Cost Estimating

Manual for Projects

M 3034.03
April 2015

Engineering and Regional Operations

Development Division, Design Office, SAEO

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Foreword
WSDOTs vision is to be the best at providing a sustainable and
integrated multimodal transportation system. Its mission is
to provide and support safe, reliable, and cost-effective
transportation options to improve livable communities and
economic vitality for people and businesses.

Estimators should
be shielded from
pressures to keep
estimates within

desired amounts.
This update to the WSDOT Cost Estimating Guide is part of an
ongoing process to keep technical information relevant and
current, as well as provide consistency with the departments vision.
More of an art than a science, cost estimating requires a thorough understanding
of project scope, past price history, and current market conditions, as well as with
a generous application of human judgment.
Key goals of the estimating process described in this manual include:
1. Departmentwide priority on estimating, managing, and controlling costs:

Fully developed and integrated policies, processes, and tools for cost
estimation, management, and control

Baseline estimates that align with early project scope development

and include an initial assessment of uncertainty

Clearly defined and documented cost management endorsement

processes to authorize changes in scope and cost after the baseline
estimate is established

Dedicated resources that are focused on effective scoping, project

cost estimating, and cost management

2. Reliable and accurate estimates:

Well-documented and complete cost estimates

Clearly spelled-out assumptions, risks, and uncertainties that can

be easily communicated

3. Statewide uniformity and consistency:

Uniform application and consistent statewide use of well-documented

processes, tools, and templates

Use of processes and tools during the planning, scoping, design, and
letting phases

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Foreword

4. Improved communication and credibility with external stakeholders:

Consistent and clear communication of cost estimates to external

stakeholders at milestone points

The ability to communicate cost estimates with confidence, leading to

stronger relationships with external stakeholders, greater possibility for
collaboration, and increased funding support of transportation initiatives

5. Clear accountability:

Accountability for cost estimating and cost management at all levels

of the agency

Defined roles and responsibilities for every person involved

Accountability that is tracked at key milestones in the process

This manual is intended as a guide for developing and managing project cost. It
provides policies, rules, procedures, and tools to aid WSDOT staff in preparing project
cost estimates and managing cost throughout WSDOTs project development process.
Although the manual is primarily written for project managers and estimators, it is
strongly recommended that others involved in WSDOTs project delivery activities
familiarize themselves with this information.
The term "project cost estimate," as used during the project development process,
includes all direct capital outlay costs, including right of way, structures, and
landscaping, but does not normally include indirect capital outlay support costs.
Project cost estimates should be as accurate as possible. Estimates should never be
artificially reduced to stay within the funding limits, nor should they be reduced to
make available more funding for region projects. Likewise, project cost estimates
should not be artificially raised beyond the contingency percentages provided for
in this manual unless adequately justified.
Cost estimating and cost management tools continue to be developed and will be
added to the departments estimating tool box as they become available. Please note
that while cost estimating in support of design-bid-build projects is covered in depth in
this manual, there are certain other conditions, such as design-build project delivery,
accelerated projects, and accelerated estimates, which are not addressed in detail.

Important Notice
The detailed estimate of any phase of an estimate shall not be disclosed to the public
and will be kept confidential until the end of the bid opening.

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Definitions
A comprehensive glossary for cost risk estimating management is posted at:
www.wsdot.wa.gov/publications/fulltext/cevp/glossary.pdf

Key Terms
Allowance Additional resources included in an estimate to cover the cost of known
but undefined requirements for an activity or work item. Allowance is a base cost item.
Base Cost Estimate The term base cost estimate was developed by WSDOT for cost
risk analysis and represents the reviewed and/or validated project cost estimate to be
used in the quantitative risk analysis for a project. The base cost represents the cost that
can reasonably be expected if the project materializes as planned, including PE, RW, and
CN costs. The base cost estimate is unbiased and neutralit is not optimistic and it is
not conservative. It does not include any risks, but does include the WSDOT standard
construction contingency, since that amount is based upon historical usage. Base costs
reported to program management shall be in current-year dollars (the un-inflated
estimate). Refer to the Plans Preparation Manual 800.03(2).
Baseline The approved time-phased plan (for a project, a work breakdown structure
component, work package, or schedule activity), plus or minus approved project scope,
cost, schedule, and technical changes. Generally refers to the current baseline, but may
refer to the original or some other baseline. Usually used with a modifier (e.g., cost
baseline, schedule baseline, performance measurement baseline, technical baseline).
Baseline Preliminary Engineering (PE) The effort (budget/cost) of taking a project
from planning through the scoping and design phases of project development. Planning
and scoping typically have separate budgets but are encompassed under Design or
Preliminary Engineering (PE). The terms Design or Design Phase are sometimes
used interchangeably with PE.
Basis of Estimate (BOE) Documentation to enable the agency to easily track changes
to project scope, cost, and schedule. A well-documented estimate basis and
documentation of assumptions used can eliminate overlap of future estimate
assumptions. This document provides a trail about what is known about the project.
This allows project knowns as well as unknowns to be clearly identified. This
documentation is important because multiple estimators may be involved on the
project; complex projects in particular take years to develop and estimates must be
completed multiple times.

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Definitions

Construction Contingency A standardized markup applied to the construction cost of

a project that accounts for uncertainties in quantities, unit costs, and minor risk events
that typically take place during construction. Refer to the Plans Preparation Manual,
Section 800.03, for guidance on estimating construction contingency.
Construction Engineering (CE) The project management effort (budget/cost) applied
to the contract execution and construction phases of the project. Refer to the Plans
Preparation Manual, Section 800.03, for guidance on estimating the CE cost.
Cost Estimate A prediction of quantities, cost, and/or price of resources required
by the scope of an asset investment option, activity, or project. As a prediction, an
estimate must address risks and uncertainties. Estimates are used primarily as inputs
for budgeting; cost or value analysis; decision making in business; asset and project
planning; or for project cost and schedule control processes. Cost estimates are
determined using experience and calculating and forecasting the future cost of
resources, methods, and management within a scheduled time frame. (Source:
Copyright 2007, AACE International, Inc., AACE International Recommended
Practices, Number 10S-90)
Estimator A knowledgeable professional assigned to evaluate the probable cost of
projects.
Parametric Estimate A method of estimating the cost of a project (or part of a project)
based on one or more project-based cost factors. Historical bid data is commonly used
to define parameters related to the cost of a typical transportation facility construction,
such as cost per lane mile, cost per interchange or cost per square foot. Percentages
can also be used to estimate the cost of project elements based on historical cost
information. Parametric methods are often used in early estimating, such as planning
and scoping estimates. (Source: WSDOT working definition)
Risk-Based Estimate An approach that involves simple or complex risk modeling based
on inferred and probabilistic relationships among cost, schedule, and events related to
the project. Risk-based estimating uses historical data and/or cost-based estimating
techniques and an experts best judgment to develop the project base cost (project
cost if the project proceeds as planned). Risk elements (defined as opportunities or
threats) are then defined and applied to the Base Cost through risk modeling to provide
a probable range for both project cost and schedule. (Source: WSDOT working
definition)
Risk The effect of uncertainty on objectives. (Source: ISO 31000, Risk management
Principles and Guidelines)

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Contents
Foreword

.................................................................................................................................................... i

Definitions .................................................................................................................................................. iii

Chapter 1

Purpose ................................................................................................................................. 1-1

Chapter 2

Cost Estimating Process ........................................................................................................ 2-1

2-1

Introduction ............................................................................................................................. 2-1

2-2

Determine the Basis of Estimate.............................................................................................. 2-1

2-3

Prepare a Baseline Estimate .................................................................................................... 2-1

2-4

Review the Baseline Estimate .................................................................................................. 2-2

2-5

Perform a Risk Assessment ...................................................................................................... 2-2

2-6

Determine the Estimate Communication Approach................................................................ 2-3

2-7

Obtain Management Endorsement ......................................................................................... 2-3

Chapter 3

Cost Estimating Methodology .............................................................................................. 3-1

Chapter 4

Cost Estimating and Project Development Phases ............................................................... 4-1

4-1

Introduction ............................................................................................................................. 4-1

4-2

Preconstruction General Guidance .......................................................................................... 4-1

4-3

Planning.................................................................................................................................... 4-5

4-4

Scoping ..................................................................................................................................... 4-7

4-5

Design..................................................................................................................................... 4-10

4-6

PS&E ....................................................................................................................................... 4-12

Chapter 5

Cost Estimate Training .......................................................................................................... 5-1

Chapter 6

Documentation/Basis of Estimate ........................................................................................ 6-1

6-1

Introduction ............................................................................................................................. 6-1

6-2

Techniques ............................................................................................................................... 6-1

6-3

Basis of Estimate (BOE) ............................................................................................................ 6-1

Chapter 7

Cost Estimating Data............................................................................................................. 7-1

Chapter 8

Specialty Groups ................................................................................................................... 8-1

8-1

Bridges, Nonstandard Retaining Walls, and Structures ........................................................... 8-1

8-2

Right of Way ............................................................................................................................. 8-1

8-3

Environmental .......................................................................................................................... 8-1

8-4

Traffic Design and Operations.................................................................................................. 8-2

8-5

Utilities ..................................................................................................................................... 8-2

Chapter 9

Preliminary Engineering Costs .............................................................................................. 9-1

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Contents

Chapter 10 Key Factors that Influence Estimating Practice .................................................................. 10-1

10-1

Geographic Considerations .................................................................................................... 10-1

10-2

Restrictive Work Hours or Method of Work .......................................................................... 10-2

10-3

Quantity Considerations ........................................................................................................ 10-2

10-4

Item Availability ..................................................................................................................... 10-3

10-5

Scheduling/Lead Time ............................................................................................................ 10-3

10-6

Difficult Construction/Site Constraints .................................................................................. 10-4

10-7

Estimating Lump Sum Items .................................................................................................. 10-4

10-8

Force Account ........................................................................................................................ 10-5

10-9

Timing of Advertisement ....................................................................................................... 10-6

10-10 Inflation .................................................................................................................................. 10-7

10-11 Expected Competition/Contractor Availability ...................................................................... 10-8
10-12 Other Contracts...................................................................................................................... 10-9
10-13 Specialty Work ....................................................................................................................... 10-9
10-14 Material Shortages ............................................................................................................... 10-10
10-15 Standard Items vs. Nonstandard Items................................................................................ 10-10
10-16 First-Time-Use Items ............................................................................................................ 10-10
10-17 Soil Conditions ..................................................................................................................... 10-11
10-18 Permit Conditions ................................................................................................................ 10-11
10-19 Allowances ........................................................................................................................... 10-12
10-20 Construction Contingencies ................................................................................................. 10-12
10-21 Other Funding Sources/Agreement Work for Others.......................................................... 10-12
Chapter 11 Independent Estimate/Estimate Review ............................................................................ 11-1
11-1

