March 9th, 2012
REAL WORLD ESTIMATESOptimize Mobility, Preserve Infrastructure, Strengthen the Economy, by Catherine Higgins.
UDOT’s Estimate Support Team scrutinizes all associated project costs for better pre-bid estimates.
The team also lends expertise to project teams to appropriately price change orders. The process, called cost-based estimating, is a departure from using average historical costs. Project costs, such as materials, can be subject to fluctuation due to market forces and project location, so an average of historical costs may not provide a good representation of specific project costs. Estimates that are close as possible to market costs allow UDOT to:
- Allocate funds more wisely – high estimates leave money on the table when bids come in lower than expected. Better estimates mean funds can be shifted to other projects an average four months sooner.
- Minimize re-advertizing – pre-bid cost estimates that are too low result in bids that may not be subject to approval. Re-advertizing is costly and delays improvements to the transportation system.
- Be wise stewards of public funds during construction – pricing change orders correctly keeps the construction budget under control and allows UDOT to get the most out of every project dollar.
Since June 2011, the UDOT Estimate Support team members George Lukes of UDOT and Jason Henrie, Abdi Fatemi and Chris Wilson of Stanley Consultants have been integrating with project teams. The team’s cost based approach is producing estimates closer to the expected bid amounts — the percentage of estimate funds awarded at bid opening jumped from 77 percent in 2010 to 91 percent in 2011.
Estimating project costs is more than just taking a look at market values. Estimators need to be experienced in the contracting world – “It takes a long, long time to be a good estimator,” says Fatemi. He has over three decades of experience working as a contractor and pricing projects.
Randall Taylor, UDOT Region Four Constructability and Environmental Engineer, has been working with the team since September 2011. He appreciates Fatemi’s extensive background and thinks cost based estimates give project teams “greater confidence that the budget is sufficient” and that the bids will come in near the expected range.
Fatemi knows the contracting world and Taylor knows the characteristics of region projects and local material sources. “We make a good team,” says Taylor. The two have come up with ways to save costs. For example, a Region Four project will re-use milled off tailings where possible instead of purchasing new material – “energy savings and savings to the project” will result explains Taylor.
Taylor believes the present approach is an advantage. “We’re getting better estimates. We know better where our costs are going to be and we’re in a stronger position to negotiate change orders.”