(EST-3053) Assessing Bid Deviation of Highway Construction Project During Economic Recession
Author(s)/Presenter(s): Minsoo Baek
The higher uncertainty can cause significant the deviation between the unit price bids submitted by contractors due to the volatility of market conditions. The significant deviation can result in inefficient budget allocation for projects. However, few empirical studies are focused on explaining the low bid deviation depending on market conditions. Thus, the objective of this is to develop an explanatory model to describe deviation between the apparent low bid and the second low bid submitted by contractors for highway projects in the United States. To develop an explanatory model, this study used the important variables that represent project characteristics, construction market, and macroeconomic conditions. Historical cost information for highway constructions let in the State of Georgia between 2008 and 2015 were collected. Statistical regression analysis was conducted for measuring whether the bid deviation is statistically different during the economic recession of 2009. This study provides a significant contribution to the transportation communities for developing more accurate bids and making reliable investment decisions for highway projects.
(EST-3074) Productivity – Back to the Basics
Author(s)/Presenter(s): Lahiru P. Silva; James K. Cravens; Stephen L. Cabano
Productivity is a hot topic in the Construction Industry due to the inability of many projects to finish on time and on budget. Owner and Contractor organizations deploy various tools and techniques with the aim of improving overall productivity. Experts have noted a decline in construction productivity within North America, including Canada. The Construction Owners Association of Alberta developed tools such as Work Face Planning a decade ago to address this issue. This paper presents a case study on how the Authors’ deploy activity analysis to improve construction productivity in a nine billion dollar mega infrastructure project in Western Canada. How different tools and techniques can be utilized in both schedule-driven and cost driven project execution philosophies. The content of this paper includes the importance of fundamentals in productivity improvement and finally outline a philosophy to deploy a productivity improvement plan for mega projects.
(EST-3075) Cost Estimation and Short-Term Price Fluctuations: A Case Study on Impact of Northern California Wildfires on Probable Cost to Rebuild
Author(s)/Presenter(s): Dr. Pasha A. Ameli, PE
According to California Department of Forestry and Fire Protection, the October 2017 wildfire in Napa and Sonoma counties is considered the most destructive wildfire in the history of California. Nearly 37,000-acres of land and 5,700 structures were burned. Shortly after, thousands of claims were filed with insurance carriers, requesting payment to homeowners to rebuild their lost properties.
This paper is focused on the challenges faced by insurance adjusters and estimators relying on industry standard pricing databases to determine the probable cost to rebuild the burned properties in the region. We studied market condition in Santa Rosa county and identified the demand for skilled labor and materials in the region had resulted in unforeseen variations in unit costs for various trades. In an attempt to produce accurate estimates, we collaborated with local contractors and successfully obtained short term unit prices to reflect the fluctuations in materials and labor costs in the region. These unit prices were then incorporated into historic price databases to allow for modular estimation of probable cost to rebuild the properties. In conclusion, we determined the direct use of industry standard pricing tools, without consideration of short term fluctuations of regional unit prices, for catastrophic events such as the California wildfires may result in underestimation of the probable cost to rebuild.
(EST-3122) The Unit Price Process – Benchmarking
Author(s)/Presenter(s): Peter R. Bredehoeft, Jr. CEP FAACE; David Ross
Benchmarking and historical data collection should be the ultimate goal of talented cost estimators. To achieve solid, reliable data, one must apply standard methodologies and report formats to facilitate proper data collection. This paper outlines a process which enables data collection at the lowest level from which proper benchmarks and metrics can be established.
Unit cost data is prevalent in every cost estimate. However the key to capturing it consistently and utilizing it effectively is standardization of the cost estimate Work Breakdown Structure (WBS). Successful execution of the Unit Price Process is highly dependent upon the consistent application and composition of five key elements of the cost estimate WBS; Unit Price, Work Package, Trade Package, Facility and Work Activity.
This process showcases the effectiveness and efficiencies of applying standard unit cost information for the purposes of estimate review, quality control and risk management by way of comparative unit cost analysis. This process relates directly to the project delivery cycle through Engineering, Procurement, Project Controls and scope management with the ultimate objective for capturing actual cost data from the field.