Introduction ........................................................................................................................... 11-1

11-2

Internal Project Team ............................................................................................................ 11-2

11-3

Peer Review ........................................................................................................................... 11-2

11-4

Region/Headquarters Review ................................................................................................ 11-2

11-5

External .................................................................................................................................. 11-3

Chapter 12 Resources ............................................................................................................................ 12-1

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Chapter 1

Purpose

Cost estimating 1 is the predictive process used to quantify, cost, and price the
resources required by the scope of the project, to better manage budgets and deliver
projects that do not exceed the identified scope, and that are on time throughout
the development process.
The need to solidify the estimation process can be seen in four areas:
1. State financial plan
2. Creation of public satisfaction and a positive response
3. Project control
4. Problems currently being encountered
The state financial plan is affected as cost estimates are used to obtain and allocate
funding for the overruns of the estimated project costs. This leads to the second
reason for the need for cost estimates: influencing public opinion.
Public satisfaction is increased if transportation projects show and prove to the
general public that they are timely and within budget. Public declaration of the
estimated cost of projects needs to be thoughtfully provided only after care is taken
to produce a well-documented, quality estimate.
Project control relies on cost estimates to help keep projects within the appropriate
fiscal boundaries. Although not necessarily a check and balance format, the
existence of the original estimate will keep the project from growing and expanding
beyond its spending limit.
As projects encounter problems, and their estimates come under fire, great scrutiny
is given to the project and its associated estimates. The ability to confront and solve
problems and obstacles relies in large part on the quality of the estimate and the
documentation, which, if done properly, will provide critical support to project
success.

AACEI: III. PROJECT CONTROL PROCESS CHAPTER 7 PROJECT CONTROL PLANNING

7.3 Cost Estimating and Budgeting
7.3.1 Description
Note: Guidance for calculating quantities of a proposed design is found in the WSDOT Design Manual.

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Purpose

Chapter 1

The reliability of project cost estimates at every stage in the project development
process is necessary for responsible fiscal management. Unreliable cost estimates
result in severe problems in WSDOT programming and budgeting, affecting staffing
and budgeting decisions that could impair effective use of department resources.
Communication with decision makers on critical budget issues is also adversely
affected.
This manual provides guidance and instruction to design staff and project managers
for a consistent approach to cost estimating. At the same time, it provides guidance
on how to treat the common and recurring challenges encountered in the estimating
process.
The manual provides cost estimating data and useful links to cost estimating resource
materials that may be found on WSDOT intranet websites. It also provides
considerations, tips, and cautions regarding the different phases of an estimate.

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Chapter 2
2-1

Cost Estimating Process

Introduction
Projects benefit from following a thoughtful and deliberate process when developing
project cost estimates. The process presented in Figure 2-1 describes the way WSDOT
develops its project cost estimates. It is applied to all phases of project delivery,
starting with the planning phase estimate and ending with the Plans, Specifications,
and Estimates (PS&E) phase (or ad ready).
Each phase of an estimate may require different estimating inputs, methods,
techniques, and tools. The task of cost estimating, by its very nature, requires the
application of prudent judgment, from the initiation to the completion. Following
is a short description of each step in the cost estimating process.

2-2

Determine the Basis of Estimate

The Basis of Estimate describes the project. It includes underlying assumptions, notes,
and exclusions, and is required prior to the preparation of every project estimate. The
Basis of Estimate document includes project information and previously developed
project scope and schedule data, from which a project cost estimate can be prepared.
The level of detail provided in the Basis of Estimate varies depending on a projects
phase, type, and complexity, but would include the design matrix and criteria, all
assumptions, and pertinent scope details.
The Basis of Estimate provides a documented history of the estimate process. It
becomes a part of the project documentation, with the end result being a complete
traceable history for each estimate.

2-3

Prepare a Baseline Estimate

Baseline estimated costs for the project components (items and aggregates of items)
are determined in current year dollars. These components may be estimated using
different techniques depending on the level of scope definition and the size and
complexity of the project. The number and detail of components estimated may
vary depending on the data available at the time of the estimate.
For example, in the scoping phase, the cost estimate covers preliminary engineering
(PE), right of way (ROW), and construction (CN). As the design progresses and more
details are known, estimate components become more detailed. Key inputs to this
activity include project scope details, historical databases, and other cost databases.

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Cost Estimating Process

Chapter 2

WSDOT has internal specialty groups that should be consulted within their respective
areas of expertise when preparing baseline estimates.
The baseline estimate is also dependent on the estimated project schedule. The
estimated schedule should be attached to the Basis of Estimate.
At a minimum, estimates developed in the early stages of project development should
include the major milestones that WSDOT uses to measure performance and progress
on projects. An early schedule may only include a few activities, but typically should
include estimated durations for the environmental, design, ROW, ad/bid/award, and
construction phases.

2-4

Review the Baseline Estimate

This activity confirms that: (1) project and estimate assumptions, as documented in
the Basis of Estimate, are appropriate for the project; (2) the baseline cost estimate
is an accurate reflection of the projects scope of work; (3) scope, schedule, and cost
items are calculated properly, and required components are not missing or double
counted; and (4) historical data and other data was used reasonably, and it reflects
project scope and site conditions. Internal specialty groups and/or subject matter
experts (SMEs) must participate in the baseline estimate review.

2-5

Perform a Risk Assessment

This activity captures the effect of uncertainties on project cost and schedule using a
structured and documented approach. Secretarys Executive Order E 1053.00 provides
instructions on how and when a risk assessment must be performed. Instructional
Letter IL 4071 provides detailed instructions on how the results of the risk assessment
are used. The WSDOT Project Risk Management Manual provides the needed detail of
how risk assessment is employed.
http://wwwi.wsdot.wa.gov/publications/policies/fulltext/1053.pdf
http://wwwi.wsdot.wa.gov/publications/policies/fulltext/4071.pdf
www.wsdot.wa.gov/publications/fulltext/cevp/projectriskmanagement.pdf

Page 2-2

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Chapter 2

2-6

Cost Estimating Process

Determine the Estimate Communication Approach

Regardless of whether risk assessment is employed, project cost estimate data
normally needs to be communicated to both internal and external constituencies.
The communication approach determines what estimate information should be
shared, who should receive this information, and how and when the information
should be communicated.
Cost estimate information should be included when the communication plan is
developed as part of the project management process. Often the words are as
important as the numbers. The Basis of Estimate document can be used effectively
as a communication tool to convey key information about the project to others.

2-7

Obtain Management Endorsement

Estimates are key products of the project management process and are fundamental
documents upon which management decisions are based. Given their importance,
all estimates should be reviewed by an independent party, and then be reconciled
and revised as needed to respond to independent reviewers comments. Once the
independent review comments have been addressed, estimates should be presented
to management staff for their endorsement.
Management endorsement of estimates developed for initial budgeting or baseline
definition is defined as a step in the project management process. Revised estimates,
typically developed if project requirements change, or as design is developed, should
also be reviewed by management staff, revised as necessary to reflect management
comments, and endorsed. Revised estimates shall be incorporated into project cost
baselines through the established project change management process.
Estimates are not altered to fit a predetermined budget outside of the formal
estimating process. In the event that management endorsement of an estimate
cannot be obtained, revisit the estimating process starting with the project definition
step (project information, project scope, project location, and site characteristics) in
Figure 2-1.

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Cost Estimating Process

Chapter 2

Project Information
Project Scope
Project Location and
Site Characteristics

Basis of
Estimate

Historical
Databases

Baseline
Estimate

Internal SMEs

Review Baseline
Estimate

Market
Conditions &
Inflation

Risk Assessment

External &
Internal SMEs

Estimate
Communication
Approach

Management
Endorsement
Regional & HQ

Estimates

Conceptual (Planning)
Baseline (Scoping)
Updates (Design/PS&E)
Engineers Letting

Figure 2-1 Cost Estimating Process

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Chapter 3

Cost Estimating Methodology

Estimating methodologies that may be applied to WSDOT projects at various stages of

project development include: (1) parametric, (2) historical bid-based, (3) cost based,
and (4) risk-based. These categories encompass scores of individual techniques/tools
to aid the estimator in preparing cost estimates. A combination of methods may be
found in any given estimate.
There are a number of specialty items in WSDOT projects that are estimated by
designated offices. These items include bridges and nonstandard retaining walls,
traffic items, right of way and other properties, environmental features, and utilities.
The procedures to estimate these items are covered in Chapter 5, Specialty Groups.
Parametric methods are applied to projects in the planning, scoping, or early design
stage. These methods involve techniques that use historical data to define the cost
of the typical transportation facility using measurements that are easily determined,
such as cost per lane mile, cost per interchange, cost per square foot, and cost per
intersection.
Two techniques are commonly used in parametric estimating: (1) analogous (similar)
projects and (2) historical percentages. WSDOT uses an Access database estimating
program to support parametric estimating:

Planning-Level Project Cost Estimating (PLCE)

The tool can be found in the Planning Level Cost Estimation Manual:
www.wsdot.wa.gov/mapsdata/travel/pdf/plcemanual_12-12-2012.pdf
Historical bid-based methods are commonly used to develop WSDOT construction
cost estimates, and are appropriate when design definition has advanced to the point
where detailed quantification of bid items is possible. The unit cost prices used are
collected and stored from prior projects. They should be modified or adjusted to
reflect current prices and project-specific conditions such as geographic location,
quantity of item(s) needed, and the scheduled timing of project advertisement.
Techniques such as historical bid pricing, historical percentage, and cost-based
estimating are also used to determine unit prices.

