PRODUCTION BASED CONSTRUCTION COST ESTIMATE
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1 PRODUCTION BASED CONSTRUCTION COST ESTIMATE (BOTTOM-UP ESTIMATING METHOD) DEVELOPED FOR CONSTRUCTION PLANNING DURING THE DESIGN PHASE REV2 10-JAN-14 1 P a g e
2 CONTENT 1 BOTTOM UP ESTIMATING SUMMARY FOR DESIGN TEAM IMPORTANT LUMP SUM PRICING CONSIDERATIONS CONSTRUCTION COST ESTIMATE NARRATIVE ESTIMATOR WORKING WITH THE DESIGN TEAM ESTIMATING QUALITY ASSURANCE CONSIDERATIONS EXAMPLE BOTTOM UP ESTIMATE P a g e
3 1 BOTTOM UP ESTIMATING SUMMARY FOR DESIGN TEAM The Prductin Based Estimating apprach is ften referred t as bttm-up cst estimating. This cnstructin cst estimating methdlgy is mre effective than traditinal unit price estimating because estimates are develped based n the way that the prject will be cnstructed rather than merely applying unit prices t quantity take-ffs. Bttm-Up Estimating is required fr all prjects that are in the criteria listed in SECTION Bttm-Up Estimate and Recnciliatin and this specific requirement applies mainly t prjects with significant LUMP SUM csts/items. Bttm-Up Cst Estimating: Helps the prject team prepare a buildable/cnstructible apprach (t avid significant cncerns/changes during cnstructin). Invlves develping csts fr the crews, equipment, and prductin rates that a cntractr wuld use in cnstructing the prject, and develping the estimate based n this infrmatin. Helps t capture/reslve cnstructability issues t ptimize the cntractr bid price (risk reductin) and cnstructin perfrmance. Helps t prepare a cmprehensive planning schedule significant time related dependencies can be translated int a prject cnstructin schedule frm the detailed cst estimate. This early linking f planning t prject cst estimating fsters effective cst and schedule cntrl thrughut the life f the prject and helps t avid claims and delays. Fr all cmmn unit priced elements (ther than the Lump Sum Bridge), MassDOT has implemented a Weighted Average unit price tracking prgram. This WABP system has allwed MassDOT and Designers t estimate unit priced items (usually amunting t < 40% f the cntract value) mre easily. Because f the cnsistency nted by MassDOT ver the past years, Weighted Average prgram will cntinue t be utilized fr all standard unit price items n MassDOT radway and bridge prjects. Designers (and the independent estimatrs) will cntinue t be required t perfrm quantity develpment and validatin f these unit prices as part the estimate submissins. 1.1 IMPORTANT PRICING CONSIDERATIONS All Bttm-Up estimates fr Lump Sum items shall cntain apprpriate markups fr indirect csts including hme ffice verhead, prfit and insurance (special cverage such as pllutin, marine, and ther unique jb requirements) and bnds. All estimates shuld exclude escalatin frm the Items as MassDOT will apply this prgrammatically. Time and care must als be taken t develp, verhead csts, general cnditins csts, and prfit rates in a sund, lgical manner, rather than by applying blanket percentages and shuld be dne s in a manner that des nt duplicate mark-ups already applied t the histrical unit prices used in the estimate (if applicable). Prices at the detail level fr material, equipment, and labr must reflect lcal/industry pricing t the maximum extent pssible. Labr pricing shall be current and shall incrprate: Apprpriate Prevailing Wage rates and fixed fringes fr the lcal area; 3 P a g e
4 Variable fringe/burden calculatins based n assumptin f hurs per wrking year r years f retentin (e.g. hlidays and vacatin fr sme Unin trades); Wrkers cmpensatin rates; Apprpriate payrll taxes and insurances (Federal and State Incme tax; Scial Security; Medicare; Mass. Health; etc); and Assumed cntractr healthcare and vacatin benefits. Pricing f vertime and shift wrk shall reflect apprpriate lcal labr wage premiums and apprpriate calculatin f payrll taxes and burdens abve. This will be evaluated as part f the 75% (r 100%) submissin, fllwing the cmpletin f a detailed Cntract Time Determinatin study (i.e. detailed cnstructin schedule) that utilizes infrmatin frm the cnstructin cst estimate. The Designer Estimatr shuld be mindful f nt applying duplicative mark-ups t the cmpnents f the cst estimate that are Unit Priced (nt Lump Sum) as the Weighted Average Unit Price data base likely already includes mark-ups. On the ther hand, the Estimatr shuld be mindful and accunt the pricing base (date) f thse unit prices. All cnstructin Bttm Up cst estimates, prvide by the Designer, are nt t include design phase cntingency f any type embedded int the payment items. MassDOT will frmulate escalatin and design phase cntingency t accunt fr: the lack f scping detail; changes t the scpe that will inevitably ccur as design prgresses; knwn and unknwn prject risk factrs; and market fluctuatins that will ccur ver the life f the prject. Hwever, the Designer is asked t identify what aspects f the quantity develpment are cnsidered t be quantity cntingency (because the scpe has nt fully evlved yet). 1.2 CONSTRUCTION COST ESTIMATE NARRATIVE Fr all prjects requiring a Bttm s Up Cnstructin Cst Estimate, the Designer is required submit a detailed narrative prviding all f the relevant basis and assumptins used t prduce the pricing fr all applicable Lump Sum items. The estimate narrative shuld list the fllwing: 4 P a g e List the specific prject dcuments and surce dcuments frming the basis f estimated scpes and assumptins. Identify surces and dates. Identify all scpes, quantities, and csts, prvided by surces ther than the estimating team (e.g. pass-thrugh allwances prvided by the MassDOT (including MBTA), the Designer, r third party) Recncile majr scpe changes frm prir estimates, as identified by the design team. Recncile summary level cst variances frm prir estimate, in tabular r narrative frm. Reference, and explain, detailed estimate backup such that third party readers can crrelate summary level infrmatin with the backup. Outline unreslved scpe r cst issues. Verify that the Prject Utilities Crdinatin Frm (PUC) has been prvided and utilized. Describe cncerns, apprach, and dcuments used t frmulate the estimate fr all sub-surface wrk.
5 Describe and cnstructability cncerns that were develped during the estimate that MassDOT Cnstructin shuld be made aware f. And identify what actins are being taken by the Designer t reslve them. Describe estimate departures frm prject dcuments, and why they are included (e.g. cnstructability). Describe estimate assumptins regarding site access restraints. Describe estimate assumptins regarding sequence f wrk and labr shifts. Describe the specific estimating methdlgies emplyed- e.g. parametric; detailed; quted; histrical, r ther surces. Describe the basis f material cst develpment, labr cst develpment, equipment cst develpment, markups develpment. Describe the basis and levels f prject markups-level f verhead, prfit, and sft csts applied, with justificatin. Describe cntingencies applied and hw they were develped (if any). Describe escalatin markup applied t bttm line (if any). Outline majr prject risks that may significantly impact prject csts. Where frmal, r infrmal, risk analysis has been emplyed, utline hw it has been used in develpment f the cst estimate. 1.3 ESTIMATOR WORKING WITH THE DESIGN TEAM The prfessinal estimatr is established as an extensin f MassDOT s supprt t help t ensure that prject design is likely t meet cnstructin budget expectatins. Whereas each design prfessinal in the team may wrk n a subset f the prject scpe, the estimatrs must becme familiar with all cntent in all dcuments, and will need t frequently be invlved in the evlutin f the design stage. Develping estimates with the mindset f develping a bid estimate will allw the estimatr t prduce valuable feedback t the Designer and MassDOT (thrugh the Designer PM) regarding final dcument clarity, accuracy, bidability, and cnstructability. The level f detail f the assumptins will vary frm prject t prject, but the estimatr shall discuss and validate all assumptins with the prject design team. 1.4 ESTIMATING QUALITY ASSURANCE CONSIDERATIONS The Designer is required t prvide quality assurance fr the develpment f their submissin dcuments. The fllwing are sme recmmendatins fr thse aspects fr the Designer t QA (f estimate) and will vary depending upn the prject cmplexity. Check t see that all scpe elements are included in the estimate. 5 P a g e