The Unit Price Process will provide the basic concept which is adaptable to virtually any industry. The paper will serve as a road map of procedures and processes that will assist most any organization with establishing best practices centered around the Unit Price Process for benchmarking.
(EST-3195) Benefits of Modularization in the Construction Industry
Author(s)/Presenter(s): James W. Cain, III CEP
The North American market has a potential of 350 billion in projects being evaluated for the LNG, Petrochemical, and Refining industries as of November 2017. Considering limitations in the construction workforce, increasing onsite construction costs and the impact of weather at construction sites in the region, modularization as part of a project’s executions strategy will definitely be helpful in optimizing the overall project cost. This paper will discuss the history of modules in the construction industry, various types of modules and their applications (mega-modules, large/intermediate modules, truckable modules), and the key drivers and benefits for modularization for projects.
(EST-3201) Predictive Analytics Can Improve Cost and Schedule Estimating for Smart City Projects
Author(s)/Presenter(s): Anthony A. DeMarco
Smart city projects will dramatically improve urban living, if they succeed. Many cities and traditional infrastructure construction contractors are being challenged to understand, estimate, budget, propose and execute complex technology development and deployment projects. Failure to understand IoT (Internet of Things) and other technologies, along with typical contractor over-optimism, results in under estimates that lead to disaster. Urban living will only improve if these projects start out with solid baseline cost and schedule estimates.
New research shows that credible estimates can be achieved by leveraging benchmarks and lessons learned from defense and security C4ISR projects (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance). New smart city statistical predictive cost and schedule models, along with proven C4ISR predictive models, are a critical resource for city governments and contractors undertaking these challenging projects. This paper will describe these models and illustrate the value of accurate estimating through a smart city project case study.
(EST-3252) Cost Estimating in Hyperinflation Economies
Author(s)/Presenter(s): Francis Lira Vargas
Regardless of a project's complexity or magnitude, predicting its costs requires dealing with many factors such as uncertainties, escalation, and inflation. In hyperinflationary economies, predicting the cost of a project with the highest possible accuracy is a particularly difficult task that requires the development of methodologies or procedures. It is of primary importance that the cost estimate should be traceable and all its elements should be easy to identify because constantly updates will be certainly made. This paper discusses this subject and proposes some ways of dealing with hyperinflation in the context of cost estimation. The objective is to design a calculation procedure to enhance the accuracy of cost estimates by including the impact of hyperinflation. This impact would be added to the costs obtained with the traditional method for materials, construction equipment, labor, indirect costs. This proposed methodology is oriented to projects with a high level of definition or in the execution phase.
(EST-3290) A Comparison Of U.S. Army Corps of Engineers Cost Estimating Policies
Author(s)/Presenter(s): Tracy Trippe Leeser
The U.S. Army Corps of Engineers (Corps) estimates the cost of construction projects for the military and for the nation, as well as on behalf of other nations. These estimates are prepared based on well-defined policy. The cost estimating policy is separated into three programs; military, civil works, and environmental. There are similarities among the policies, as well as differences.
This paper will present the results of research that examines the cost estimating policy for the Corps’ military, civil works and environmental programs. Specific policies for military and civil works cost estimating will be compared and contrasted. Suggested changes that arise from the identification of differences in the military and civil works cost estimating policy will be made.
The paper will be of interest to those who prepare cost estimates spanning the project life cycle, as it will address the evolution of estimates from the planning phase through construction completion.
(EST-3302) Overview of New Estimating Recommended Practices
Author(s)/Presenter(s): Dave Kyle, CEP
This session provides an introduction to 3 new or revised Recommended Practices: CE-81 (Owner's Estimate Requirements Document - as Applied in Engineering, Procurement, and Construction for the Process Industries); 36R-08 (Development of Cost Estimate Plans - as Applied in Engineering, Procurement, and Construction for the Process Industries); CE-95 (Development of Cost Estimate Bases - as Applied in Engineering, Procurement, and Construction for the Process Industries).
The content and use of the documents will be explained, in particular the new sections on Class 4 and 5 estimates. The relationship between each will also be discussed. This session is also intended to provide an opportunity for attendees to openly discuss the use of the documents.