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Cost Estimating Methodology

Chapter 3

Historical cost data sources include:

E-base
BidTabs Professional
Unit Bid Analysis
RS Means, when WSDOT-specific unit costs are not available (this tool can be
used for both historic bid-based and cost-based methods)

Oman Systems BidTabs Professional (contact IT to set up):

www.wsdot.wa.gov/design/projectdev/engineeringapplications/bidtabs.htm
WSDOT Unit Bid Analysis:
www.wsdot.wa.gov/design/projectdev/engineeringapplications/unitbidhistory.htm
Cost-based estimate methods are based on estimating the contractors cost for
materials, equipment, and labor for an item or a set of items. Estimated contractor
overhead and profit are added. This may be appropriate in situations where historical
unit prices are not available, or where historical bid-based information is not suitable
for the project under consideration.
Contractors also generally utilize a cost-based estimating approach to prepare their
bids. This method can be used to support the decision for contract award/rejection
and to support any future price negotiations with the contractor after contract award.
Cost-based estimates frequently focus on those items that comprise the largest dollar
value of the project, typically 20% of items of work that account for 80% of project
cost. The cost of the remainder of estimate line items can be determined using
historical bid-based estimate methods. This approach provides for a more efficient use
of estimating resources and reduces the total time and cost of preparing cost-based
estimates. Cost-based estimating is also a good way to check a few large items of
work in a historical bid-based estimate to ensure the historical prices are still valid.
Risk-based estimate methods use the probabilistic relationships between base cost,
base durations, and risks related to the project. This approach may incorporate a
variety of techniques, including historical data, cost-based estimating, and the best
judgment of subject matter experts for given types of work, to develop the base cost
(the cost of the project if all goes as planned). Risks (opportunities or threats) are then
defined and applied to the base cost through modeling (Monte Carlo simulation) to
provide a probable range for both project cost and schedule. The schedule and cost
are integrated into the same model.
For more information about risk-based estimates, please see the links provided in
Section 2-5, Risk Assessment.
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Chapter 4
4-1

Cost Estimating and

Project Development Phases

Introduction
Typical phases of project development in the preconstruction phase are:
1. Planning
2. Scoping
3. Design
4. Plans, Specifications, and Estimates (PS&E)
Figure 4-1 illustrates how the phases of project development in the preconstruction
phase overlap and succeed each other.

Figure 4-1 Gant Diagram of Preconstruction Phases

Blending art and science, cost estimating requires a thorough understanding of project
scope, past price history, and current market conditions, along with a generous
application of human judgment. While the science part is relatively easy to master, the
art part can take much longer to develop. The following section is intended to provide
information and insight into the art and science of the estimating process.

4-2

Preconstruction General Guidance

WSDOT provides a number of useful tools and resources, including the documents
listed below, which you can access at:
www.wsdot.wa.gov/projects/projectmgmt/riskassessment/information.htm

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Cost Estimating and Project Development Phases

4-2.1

Chapter 4

WSDOT Estimating Documents and Steps

4-2.1.1

Estimating Documents

4-2.1.2

Cost Estimating Manual for WSDOT Projects

Basis of Estimate Form (doc 99kb)
Estimate Order of Calculations, Tax Rates, & 700 & 800 Items (doc 36kb)
Estimating Template (xls 1mb)
Estimating Forms
Estimating Steps

Regardless of the project development phase of an estimate, a good estimator must

consider the following:
1. Review the Estimating Template (which includes the Estimate Summary) and
Estimate Order of Calculations, Tax Rates, & 700 & 800 Items forms, and seek
clarification if necessary. Also review the other resources at Estimating Forms:
www.wsdot.wa.gov/projects/projectmgmt/riskassessment/information.htm
2. When determining a projects Basis of Estimate, see the Basis of Estimate form
( www.wsdot.wa.gov/projects/projectmgmt/riskassessment/information.htm)
and complete the following:

Visit the site in person.

Review all available documents and design parameters relating

to project definition.

Account for unique project location characteristics, such as land

use context, travel modes, and construction challenges.

Review aerial photos and/or video logs.

Document initial estimating assumptions, including factors that

will need further investigation.

Establish an estimate file in which estimate calculations will be

placed over the life of the project.

3. When preparing the cost estimate, document the level of preconstruction phase
(see Figure 4-1). Document the baseline estimate in each account (PE, ROW, and
CN) and the contingency amount separately to facilitate tracking of deviations.
4. When reviewing the total estimate, engage knowledgeable and experienced
individuals who are independent from the project. Perform reviews in each
project development phase.

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Chapter 4

Cost Estimating and Project Development Phases

5. Use the tools and documents that have been prepared by others to your
advantage. Review estimates from similar projects and use as a starting point
for items and costs. Use spreadsheets and databases others have developed
as templates for building your estimate.
6. Use the expertise of specialty groups at WSDOT to provide input to your estimate.
Special items may have a significant effect on a projects cost. The information
obtained from specialists can greatly increase the accuracy of an estimate. Be sure
to inform the specialty groups about any unique issues or uncertainties that you
think might affect their estimates.
7. Ask specialty groups about what kind of contingency they recommend for the
specialty work and justification of it.
8. Economy of scale plays a large factor in estimating projects. When using a previous
projects data to determine unit prices, be sure both projects are similar in size for
the given item.
9. Have someone check your work. One of the easiest and most often overlooked
ways to eliminate errors is simply to have your estimate reviewed by an
experienced co-worker. Have the person look at the spreadsheets as well as
your backup calculations.
10. Become familiar with the region in which the project will be constructed and any
unique local policies. Market conditions may be different across the state, which
will affect the cost of construction and/or materials. Knowing the general locations
where materials might be obtained could be beneficial. Even a basic familiarity
with contractors and their past practices can help you understand how they may
bid on your project.
11. Use checklists throughout the estimating process to make sure no basic items are
left out of an estimate.
12. Make sure the appropriate human and technical resources are dedicated to the
estimating process.
13. Allow adequate time to estimate the costliest items; in most cases, they have the
most important influence on overall cost.

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4-2.2

Chapter 4

Cost Management
Regarding cost management, it is wise to consider the following procedures:
1. Obtain endorsements at milestone points during project development. Consider
using peer reviews prior to key milestones. If an endorsement is not indicated, the
project team may also see value in a peer review involving knowledgeable and
experienced individuals from outside the project team.
2. Establish good communication practices within the team and with management
about the estimate, including assumptions, uncertainty, and other issues that may
influence decisions about the project.
3. Protect estimators from internal and external pressures to deviate from established
estimating guidelines, in order to foster and promote objectivity and impartiality.
4. Document updates to the base estimate and the use of miscellaneous items in
each project development phase (planning, scoping, preliminary design (30%, 60%,
90%, ad ready), with reference to the scope, cost, and schedule that correspond to
the prior endorsed estimate.
5. Contingencies identified in the planning or scoping phases that are not needed
at the design or advertising phases should not be used to increase project scope.
Return any unused contingency to region program management.
6. Keep region program management and HQ Capital Program Development and
Management informed about project changes and external impacts that affect the
baseline/project budget. Provide procedures that require endorsements prior to
budget changes.
Each project development phase is inherently different from the others; therefore,
they all have unique challenges to overcome during the estimating phases. In the
following pages, techniques and considerations related to the best estimating
practices are presented for each phase. The considerations include: (1) general
advice, (2) tips, and (3) cautions.
Each tip can be used to either increase the quality of the estimate or reduce the time
spent on the estimate. The cautions focus on situations that can be detrimental to
the quality of an estimate. They generally include warnings about improper use of
information, external factors that can affect an estimate, or even common pitfalls
the estimators have encountered in the past.

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While the list of considerations is a good compilation of pointers and warnings, the
best advice will come from an experienced estimator who has worked on similar
projects.

4-3

Planning
The planning phase estimate is used to estimate the funding needs for long-range
planning and to prioritize needs for the Highway System Plan. These estimates are
typically prepared with limited project information.

4-3.1

Techniques
Parametric estimating techniques are most commonly used for planning estimates.
Lane mile and square foot are two examples of parametric estimating techniques.
Historical bid prices and historical percentages can also be used to generate costs
for these parameters.
Analogous project estimating is another approach that can be used at the planning
phase.
WSDOT supports a planning phase estimate tool that uses the above techniques:

Planning Level Project Cost Estimating (PLCE): an Access database

Refer to this tool at: www.wsdot.wa.gov/mapsdata/travel/pdf/plcemanual_12-122012.pdf

4-3.2

Considerations

4-3.2.1

General Advice

Analogous projects: The chosen historical project must be truly analogous. Determine
the similarities and differences between the historical project(s) and the current
project before using historical data.
Older projects: Project data from older projects is less reliable due to variations in
prices, standards, construction technology, and work methods. The analogous method
is best used as a tool to determine broad price ranges for simple, straightforward
projects or as a check to verify estimates prepared using another method.
Communication: Due to the lack of scope definition or preliminary design, care should
be taken to properly communicate with project stakeholders regarding the range of
possible cost and schedule changes as the project becomes more defined.

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Assumptions: Given the large-scale assumptions inherent in parametric estimating

methods, the estimator must document all assumptions clearly.
Uncertainty: Provide an adequate range of costs that reflects the unknowns in the
project (see Table 4-1).
Maintenance: Keep the estimate current as the project waits to move into scoping
phase.
1. Tips

a. Project scope: Although the project has not been fully defined, do your best
to determine the full scope of the project before putting an estimate together.
Develop a comprehensive list of all of the components that will be required in
the project (within the time and resources allowed).
b. Field review: Walking the job is an excellent way to begin the process of
obtaining good quality, factual data to back up the cost estimates and establish
confidence in the process. To be confident that the project is adequately
planned, perform a systematic field review.
A project field review provides an important perspective that supplements the
mapping, photos, survey data, and other sources of information about the
project that are used in the office. Seeing the proposed project site first-hand
minimizes the possibility of overlooking significant design features.
While in the field, project personnel should be looking for potential high-cost
items (costs of mitigating hazardous waste and other environmental impacts;
utility relocation; noise barriers; retaining walls; major storm drains; need for
a transportation management plan; traffic handling, etc.). Document where
high-cost items may be present on the project so they can be considered in
more detail during project scoping. A strip map and proposed typical sections
are very useful in the field to document the occurrence of project features of
special interest.
c. Worst probable case: Determine and assess in the field the worse probable
case scenario, particularly on reconstruction projects. Existing facilities
previously thought to be adequate may have become inadequate because
of changes to standards, new data, etc. Design feature decisions, project
constructability, construction staging, etc., can often be evaluated and
documented in the field in preparation for further study later.