6 Check t see if the estimate is in the required frmat. Estimate Frmat Review crrespndence and ther dcumentatin prvided by the estimatr which identifies the required frmat that the estimate is t be presented in, e.g. CSI, bid item numbers, Unifrmat, etc. Review the summary level pricing represented by the verall estimate, if feasible. Fr example, check the verall square ft price f the estimate and cmpare it with pricing f similar bridge prjects using the mst pertinent pricing surce available, e.g., histric prject pricing, r estimating manuals. Review the estimatr s take-ff files t ensure the accuracy f quantities derived by the estimatr. At a minimum, check quantities f majr scpe items cmprising the majrity f the cst f the prject. Ensure that quantity take-ff dcumentatin is included in the estimate file prepared by the estimatr and utilized the current dcuments. Ensure that backup dcumentatin is included in the estimate file prepared by the estimatr fr all items f material. Backup dcumentatin may include vendr qutes, histric pricing frm ther recent estimates, phtcpies f pages frm estimating manuals, cpies f recent invices, r ther pertinent substantiatin. Ensure that backup dcumentatin is included in the estimate file prepared by the estimatr fr all equipment. Backup dcumentatin may include vendr qutes, histric pricing frm ther recent estimates, phtcpies f pages frm estimating manuals, cpies f recent invices r lease agreements, r ther pertinent substantiatin. Ensure that backup dcumentatin is included in the estimate file prepared by the estimatr fr all labr. Backup dcumentatin shuld include prevailing wage agreements in the vicinity f the prject and ther pertinent infrmatin. If apprpriate, check t see that the backup includes a wrkup f the elements cmprising the fully burdened wage rate. Check t see that verhead and prfit have been included in the estimate. Check t see that the verhead and prfit rates used are apprpriate fr the prject. Ensure that the estimate file prepared by the estimatr cntains a discussin/wrkup f verhead and prfit rates used. The Estimate QA Reviewer shall dcument all questinable cst elements identified during the review by red-lining the estimate, r ther suitable means. The Reviewer shall then discuss the review, including all questinable cst elements, with the estimatr. The estimatr shall make adjustments t the estimate based n the cmments prvided by the Reviewer, and shall prvide a cpy f the adjusted estimate t the Reviewer. The Reviewer shall perfrm a final QA review f the estimate t ensure that all adjustments discussed with the estimatr have been incrprated int the estimate. 6 P a g e
7 1.5 EXAMPLE BOTTOM UP ESTIMATE Example f the details prvided in the prductin based cst estimate fr the direct cst elements (i.e. thse csts that are directly attributable t a particular peratin excluding indirect csts that are ften shared between many peratins, such as the field ffice csts). This example is shwn in HCSS Sftware. Timberline and Excel Spreadsheets are als cmmnly used t satisfy the prductin based estimating apprach. EXAMPLE DIRECT COST ESTIMATE FORMAT Estimate cmpnents expected: HCSS SOFTWARE Bid Item r cst grup Quantity (Unit t be measured and installed) Descriptin f item being priced Cding fr labr and equipment Crew size/cmpsitin Material csts / unit with breakdwn f all materials (described) required fr the peratin (nt shwn abve fr simplicity) shwn as temprary r permanent. Prductin rate MH/Unit, Unit/MH, Unit/Shift, Unit/Hr. Sub-Ttals fr all labr material and equipment. 7 P a g e
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