Right-of-Way 4.) Utilities 5.) Environmental (Mitigation, Documents, etc.)

consistent.Cost Estimating Process GOAL: To provide guidance in developing and maintaining accurate. and reliable project cost estimates. .

Cost Estimating Process Some common methods of Cost Estimating:     Historical Bid Based Cost Based Parametric Risk Based .

. It is LADOTD’s most common method of estimating.Historical Bid Based Estimating    Uses previous bid data as a basis for cost estimating. Items with little or no bid history can not be estimated with this method.

time. overhead. Requires significantly more in terms of effort. Uses current costs of these components to estimate the total cost of each item of work. and profit. equipment.Cost Based Estimating    Breaks down items of work into individual basic components such as material. labor. time. and skill than the Historical Bid Based method. .

Typically generates a cost per lane mile or cost per square foot. . Commonly used during early project development when very little detail information is available.Parametric Based Estimating    Uses costs of similar components of work from similar projects recently bid.

Determines an impact and probability of occurrence for each risk.Risk Based Estimating     Identifies and Analyzes Risks associated with a project. . a cost is associated to each risk. These costs are considered contingencies and added to the project cost estimate. Based on impacts and probabilities.

Historical Bid Based Estimating  Long Range Estimates Estimates  Detailed .

Historical Bid Based Long Range Estimating Estimating Using Major Item Cost Groups .

.Historical Bid Based: Long Range Estimating Cost groups are based on line items classified into major item categories such as:  Asphalt  Gates & Fences  Base  Guiderail  Concrete  Landscaping  Drainage  Mobilization  Earthwork  Pavement marking  Erosion Control  etc.

Historical Bid Based: Long Range Estimating Item Group Cost = XX% Project Cost Project Cost = Item Group Cost / XX% .

historically. Asphalt Items: Base Items: Mobilization: Other Items: 58% 12% 10% 20% of of of of Project Project Project Project Cost Cost Cost Cost .Historical Bid Based: Long Range Estimating For example. for a particular type of roadway project.

Historical Bid Based: Long Range Estimating Item Group Cost = Quantity ∙ Unit Price .

.Historical Bid Based: Long Range Estimating Quantities for cost groups can be estimated based on early project measurements such as: Length of roadway Width of roadway Depth of pavement Number of intersections Etc.

.Historical Bid Based: Long Range Estimating Once the quantities are estimated. Unit Prices can be determined based on historical bid data.

Historical Bid Based: Long Range Estimating Estimate of Asphalt Group: Estimate of Base Group: $1.7 M / (58% + 12%) = $3.8 M + contingencies .8 M Construction Cost = $3.2 M $2.7 M $2.5 M $1.

Detailed Estimates .

Historical Bid Based: Detail Estimating Involves past item level relationships between the unit price and other measurable parameters of the item such as:    Quantity  Location Letting Date  Size Number of Bidders  Type of Work  Etc... Etc. … .. Etc.

Historical Bid Based: Detail Estimating Modeling Unit Price relationships Simple Linear Regressions Not so Simple Linear Regressions .

Historical Bid Based: Detail Estimating  Simple Linear Regression Models For example: Unit Price = β0 + β1 ∙ (Bid Date) Log(Unit Price) = β0 + β1 ∙ Log(Quantity) .

.

.

.

.

.

.

.

.

.

Historical Bid Based: Detail Estimating  More Complex Linear Regression Models For example: Log(Unit Price) = β0 + β1 ∙ Log(Quantity) + β2 ∙ (Bid Date) .

.

.Historical Bid Based: Detail Estimating Adjust the bid points to reflect only one relationship at a time.

.

.

.

.

.Historical Bid Based: Detail Estimating 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: Excel Spreadsheets Access Database Applications Trns*port CES All these tools rely on the EXPERIENCE of the ESTIMATOR to use them wisely to develop the Construction Cost Estimate.

QUESTIONS? Charles Nickel.nickel@la.gov . Value Engineering & Cost Estimate Director Office: (225) 379-1078 E-mail: charles. P.E.

.CES CES is a client-server estimating tool providing a full range of estimating capabilities from long range estimating to detailed estimating.