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2. Cautions

a. Market conditions: Unit prices can vary greatly over time based on market
conditions. Petroleum products, concrete, and steel prices have probably been
the most volatile recently. It is important to review the unit prices, especially
for larger-cost items on a project, to reflect current trends. Market conditions
are important in all phases, but most prominently in planning, since the
construction date is so far into the future.
b. Ongoing maintenance: Planning estimates may sit on the shelf for many years
before moving to scoping, design, and construction. Planning estimates should
be reviewed and refreshed regularly to reflect potential changes in scope, unit
prices, regulatory requirements, etc. This is also a good time to review the
assumptions and revise as necessary.
c. Precision: The total cost may be displayed by computer estimating tools to
the nearest dollar, sometimes even to the penny. When these estimates are
shared within the organization, or even outside the organization, they may
give the impression that the estimate is very precise. Round planning phase
estimates up to the nearest thousand, ten thousand, or hundred thousand
dollars, depending on the magnitude of the estimated cost.

4-4

Scoping
Scoping estimates set the baseline cost for the project. A project is programmed when
it is entered into the Capital Improvement and Preservation Program (CIPP) and the
Biennial Transportation Program. The scoping estimate is important because it is the
baseline used by the Legislature to set the budget; future estimates will be compared
against it. Clearly document assumptions and scope definitions in the Basis of Estimate
document so that changes can be accurately compared to this estimate.

4-4.1

Techniques
Historical bid-based and parametric techniques have been described previously, and
both may be used in the scoping phase.
Cost-based estimating uses the same process as historical bid-based estimating,
except that the costs applied during estimating are based on analysis of items other
than bid research. Historical bid-based and cost-based approaches both utilize
quantities estimated for items such as asphalt, concrete pavement, structures,
and roadway excavation.

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Other items that are not yet quantified may be estimated parametrically or through
the use of historical percentages. At this time, risks associated with the calculation
of item quantities should be identified, and a Risk Management Plan should be
developed and included in the estimating file for future reference.
4-4.2

Considerations

4-4.2.1

General Advice

Create/Update Basis of Estimate: Clearly document all changes, assumptions, and

data sources in the Basis of Estimate. This documentation is crucial because future
estimates will reference this work to justify any changes in the cost of the project.
False precision: Do not assume a level of precision that is not warranted to the phase
of the estimate. A properly developed estimate will include well-documented
assumptions; many of the details that impact project cost are not defined at the time
a scoping estimate is prepared. Miscellaneous item allowances at this phase of design
typically range from 20% to 30%, and may be higher for nonstandard projects (see Table
7-1). Ensure costs and quantities are rounded to the appropriate significant figure.
Unit costs: Choose the correct unit costs for items in current dollars.
Major risks: Ensure major risks to the project are identified and documented.
1. Tips

a. When preparing the baseline estimate in the scoping phase, recognize

complexity and the work that needs to be done to minimize uncertainty, such
as stakeholder involvement and permits to be documented. If appropriate, call
suppliers or specialists to get ideas about cost. Contact city/county engineers
to discuss local issues, such as utility work and coordination, and use the
expertise of offices within the agency, such as right of way, materials, traffic,
environment, and bridge.
b. Once again, a site visit and investigation can be quite valuable. The more
familiar an estimator is with the site, the more likely it will be that the
estimator will not miss anything while estimating the project. During scoping,
all existing structures, utilities, and any other potential obstructions should be
noted and quantified. (Look for: costs of mitigating hazardous waste and other
environmental impacts; utility relocation; noise barriers; retaining walls; major
storm drains; need for a transportation management plan; traffic handling,
etc.) Keep in mind that operations and maintenance personnel are aware
of problems that are not apparent from a cursory site review.

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c. Understand the current design standards and their project impacts.

Anticipating potential design changes by staying actively engaged in design
development can help while performing a scoping estimate.
d. Define the work as completely as possible. What work will be included in the
project? What work is excluded?
e. Identify the major items of work for the type of project being scoped. Focus
the efforts on these major items. For example, on a paving project, hitting the
cost of striping to the exact penny of the final cost means nothing if the paving
quantities are misestimated or the unit cost is way off.
f. Review the project constructability and make sure you are comfortable with
constructing the project. Can the project be constructed as planned? Will there
be adequate time to complete the project without carrying it into another
season beyond what is planned? Are there local contractors who can perform
the work?
2. Cautions

a. Watch out for traffic problems that will be caused by construction. If detour
routes are necessary or available, will the estimate include addressing damage
done to the detour route by the added traffic? If detour routes are not
available, will daytime lane closures be allowed? If night work is necessary,
address in the estimate.
b. What utility impacts are there? Utility impacts can be direct costs to a project
and may result in change orders due to delays when the utility work is
concurrent with the highway construction. This holds true for both public
and private utilities.
c. Watch out for areas within the project limits with a high number of accidents.
These areas may need safety improvements that werent initially identified.
d. The same personnel who originally scoped the project should not be the only
ones estimating it. More people and fresh perspectives should always be
welcomed.
e. Not including enough risk on major improvement projects can be a problem
during scoping. What cant be seen poses a significantly higher risk than what
can be seen. There may be much more work than what is initially apparent.

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4-5

Chapter 4

Design
Estimates prepared at various design phases, including Geometric Review, General
Plans Review, and Preliminary Contract Review, are used to track changes in the
estimated cost to complete the project in relation to the current budget (legislative
budget). Each time the estimate is updated, the cost estimating process detailed in
Figure 2-1 should be followed. Compare the current budget for the project cost and
schedule to the new estimate.
Document each update and provide a written explanation of any significant changes
to include in the estimate file. If the budget or scope of the project is to be updated,
fill out and submit a Project Change Request Form. The final Engineers Estimate,
along with supporting documents, is required to be filed in the Design Documentation
Summary (DDS).
At design approval, the scope of work becomes more stable and many items become
better known. These include right of way needed, permit conditions, environmental
mitigation, quantities of major items, and stakeholder needs. As the scope of work
becomes stable, the confidence in the estimate should improve.

4-5.1

Techniques
Historical bid-based estimating methodologies are typically used for standard bid
items known to be included in the project.
Cost-based estimating methodologies can be used for items where there is little or no
WSDOT bid history. Cost-based estimating may also be used for major items of work
that are known project cost drivers. Cost-based key resources are suppliers and
other individuals knowledgeable about current prices for the subject items, typical
construction methodology and production rates, and equipment used. The estimator
should contact these resources to develop basic cost data for materials, labor, and
equipment.
Risk-based estimating is used to capture the effect of a projects uncertainties on the
project cost and schedule. Review risks identified earlier in the project development
process and update the Risk Management Plan to reflect the current design phase and
risks.

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4-5.2

Cost Estimating and Project Development Phases

Considerations

4-5.2.1

General Advice

Guard the estimate against false precision. We often do not know as much about the
project as we think we do, particularly early in design. Project definition continues
to be refined until the project is ready for advertisement. Use appropriate item
allowances for estimates (see Table 7-1).
If cost-based estimating techniques are used, pay special attention to documenting
assumptions such as crew size, crew make up, production rates, and equipment
mix and type. The costs assumed for contractor overhead and profit as well as for
subcontractor work should also be documented. It is important to remember that
these assumptions may not reflect the decisions of the individual contractors that
will bid the job, thus introducing elements of uncertainty into the estimate.
1. Tips

a. Early in the project, get rights of entry for all properties adjacent to the project,
not only those that seem to be necessary. Repeatedly sending a real estate
services employee to obtain these documents is costly and can impact the
schedule.
b. Understand the staging needed to construct the project. Work with the proper
functional groups to verify traffic control strategy. (A functional or specialty
group is a team that has authority in a particular area and profound knowledge
or skills in a particular area of endeavor).
c. Do your research. If there are materials sources near your project site, you can
often get a better price. If you need fill, and another project has excavation
to waste, maybe their excavation can be stockpiled for your fill needs (results
in haul and placement costs only). Dont forget your local agency projects.
Develop a good relationship with the cities and counties you work in.
d. Consider the timing of your advertisement. If you advertise in late fall or
winter, your estimate may be lower. Demand is typically lower in these
months, resulting in lower prices. Contractors usually have more crews
free during this time, and you may end up with their best or most
experienced crew for off-season work.
e. Ask the experts. Do not be afraid to call suppliers, specialists, or contractors
to get an idea about cost. And dont be afraid to change their numbers to
fit your situation (remoteness, limitations, working days, work hours).

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Chapter 4

2. Cautions

a. Assuming the scoping estimate and project definitions are correct is not a good
way to begin an estimate. When you start an estimate, look with fresh eyes
and identify all substandard conditions. Coordinate with the appropriate
entities to determine whether deviations will be approved.
b. Not enough contact with functional groups will lead to less accurate estimates.
Do not be afraid to ask questions. Spend time getting to know those in
functional groups who will be reviewing the project.
c. Be sure to pay enough attention to lump sum items. These have the greatest
potential for cost overruns.
d. Be aware of structures. Work with the functional groups to confirm the
estimate for any structures. Reconfirm structure estimate after the
geotechnical report is complete.
e. Do not take the historical bid data at face value and simply average the prices
shown. There are always circumstances that should be taken into account.
f. Avoid dictating the methods the contractor is to use on items that do not
require it. It limits the contractors flexibility and raises your cost. The
contractor will find the least expensive way to perform the work since the
lowest bidder will be awarded the project.

4-6

PS&E
The Engineers Estimate is prepared for the Final Contract Review in preparation for
advertisement. It is used to obligate construction funds and to evaluate contractors
bids.

4-6.1

Techniques
Historical bid-based, cost-based, and risk-based estimates are the same as Section
45 (Design). Pay attention to the miscellaneous item allowances (see Table 71). At
the PS&E phase (letting) the allowances are terminated because the estimator should
have all the data needed for the projects. The project data used at this phase shall be
identical to the project data provided to potential bidders.

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4-6.2 Considerations
4-6.2.1

General Advice

Carry out the final independent QA/QC checks of calculations, prices, and assumptions
during the review estimates. Review the Basis of Estimate for completeness, accuracy,
and clarity, and ensure all figures, from detailed backup to summary phases, are
traceable.

Double-check quantities of major items and cost drivers.

Review specialty group estimates for scope and cost.

Review Contract Special Provisions.

1. Tips

a. Do not use any documents for the PS&E (letting) estimate that the contractor
will not have. If you need additional documentation to complete an estimate,
it may be an indication that the plans and specifications are not complete.
b. If possible, use historical data from the region the project will be performed in.
These historical bids are probably from the same contractors who will bid on
this project.
c. Construction staff can help evaluate the potential impact of staging, materials
storage, hauling of materials, location of batch plants, and other constructabilityrelated issues. The information in this step is exceedingly important, since the
estimate at this phase is completed as though the bidders prepared it.
2. Cautions

a. Recent drastic changes in material costs or availability may cause a knee-jerk

reaction with the contractors while preparing their bids. The WSDOT estimator
should think like a contractor.
b. Previous estimates using elements and categories should now all be reduced
to items. Be sure you know everything that was included in the aggregations
before splitting them into items. Not doing so is an easy way to miss some
items.

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Chapter 4

Methodology

Tools

0% to 2%

Screening or
Feasibility
WTP/HSP
(20-Year Plan)
WTP Washington
Transportation Plan
HSP Highway
Systems Plan

Parametric

PLCE and/or MP3

1% to 15%

Concept Study or
Feasibility
Implementation Plan
(10 Yr. Plan)

Parametric
Risk-Based

PLCE and/or MPE

Risk assessment
models

10% to 30%

Budget Authorization
or Control
Capital Improvement
& Preservation Plan
(CIPP)

Parametric
Historical Bid-Based
Risk-Based

PLCE and/or MP3

UBA, BidTabs Pro
Risk assessment
models

30% to 90%

Design Estimates
(Project Control of
Scope Schedule
Budget)

Historical Bid-Based
Cost-Based
Risk-Based

UBA, BidTabs Pro

Risk assessment
models

90% to 100%

Engineers Estimate
(prior to bid)

Historical Bid-Based
Cost-Based
Risk-Based

EBASE, UBA,
BidTabs Pro,
Risk assessment
models

Highway System
Plan
Design Studies
Route Dev. Plans

Scoping
Project Summary
(PD, DDS)

-50% to +200%

Estimate
Range

-40% to 100%

Washington
Transportation
Plan

Purpose of Estimate

-30% to +50%

Planning

Percentage
of Design
Completed

-10% to +25%

Project
Development
Phase

-5% to +10%

Table 4-1 Cost Estimating Matrix

Design
Design
Documentation
I/S Plans for
Approval
Design Approval
PS&E
Plans, Specs,
Estimate
(R/W Plans
approved)

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Chapter 5

Cost Estimate Training

As of the publication of this manual, no formal training for cost estimating is being
provided by WSDOT. However, it is hoped that several classes offered in the past,
specifically addressing cost estimating, will return in the not-too-distant future. They
include:

CZV: Introduction to Cost Estimating

A4J: Contract Plans and Estimate Preparation

CZ2: Risk-Based Transportation Cost and Schedule Estimating

Resources from the HQ Strategic Analysis and Estimating Office are also available to
assist with specific questions about estimate preparation and the use of individual
techniques or tools described in this document ( www.wsdot.wa.gov/design/saeo/).

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Cost Estimate Training

Page 5-2

Chapter 5

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Chapter 6
6-1

Documentation/Basis of Estimate

Introduction
An estimate without documentation is not an estimate. The estimate file should be a
well-organized, easy-to-follow history from the first estimate through preparation of
the final estimate. The documentation should track changes as the estimate evolves,
including updating the scope; assumptions; quantity and price calculations; and risks
from the previous estimate.
A well-documented estimate enhances credibility and contributes to transparency
and confidence in project estimates. Clear documentation is particularly important
as the project passes from one group to another, or as team membership changes.
The project estimate file should follow the project through the various stages so
that each new estimate can be easily tied to the previous one.

6-2

Techniques
Estimating time should be scheduled into the project management plan for each
phase of the project. This will ensure adequate time and resources are allotted for
performing cost estimating.
As part of the estimate review process, someone external to the project team
should perform a review of the estimate file. This external review will help ensure
the estimator has clearly recorded the assumptions and decisions made in the
estimating process.

6-3

Basis of Estimate (BOE)

A well-written BOE clearly and concisely states the purpose of the prepared estimate
(cost study, project options, benefit/cost study, funding, etc.); project scope; pricing
basis; allowances; assumptions; exclusions; cost threats and opportunities; and any
deviations from standard practices. The BOE is a documented record of pertinent
communications with and agreements made between the estimator and other
project stakeholders.
A well-prepared Basis of Estimate will:

Document the overall project scope.

Document the items that are excluded in the project scope.

Document the key project assumptions.

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Chapter 6

Communicate the estimators knowledge of the project by demonstrating

an understanding of scope and schedule as it relates to cost.

Alert the project team to potential cost risks (threats and opportunities).

Provide a record of key communications made during estimate

preparation.

Provide a record of all documents used to prepare the estimate.

Act as a source of support during dispute resolutions and for bid analysis.

Establish the initial baseline for scope, quantities, and cost for use in cost
trend evaluations throughout the project.

Provide the historical relationships between estimates throughout the

project lifecycle.

Facilitate the review and validation of the cost estimate.

Concisely and completely describe the facts.

Support facts and findings.

Identify estimating team members and their roles (including Specialty

Groups).

Describe the tools, techniques, estimating methodology, and data used

to develop the cost estimate.

Identify other projects that were referenced or benchmarked during

estimate preparation.

Establish the context of the estimate, and support review and validation.

Qualify any rates or factors that are referenced either in the estimate or
BOE; e.g., productivity can be expressed as either units/time (linear
feet/hours) or time/units (hours/linear feet).

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Chapter 7

Cost Estimating Data

The cost of work items is estimated, including the Miscellaneous Items Allowance in
design, and then the markups such as mobilization, sales tax, preliminary engineering
(PE), and construction engineering (CE) are applied to them.
Table 7-1 presents data related to the markups. The order of calculation is provided
at: www.wsdot.wa.gov/publications/fulltext/cevp/700%20800%20items.pdf
Table 7-1 Markups Summary

Cost Estimating
Elements[1][2]
Mobilization

Sales Tax

Preliminary Engineering
Miscellaneous Item
Allowance in Design[3]

Planning

Scoping

Design

PS&E

Per EBASE
www.wsdot.wa.gov/design/projectdev/engineeringapplications/adread
y.htm
Site-specific, based on Control Section. Data can be found in TRIPS or
EBASE. Specific direction is found in Standard Specification 1-07.2.
www.wsdot.wa.gov/nr/rdonlyres/c1b02cbf-ea4c-4a3f-affff13cc43cc9de/96366/taxes.pdf
See Table 9-1
30% to 50%

20% to 30%

PMs Workplan +
Actuals to Date

Actual

10% to 20%

0% (all items
should be defined)

Applies to parametric, historical bid-based, and cost-based

estimates only.
Contingency

Construction Engineering

Per EBASE
www.wsdot.wa.gov/nr/rdonlyres/c1b02cbf-ea4c-4a3f-affff13cc43cc9de/96724/engineeringandcontpercentagetables.pdf
Per EBASE
www.wsdot.wa.gov/nr/rdonlyres/c1b02cbf-ea4c-4a3f-affff13cc43cc9de/96724/engineeringandcontpercentagetables.pdf

(See table notes on the following page.)

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Cost Estimating Data

Chapter 7

Notes:
[1] Round to appropriate significant digit; for example, $196,526,918.00 is rounded to $197
million.
[2] Report cost estimates in current dollars to program management. The Construction Cost Index
(CCI) will be used to inflate the estimate to midpoint of construction by program management.
Note: Public declarations of estimated project costs should be presented in the form of a range
in Year-Of-Expenditure (YOE) dollars.
[3] Miscellaneous Item Allowance in Design accounts for lack of scope definition and those items
too small to be identified at the stage of project design. This allowance is eliminated for final
PS&E estimates on design-bid-build projects because the scope and estimate for all items
should be identified at that point.

Miscellaneous Item Allowance in Design will vary along with advances on design.
Figure 7-1 illustrates the ideal situation: as items are Identified and Quantified during
the Scoping and Design phases, Miscellaneous Item Allowance should correspondingly
decrease (see Table 1)

100%

Estimated construction cost

Allowances

~75%
Identified and quantified items

Scoping

Design

PS&E
Design maturity

Figure 7-1 Identified and Quantified Items vs. Miscellaneous Item Allowances in Design

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Chapter 8

Specialty Groups

Specialty groups provide cost estimates for portions of the project relevant to their
areas of expertise.

8-1

Bridges, Nonstandard Retaining Walls, and Structures

The costs to construct bridges and nonstandard retaining walls and other structures
are estimated by the Headquarters (HQ) Bridge and Structures Office.
For planning and scoping phase estimates, contact the Bridge Projects Unit in the HQ
Bridge and Structures Office. They will help prepare the estimate using historical bidbased methods and take into account structure type, size, and location. For Design
and PS&E phase estimates, the Bridge Projects Unit will provide a detailed costbased estimate for project structures.
Estimators must understand and document what is included and what is not included
in estimates from specialty groups. Items not included by the specialty group but
required for the project must be included elsewhere in the project estimate.

8-2

Right of Way
Right of way (ROW) costs vary widely throughout Washington State. Region and/or HQ
Real Estate Services should be involved early to help determine appropriate costs for
the project. ROW estimates typically include administration, relocation, cleanup costs,
and allowances for condemnation.
Real estate markets are best characterized by those familiar with the geographic area.
In consideration of this fact, subject matter experts (SMEs) such as region Real Estate
Services and region Right of Way staff should be asked to provide this estimate.
These SMEs can provide input regarding the cost of right of way and the uncertainty
associated with the real estate market in the geographic area of the project. Other
issues to consider include zoning changes, speculation, growth management plans,
and pending comprehensive plan changes.

8-3

Environmental
Region and/or environmental staff must be involved in the design and estimating
process early. The costs and time durations of complying with environmental impact
analysis, mitigation, permit, and public involvement requirements in environmental
laws and regulations and interagency agreements can be significant and need to be
included in the project estimate.

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Specialty Groups

8-4

Chapter 8

Traffic Design and Operations

Traffic conditions have a significant effect on prices. Prices should be adjusted to
reflect difficulties, hazards, and expenses caused by traffic conditions. Contractors
are inclined to raise their prices on projects to be constructed with work sites
exposed to considerable traffic.

8-5

Utilities
The Utilities Office should also be involved early in the process. Subsurface and
overhead utilities are located on a majority of project sites, and conflicts with these
utilities can increase a projects cost dramatically. When a utility is located on an
easement and WSDOT acquires the property through ROW acquisitions, WSDOT
must pay all relocation costs in addition to providing the affected utility with a new
easement. Also note that city-owned utilities that are impacted within the citys
limits can add similar costs to a project.
Another risk that may affect project costs is triggered when utilities that are not
identified during the design phase (due to insufficient engineering investigation or
inaccuracy in utility as-builts) are discovered while the project is under construction.
Utility conflicts not identified until the construction phase can result in costly change
orders and project delays.

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Chapter 9

Preliminary Engineering Costs

Preliminary Engineering (PE) percentages can be used at early stages (planning and
scoping) to estimate the cost of design for a project. These percentages will vary by
project type and total dollar amount of the project. On average, PE costs for WSDOTdesigned projects are approximately 15% of project cost. This should be used when
Table 9-1 does not provide data.
As the project moves through design, the PE cost should reflect actual costs to date
plus the anticipated costs to complete the design work as determined from the project
work plan.
There is a reasonable minimum cost for PE, because of the cost of the Ad, Bid, and
Award process, which even a very small project will incur as full fare. If the project
cost is under $200,000, it might be more efficient to combine it with another project
in order to reduce the Ad, Bid, and Award cost.
For projects that include consultant design, PE costs can be significantly different than
for projects designed by WSDOT. The cost of design by consultant is almost always
more than the typical WSDOT design costs. PE cost estimates should reflect the type
of resources (WSDOT and consultant) involved in the design effort.

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Table 9-1 Preliminary Engineering Percentage

IMPROVEMENT
PROGRAM

I1
Mobility

PE as % of CN

IA
Subprogram
$0
$250,000
$500,000
$1,000,000
$2,000,000
$5,000,000
$10,000,000

$250,000
$500,000
$1,000,000
$2,000,000
$5,000,000
$10,000,000
+

PRESERVATION
PROGRAM
PE as % of CN
Subprogram
$0
$250,000
$500,000
$1,000,000
$2,000,000
$5,000,000
$10,000,000

$250,000
$500,000
$1,000,000
$2,000,000
$5,000,000
$10,000,000
+

IB

I2
Safety

IC

IQ

ID

IE

Urban

Rural

Urban Bike
Connection

HOV
Lane

Collision
Reduction

Collision
Prevention

ND
ND
ND
15%
15%
15%
15%

ND
ND
ND
20%
20%
ND
10%

ND
15%
ND
12%
12%
ND
ND

ND
ND
ND
ND
ND
10%
10%

40%
30%
22%
20%
20%
12%
12%

20%
20%
20%
20%
15%
15%
15%

P1
Roadway
PA
Paving Safety
Restoration
15%
12%
12%
10%
8%
6%
6%

IF

IG

IH

AllWeather
Highway
ND
ND
ND
ND
10%
10%
10%

Trunk
System
Completion
ND
ND
ND
ND
ND
ND
14%

New
Safety
Rest Area
ND
ND
ND
ND
ND
ND
ND

P2
Structures
PB
Structure
Preservation
20%
15%
13%
12%
12%
12%
11%

PC
Catastrophic
Reduction
40%
30%
20%
13%
13%
13%
13%

I4
Environmental
Retrofit

I3
Economic Initiative
II
Bridge
Restriction
ND
ND
ND
ND
ND
ND
ND

IK

IL

Stormwater
Runoff
40%
25%
20%
20%
ND
ND
ND

Fish
Barrier
Removal

40%
30%
20%
15%
15%
ND
ND

P3
Other Facilities
PD

PE

Rest Area

Unstable Slope

20%
20%
20%
ND
ND
ND
ND

30%
20%
15%
10%
10%
10%
ND

PF
Weigh
Station
ND
ND
ND
ND
ND
ND
ND

PG
Program
Support
ND
ND
ND
ND
ND
ND
ND

PH
Major Drain
Electrical
30%
20%
20%
20%
20%
ND
ND

Notes:
1.
2.
3.
4.
5.

The percentages in this table are based on actual WSDOT project costs statewide from July 2001 through March 2007.
ND indicates that there is no data for that cell.
Yellow highlighted cells indicate that there is limited data for that cell.
For project type definitions, see below and the Plans Preparation Manual, Section 800.03.
A factor must be applied to the PE amount for consultant work. Typical factors for the consultant portion of the work range between 1.8 and 2.8, depending on the type and
scope of consultant involvement.

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Chapter 10

Key Factors that

Influence Estimating Practice

The key factors that may affect the project cost and schedule estimated number are
described in this chapter.

10-1

Geographic Considerations
Geographic considerations are powerful project characteristics that may substantially
affect the selection of unit bid prices. The projects location, whether in an urban,
suburban, or rural setting, should be considered in establishing bid prices. Some of
the cost considerations relating to a projects location may be accounted for in the
mobilization bid item, dependent on the restrictions of Standard Specification 1-09.7.
A project in an urban setting generally has to contend with construction operations
occurring in more confined work spaces, with greater volumes of traffic, limited
hours of operation, nighttime work, etc. Some of these factors may be offset by
the availability of local contractors, materials, equipment, and personnel.
Projects located in rural settings have factors that affect the establishment of unit
bid prices different from the projects located in urban settings. Construction
operations may have less restricted work areas, less traffic to contend with, and
additional hours to complete the workall factors that increase productivity. On
the other hand, materials, equipment, and personnel may have to be brought in
from out of the area, which may increase costs related to transportation, support,
wages, per diem, etc.
For projects that utilize large quantities of aggregate, whether for base, surfacing,
or earthwork, the location of material sources and disposal sites may have a large
impact on costs. Nearby material sources or disposal sites reduce hauling costs. On
rural projects, the cost of bringing in a concrete batch plant, hot mix asphalt plant, or
similar facility, may increase unit bid prices. Again, dependent on the restrictions of
Standard Specification 1-09.7, those costs may be directly attributed to and reflected
in the mobilization bid item.
Terrain may also be a consideration in establishing an items cost. Mountainous
terrain and steep grades cause production rates to fall, whereas level terrain and
straight roadways generally have the opposite effect.

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Chapter 10

Groundwater conditions can vary greatly and need to be investigated to determine

the extent of dewatering required for foundations and other structures such as
stormwater retention ponds. Varying geotechnical conditions are covered in Section
10-17, Soil Conditions.
Material hauling that must be accomplished by entering and exiting only on
interchange ramps, hauling uphill rather than downhill, working on the top of slopes
or retaining walls, etc., is always more expensive to construct than work that is easy
to accomplish on level or gentle slopes. The ease of accessibility to the work will
affect the cost to do the work.

10-2

Restrictive Work Hours or Method of Work

Restricting the contractors working hours or the method of work on a project may
have major effects on prices. The prices for work that is limited to short shifts, or
required to be completed in long shifts, or limited to nighttime operations should be
increased to reflect the cost of premium wages required for such work and for the
general inefficiencies and decreased productivity that may result. Night work for plant
operations (e.g., asphalt concrete production) can be especially expensive when small
quantities are involved. Plants usually do not operate at night and may require special
production runs at much higher than normal operating costs.

10-3

Quantity Considerations
The quantity of a given material on a project impacts the unit cost of constructing
and/or supplying that item. This is not simply a supply and demand issue, but also
one of production efficiency and economy of scale.

Page 10-2

On one hand, the unit price for larger quantities of a given material will be
less than for smaller quantities. Larger quantities may give rise to efficiency
by gained experience and the expertise of the contractors personnel in
completing the work.

On the other hand, for some projects, very large quantities of certain
materials may cause an increase to the unit bid price. For example,
a project with numerous or large structures may affect the market for
a particular type of steel or the availability of cement, or may even tie
up a regions labor resources.

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Small quantities of items of work are often less cost-effective to construct and lead to
higher unit prices. Suppliers charge more for smaller purchases, and in some instances
the minimum amount that has to be purchased is greater than needed for the project.
Smaller-quantity items may be subcontracted out; this increases a contractors
overhead and usually results in a markup being applied to those items.
10-3.1 Separate Operations
Separate operations will usually increase item costs, especially if the order of work or
the work unit is to be constructed in scattered locations throughout the project (each
requiring move-in and move-out costs). If this is the case, unit prices should be based
upon the smaller unit sizes and should not be based upon the entire quantity for the
total project.
10-3.2 Handwork and Inefficient Operations
Handwork and small or inefficient operations (even though equipment may be used)
will have higher unit costs than work that is able to be mass produced or constructed
by using techniques that result in higher production rates.

10-4

Item Availability
Materials that are readily available, or ones that are commonly used, are generally
less expensive to purchase and install/construct. Materials that are in short supply
are more expensive. This should be considered in establishing the unit price.
Large quantities of materials required in a short period of time may result in a
temporary shortfall in product availability and potential cost increases or delays
to a project.

10-5

Scheduling/Lead Time
To be efficient, a contractor needs to optimize the scheduling of resources, including
labor, equipment, and materials. The ability to plan for and maximize resources allows
contractors to be more competitive in bidding. Lead times need to be considered in
estimating the project based upon when it is expected to be built. For example, a
project that is two seasons long may have the majority of its paving in either the
first or the second year.

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Key Factors that Influence Estimating Practice

10-6

Chapter 10

Difficult Construction/Site Constraints

Difficult construction and site constraints will increase the cost of construction for a
contractor. Examples of site constraints that should be considered include: placing
piles under water; working near active railroads or nearby historical buildings (possibly
fragile); constructing on or near culturally important or environmentally hazardous
sites; and working in areas with limited room to construct an item.

10-7

Estimating Lump Sum Items

Lump sum bid items can be more difficult to estimate. They can reduce administrative
costs in contract administration, as well as allow a contractor a bit more freedom to
be innovative with regard to work means and methods. Lump sum items transfer the
risk of performance and quantities to the contractor. If the work to be performed can
be quantified, then a payment method that includes a quantity should be used.
Lump sum bid items may also be used when an item of work can only be defined
in general terms, such as when the finished product can be defined but not all the
components or details can be easily determined. This can make estimating lump sum
items difficult for the estimator. It is recommended that the lump sum item be defined
as detailed as feasible in order to accomplish a reasonable lump sum estimate.
An estimator should define a lump sum item in terms of its simplest, most basic
components and should also consider other factors that may not be easily estimated.
By breaking out a lump sum item into smaller items of work that have historical data,
and then applying reasonable estimated prices to those subunits, the estimator can
calculate the overall lump sum item.
Using lump sum items typically transfers risk to a contractor, and the contractor may
adjust the price upward to take on this risk. Contractors cannot necessarily rely on
overruns to cover work that they did not foresee.
Lump sum items are typically bid at higher costs than component costs due to the
transfer of risk from the owner to the contractor. Therefore, the use of lump sum
items should be used with great care.
In some situations, as may be the case for a time-based lump sum bid item such as
project temporary traffic control, the lump sum payment may provide the incentive to
perform the work more quickly. In such situations, hourly pay items offer no incentive,
and may result in the contractor remaining in the work zone for a longer period of time.

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In many cases, lump sum bid items can lead to higher contractor bids. Therefore, lump
sum items should only be used when the following conditions apply:
1. The lump sum item is a standard item with no appropriate alternative non-lump
sum standard item available for use.
2. The work is not easily defined. In other words, the final product is known, but
the construction techniques or other components are difficult to determine.
3. The project has complex items with many components (although the designer
is encouraged to break down constituent items if possible).
4. The lump sum payment may be justified as incentive to complete the work in
a more timely or efficient manner than if other units of measure were used.
5. The lump sum item may be justified as less expensive than a force account item
(see below) or where the risk assumed by the contractor is low.
The use of a lump sum item must be justified and the work breakdowns documented
in the estimate file. Use of earned value techniques may aid in determining the
performance of the contractor on lump sum bid items.

10-8

Force Account
Force account is a method of payment that pays the contractor the actual expenses
for all labor, materials, and equipment to complete the work. Markups for material
costs, labor surcharges, overhead, and profit are usually added to this figure. This
method of payment is used primarily for extra work (i.e., work that is unforeseen
at the time a project is let or advertised and is discovered during construction) or for
items of work that are poorly defined and may/may not be used during construction.
The case of poorly defined items of work is the one most frequently encountered by
the estimator. Since the contractor does not usually bid on this work, there is little
incentive to reduce costs or execute the work diligently. Because of this, the force
account method of payment should only be used when necessary.
When a reasonable cost estimate for a force account item is required, the estimator
should try to establish the scope of work to be accomplished. Once the scope is
developed, it can be compared to historical bid price data for similar items of work.
If no comparable history exists, the force account item should be broken out into its
anticipated core components. The estimator can then rely on historical bid data for
those items and the given limitations to come up with a reasonable force account
estimate. If no such data exists, the estimator may need to estimate the amount
and costs of materials, equipment, and labor to execute the work.

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Chapter 10

Force account may also be considered as a tool for transferring risk from the
contractor to the owner. If the work is properly directed by the project inspector,
force account may actually cost less than an equivalent lump sum item.
Use of force account items and their estimated costs must be documented and
justified in the project estimate file.

10-9

Timing of Advertisement
The timing of a project advertisement can influence bid prices. Contractors can have
a time of year that is busier than others. This relates to weather and construction
windows; for example, asphalt paving is not done during cold, wet weather. The
appropriate timing of advertisement can also be affected by other items like fish
and HMA paving windows or other outside constraints.
The peak season for most highway projects is April through October. The peak season
for marine work is November through March. The best time to advertise a project
is several months before the work season for that type of work, to allow time for
contract execution and for contractors to mobilize their resources in time to take
advantage of the full work season.
If contractors have fully allocated resources for the upcoming season, they are less
likely to bid on a project and, if they do bid, it is in a less competitive environment.
For this reason, there is a benefit to WSDOT to advertise a project as soon as possible
prior to the peak season, to allow contractors time to plan, schedule, and seek as
many opportunities as possible to find efficiencies in their work plans. Hopefully,
this promotes a more competitive bidding environment.
The estimator preparing the final Engineers Estimate needs to be aware of the timing
of the advertisement. The estimator should account for any expected fluctuations in
bid prices due to the season, such as lower production during temperature extremes,
additional protections for weather-sensitive materials, and so forth.
It is important to know if the work can be accomplished before winter weather
causes the project to shut down. If the job cannot be finished before the end of the
construction season, and the project needs to be suspended, contractors will increase
their bid prices to cover their overhead during the winter and repair any damage that
may occur. Even if contractors reasonably expect to finish before the winter, they may
protect themselves to allow for an early winter.

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10-10 Inflation
The estimate represents the probable cost at the time of estimate. Any time an
estimate is created or updated, the unit prices must reflect the cost at the time the
estimate is done. It may require the estimator to go back to the unit price database
and get the latest information.
The estimator must always adjust the unit price for inflation considering the interval
of time from when the price was used and the estimating time.
Figure 10-1 illustrates the ideal situation, when the current prices representing the
cost at the time of estimate increase because of the Past Inflation (PI) applied to the
prior prices. Simultaneously, the figure shows that the estimated amount created by
Future Inflation (FI) (what program management does) decreases since the time span
decreases. WSDOT inflation tables are found at:
CPMS CCI Tables: http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/cci.txt
CPMS PECI Tables: http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/pe.infl.txt
CPMS RWCI Tables: http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/rw.infl.txt

Inflation Adjustment to the Time of Delivery

by Program Management (FI)

Estimated Cost

PI
PI

Current Prices

Current Prices

Planning

Current Prices

Current Prices

PI

Scoping

Design

Letting

Figure 10-1 Past Inflation (PI) and Future Inflation (FI)

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10-11 Expected Competition/Contractor Availability

Projects that are advertised for bids late in the season or after contractors have
scheduled their work for the year, can expect higher bid prices. This is due to the lack
of competition or contractor availability. Projects that are bid during a period of time
when a large number of contractors are available may be bid more competitively.
Competition could be a major factor of the cost of the construction. When the
estimator expects just one bidder, then the project cost may be much higher than
otherwise. On the other hand, if there are many bids, the project cost may be
significantly lower than the estimate. Figure 10-2 represents the Comparison of the
Low Bid vs. the Deterministic Estimate Based on Number of Bidders, as provided by
WSDOT and Caltrans. There is a noticeably dramatic effect of the number of bidders
upon the value of the lowest bid. The figure indicates a dramatic decrease in the
project cost once three or more contractors bids on a project. Once the number of
bidders is greater than 1012, it looks as if the prices reach the bottom line (not
much room to go down and remain in business).

Percent Low Bids vs. Deterministic Estimate

Comparisonofofthe
the
Low
Deterministic
of
Comparison
Low
BidBid
vs. vs.
the the
Engineer's
EstimateEstimate
based on Based
Numberon
of Number
Bidders (All
Projects
Bidders)
30%
20%
Caltrans

10%

WSDOT

0%

-10%
-20%
-30%
-40%
-50%
0

9 10 11 12 13 14 15 16 17 18 19 20 21 22
Number of Bidders

Figure 10-2 Comparison of the Low Bid vs. the Deterministic Estimate Based on Number of Bidders

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10-12 Other Contracts

Multiple projects being advertised at the same time can influence bid prices in much
the same way as lack of competition and availability. The contractors only have so
many resources available to develop bids for projects. In the case of large projects,
a contractor may not have the resources to develop bids for more than one project
at a time.
The most prudent course of action in this case is to manage the program of projects
to ensure this does not become an influencing factor on the bids. If this cannot be
prevented, then the estimate needs to reflect that multiple bids will be developed
at the same time.
The estimator should consider to what extent the reduction below the normal number
of bidders will influence the bid amount. A reasonable range of impact is a 0% to 8%
increase over the Engineers Estimate for construction. The probability of the
occurrence of this risk should be evaluated by the estimator. Common mitigation
strategies include timing of the advertisement and work packaging. On the other
hand, in extremely competitive bidding environments, with large numbers of
contractors bidding, the bids may actually come in lower than expected.
Another factor to consider is that multiple active projects can create conflicts in an
area. For example, multiple large-scale bridge projects in a given area may create
a shortage in structural steel or skilled labor. In these cases, the estimator must
be aware of the ability of the market to support multiple projects.
Other conflicts could include traffic control, labor issues, and direct coordination
issues, among others. These conflicts need to be considered in the calculation of
production rates and subsequent bid item prices. Project managers should be aware
of adjoining projects and nearby work (even from other regions or local agencies).
There may be opportunities for collaboration and coordination that will result in
more competitive bids and better maintenance of traffic.

10-13 Specialty Work

Specialty items are not necessarily new items or new construction methods. Rather,
they are items that are somehow different than the majority of the work on a given
project. For example, on a pavement rehabilitation project, the signal work may be
classified as specialty work, although it would not be classified as such on a project
that was predominantly signal and lighting work. Estimating the cost of specialty 
work requires a thorough understanding of the work involved and the resources
required for accomplishing it.
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When estimating specialty work you are not familiar with, seek the advice of experts
who can help. Consider the number of qualified contractors capable of doing the
project or elements of work.

10-14 Material Shortages

Material shortages will have a major effect on prices, since prices are directly affected
by supply and demand. Where a shortage is especially acute, a change in design might
be considered rather than increasing prices.

10-15 Standard Items vs. Nonstandard Items

Standard items, as listed on the WSDOT Standard Item Table, are familiar to both
WSDOT and the contractors. These items of work typically represent a known
quantity and quality to both WSDOT and the contractor, and bid history tends to
reflect that. When an item is changed in some way to become a nonstandard item,
then uncertainty is introduced. This uncertainty typically results in an increased price
for the item, especially the first time contractors see it in a contract. Typical practice
should be to use standard items whenever possible. When a standard item is changed
and becomes a nonstandard item, the estimator should recognize that the price may
differ from the historical prices.

10-16 First-Time-Use Items

On occasion, items of work are included in a project for which WSDOT has little or no
historical data to establish unit prices. In these instances, similar items may provide
some guidance, but additional investigative work may be necessary. If the item is
thought to be of minor significance, there may be little benefit in spending much 
time in determining a reasonable bid price. If the item is considered major or is likely
to be significant to the overall project bid, research should be conducted to establish 
a cost. Contacting others who are familiar with use of the item can usually help in
determining a cost.
Suppliers, other state departments of transportation, the HQ Strategic Assessment
and Estimating Office (SAEO), Regional Transportation Commissions, Port Authorities,
Consultant Letting, RS Means Publications, and contractors can be valuable resources
in establishing costs. Be wary of relying on estimates from a single contractor or
source. Multiple sources should be utilized in developing an estimate for first-timeuse items.

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If the item in question is unique in some manner (innovative, new, or experimental),

or it is considered a specialty item, costs may need to be adjusted to account for the
contractors lack of experience with it and the potential increased risk in construction.
If the work is likely to be subcontracted out, then the prime contractor may also add
a markup to the subcontractors price.

10-17 Soil Conditions

General assumptions about soil conditions may be made early in the estimating
process, but they may turn out to be wrong. As the estimate progresses, geotechnical
data may help improve the information and prevent costly change orders and claims.
In the early estimates, the assumptions regarding soil conditions and the potential
effects of unknown soil conditions should be clearly documented.
A common estimate omission is an improper allowance for shrink and swell of
material. The Region Materials Engineer should be consulted to determine the
appropriate shrink or swell factor to use. Soil conditions can be a significant cost
risk to a project. Risk-based estimating techniques should be utilized to quantify
geotechnical risks if they pose a significant threat or opportunity.

10-18 Permit Conditions

Throughout the stages of planning, scoping, and design, various projections of permit
conditions for construction can be obtained from region or HQ environmental offices.
Engaging these groups early helps to identify specific permits or conditions that can
drive up construction costs and identify opportunities to avoid costly environmental
conflicts.
At the same time, the estimate must address:

The actual out-of-pocket costs for developing and constructing

transportation projects.

The labor, material usage, equipment usage, and travel expenses of staff
or consultants doing environmental analysis and documentation during
project development.

The purchase of ROW, materials, and installation labor, and additional

purchases for major environmental mitigation features such as wetlands
restoration and noise walls during construction.

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Chapter 10

Be aware that considerable costs may be required due to: stormwater collection
and treatment; wetland protection and mitigation; hazardous materials testing;
containment and treatment; and removal and disposal of underground fuel tanks,
creosote timbers, and contaminated soils.

10-19 Allowances
Allowances cover items known to be needed for the project but yet not specifically
identified and/or quantified. It is different from construction contingency. 1 Allowances
account for a lack of project definition during the preparation of estimates.
In WSDOT estimates, allowances should be shown as a separate line item in the
baseline cost estimate. Allowance amounts should be identified with an explanation
as to what they are intended to cover so they can be managed and reduced
appropriately as the design progresses. This will assist in review of the estimate.
Figure 7.1 illustrates the negative correlation between the amount of allowances and
the amount of identified and quantified items. Once identified and quantified items
are added to the baseline estimate, the allowances should be reduced in order to
reflect the new data available.

10-20 Construction Contingencies

Construction contingencies are typically meant to cover a variety of possible risks
or events that are not specifically identified or quantified, such as uncertainties
in quantities and minor risk events related to quantities, work elements, or other
project requirements during construction. Refer to the Plans Preparation Manual,
Section 800.03, for guidance on estimating construction contingencies.

10-21 Other Funding Sources/Agreement Work for Others

Funding sources should be documented in the Basis of Estimate. Federal funding,
participation from local agencies (e.g., participation in intersection improvements),
or funding from public/private partnerships should all be documented.

Construction Contingency A standardized markup applied to the construction cost of a project that accounts for
uncertainties in quantities, unit costs, and minor risk events that typically take place during construction.

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Chapter 11
11-1

Independent Estimate/Estimate Review

Introduction
Each estimate should have some level of review, as indicated on the flow chart
provided in Figure 2-1, Cost Estimating Process. Project complexity is an important
driver of the level of estimate review. The level of review should be carefully chosen
by the project manager.
Estimates are key outputs of the project management process and are fundamental
documents upon which key management decisions are based. It is recommended,
and may become policy at a regions discretion, that all cost estimates be
independently reviewed by estimating staff specialists, subject matter experts, and
others as appropriate. Estimates will then be reconciled and revised as needed to
respond to independent reviewer comments. In the event of a significant difference of
opinion, an estimate reconciliation meeting will be held and the results documented.
The final results of the independent review and reconciliation meeting must receive
management endorsement before any project is advertised.
Independent reviews (check estimates) should be made by experienced estimators
who are familiar with the type of work inherent in the project, and who have had no
involvement in the development of the project estimate to date. The independent
estimator consults with other independent sources such as design engineers,
construction managers, or other estimators as needed on specialty items of work.
Checks performed by independent estimators include:

Reviewing the estimate file and Basis of Estimate document for

completeness and readability.

Ensuring the name(s) of estimator(s) involved in preparing the estimate

are shown.

Ensuring the estimating methodologies are noted by individual items of work.

Reviewing the overall estimate documentation to ensure it is clear and the

figures are traceable, from detailed backup to summary phases.

Conducting a detailed check of the estimate to include:

o Checking the development of unit rates and quantities of those
items that drive the majority of the bottom line cost (the 20%
of the items that comprise 80% of the estimated project cost).
o Making note of comments on unit rates and quantities.
o Checking for mathematical errors.

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Independent Estimate/Estimate Review

Chapter 11

11-2 Internal Project Team

The internal project team review should include a quality control check of quantities
and prices. It should also include a quality assurance check that the proper procedures
were followed, the documents are complete and clearly understandable, and the final
costs and schedule are deemed reasonable for the project scope, size, location, and
complexity. The advantages of the internal project team review are that the project
teams schedule is easier to coordinate than outside resources and the reviewers have
a base knowledge of the project. The internal reviews tend to be conducted with the
same vision, framework, and assumptions as the project teams and this may introduce
unwanted bias. This can lead to a review that does not objectively assess all the
parameters that affect the estimate.
One useful double-check is to prepare estimates in two different ways and then
compare them. For example, if a project team utilizes historical bid-based methods
for preparing the project cost estimate, then consider selecting the top five to ten
items in terms of cost and estimate them using a cost-based approach (materials,
equipment, and labor). The comparison of the two estimates may be enlightening.

11-3 Peer Review

This type of review is similar to the internal project team review, but it uses another
project team or office to conduct the review. Offices can often perform reviews for
each other in this way. The advantage to this type of review over the internal review
is that the project gets a review with a fresh perspective on the estimate. This can
provide an increased level of confidence in the estimate. This is also a good way
to share lessons learned and information between project offices and serves to
efficiently utilize fixed engineering resources within the department.

11-4 Region/Headquarters Review

This type of review at the region and Headquarters level is typically more formal. One
advantage to this type of review is that the reviewers are external to the project team
and can thus provide a truly independent perspective on the project. However, the
biggest advantage is that the reviewers typically have significantly more experience in
performing this type of independent review. Region reviews can be coordinated with
region staff. Headquarters reviews should be coordinated with Strategic Analysis
Estimating Office staff ( www.wsdot.wa.gov/design/saeo/).

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Chapter 11

Independent Estimate/Estimate Review

11-5 External
In this type of review, external experts are brought in to review either specific pieces
of the estimate or the entire estimate. This type of review can be combined with any
of the other types of reviews to supplement knowledge of a specific item of work or to
provide an outside perspective. This type of review has a wide range of costs but can
provide significant confidence in the estimate that might not be otherwise attainable
from internal WSDOT resources.
Table 11-1 is a matrix that identifies which position has responsibility for reviewing
and endorsing each type of WSDOT estimate.
Table 11-1 Activity/Responsibility Matrix

Changes Scope Changes, Schedule Changes,

Budget Requests

PE/PM through Region PDE or EM Must Process

Control Change Form through the PC&R Office

Planning Phase

Region Planning Manager

Scoping Phase, including:

Design Documentation Package (DDP)

Region Plans Office and Programming

Design Approval
Design Report Alternative Analysis

ASDE, PE/PM, PDE/EM, and Region Plans Office

Determine Contingencies

PE/PM, PDE/EM

PS&E Phase Estimates

Estimator, Designer, and PE/PM

Documentation, including:
Assumptions
Quantities and Adjustments
Prices and Adjustments

Estimator, Designer, and PE/PM

Review Estimates

Region Plans Office and Peer Review Team

Check Estimates and Calculations

Region Plans Office

Prepare Engineers Estimate

Estimator, Designer, and PE/PM

Independent Estimate

To be determined

ASDE Assistant State Design Engineer

EM Engineering Manager
PC&R Project Control and Reporting

PDE Project Development Engineer

PE Project Engineer
PM Project Manager

Note:
The Region Project Engineer, Project Manager, Project Development Engineer, and Engineering Manager
should be informed of changes and updates to project scope, schedule, and cost estimates. This table is
based on the Project Control and Reporting Manual (M 3026), January 2006 revision.

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Independent Estimate/Estimate Review

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Chapter 12

Resources

AASHTO Standing Committee on the Environment, Guide to Estimating Environmental Cost,

2008.
AASHTO Technical Committee on Cost Estimating, A Practical Guide to Estimating:
http://design.transportation.org/documents/aashtoguidetocostestimating_july2009_lt.pdf
Bridge Design Manual (Chapter 12, Appendix 12-A):
www.wsdot.wa.gov/publications/manuals/M23-50.htm
Caltrans, Project Development Procedures Manual, Chapter 20 Project Development Cost
Estimates, 2007
Connecticut DOT, Cost Estimating Guidelines, 2013
CPMS CCI Tables:
http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/cci.txt
CPMS PECI Tables:
http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/pe.infl.txt
CPMS RWCI Tables:
http://wwwi.wsdot.wa.gov/ppsc/pgmmgt/cpms/fields/rw.infl.txt
EBASE (Estimates and Bid Analysis System):
www.wsdot.wa.gov/design/projectdev/engineeringapplications/adready.htm
FHWA Major Project Delivery Guidance:
http://www.fhwa.dot.gov/ipd/project_delivery/index.htm
Instructional Letter: IL 4071:
http://wwwi.wsdot.wa.gov/publications/policies/fulltext/4071.pdf
Minnesota Department of Transportation, Cost Estimation and Cost Management, Technical
Reference Manual, 2008
Montana Department of Transportation, Cost Estimation Procedure for Highway Design
Projects, 2007
NCHRP 8-36 Task 72: Guidelines for Cost Estimation Improvements at State DOTs, 2008
Nevada DOT, Project Cost Estimation Manual, 2013

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Resources

Chapter 12

New Jersey Department of Transportation, Construction Cost Estimating Guide, 2010.

Oman Systems BidTabs Professional (see your IT to setup):
www.wsdot.wa.gov/design/projectdev/engineeringapplications/bidtabs.htm
Online Project Management Guide:
www.wsdot.wa.gov/projects/projectmgmt/pmog.htm
Oregon Department of Transportation, Estimating Manual, 2010
RS Means:
www.rsmeans.com/
Self-Modeling Excel worksheet:
www.wsdot.wa.gov/projects/projectmgmt/riskassessment/information.htm
Virginia Transportation Research Council, Highway Project Cost Estimating Methods Used
in the Planning Stage of Project Development, 2001
WSDOT Glossary for Cost Risk Estimating Management:
www.wsdot.wa.gov/publications/fulltext/cevp/glossary.pdf
WSDOT Project Bid Results and Contract Awards:
www.wsdot.wa.gov/biz/contaa/bidstats/
WSDOT Unit Bid Analysis:
www.wsdot.wa.gov/design/projectdev/engineeringapplications/unitbidhistory.htm

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