Why does project cost estimating seem so hard?

By Ann Briggs

If you have got ever taken on a essential residence transforming project, you already know that one in every of the primary steps is to get estimates for what your undertaking will cost. "Remodeling" a street is comparable in some ways, but for our projects, we grow our own value estimate earlier than we ask contractors to present us their bid for the work.

Estimating is now not an actual science

What is an estimate, really? It's an educated guess utilizing the greatest news we've accessible to us on the time. Like a residence remodel, what we suppose the undertaking will value would now not all the time align with what contractors bid for doing the work. We grow our estimates with the aid of way of watching at historic bids for comparable work, as nicely as developments in fabric and labor expenses and market conditions. It provides us a nice foundation to soar from, but with the aid of way of watching again on the past, we are now not all the time capable to maintain up in unstable markets with swiftly growing expenses or with unanticipated events, corresponding to tariffs or work stoppages.

With these varieties of variables, we believe contractor bids which can be inside 10 percentage above or under our engineer's estimate suited and we regularly award the undertaking to the lowest bidder inside that range. So for example, the Interstate 5 Northbound - S. 260th Street to Duwamish River Bridge project, which changed concrete and expansion joints on I-5 in King County, was estimated to value $29.5 million and the contractor's bid was $30.8 million. That's simply four percentage over estimate - yet it equates to $1.28 million. We understand that here is nonetheless plenty of money.

Things that also can also just affect the value of a project

Any quantity of parts can affect the quantity a contractor bids for a project; some are inside our control, others are not. These are a couple of of the essential ones:

Contract Restrictions: Think concerning the differences in method you'd take transforming an empty constructing versus one that's occupied. We do the comparable for transportation projects. For us "occupied" also can also just imply operating round site visitors on a hectic roadway, or fish in a stream, or birds nesting on bridges and local timber - any of those also can also just outcome in setting restrictions on whilst a contractor can do their work. The further restrictions there are, the much less flexibility a contractor has to do the work, and regularly that's pondered in bid prices.
Time of year: Projects advertised for contractor bids early inside the season (December/January) regularly outcome in decrease bid prices. During this time, contractors are simply beginning to schedule work for the upcoming construction season, and provides and accessible work drive are further plentiful. Later inside the season, there also can also just be further call for for labor and materials (such as asphalt) and these prices pass up. For plenty of our engineers, the winter season is whilst they're growing tasks - after the summer time construction season is over - so it is a topic of balancing workloads, making it tough to meet that early season time frame.
Competition amongst owners: There's a construction increase going on in our state and whilst many undertaking house proprietors - for example, King County, City of Seattle, Sound Transit - all have tasks inside the comparable region, pageant for construction contractors can drive prices up resulting from call for for accessible labor. A comparable increase is occurring inside the personal sector as well. With so a lot work going on, we are getting fewer bidders on our tasks simply as a result of the fact contractors are already busy. Contractors with further work than workers, also can also just have got to deliver in further crews from different regions, which drives up their expenses (travel, lodging, etc.) and these expenses get handed on to us.
Project complexity: We have a variety of distinctive and complicated tasks that require specialized engineering talent or construction talent - adding the greatest bored tunnel in North American, ferry terminal tasks that require equally constructing and marine construction expertise, and floating concrete bridges - that create estimating challenges for engineers with constrained publicity and ride in these varieties of projects.
Project duration: Very huge tasks that span numerous years to build, also can also just be situation to altering market conditions during the construction period. As a result, contractors also can also just regulate their bids to reflect the danger and expected inflation.
Materials costs: We music materials fee modifications for presents which can be wide-spread in our projects, corresponding to hot blend asphalt (influenced with the aid of way of oil prices) and metal (rebar and structural steel). We also reveal the results of tariffs on commodity prices. In unstable markets, it is now not strange for us to underestimate these commodities as the historic bid news we use lags the market.
How we degree up

Our engineers are skilled experts they usually expertly layout some wonderful and artistic undertaking answers under difficult conditions. The chart under exhibits the percentage of tasks that have been below, inside 10 percent, or above the engineer's estimate for the previous three fiscal years (July 1 - June 30).

Nationally, the Federal Highway Administration sets the target for project engineer estimates within the plus or minus 10 percent range at 50 percent. We met that target in FY 2016, struggled with our accuracy in FY 2017 (for some of the reasons outlined above) and then bounced back in FY 2018.

As with any project, we understand the importance of starting out with a realistic budget. That's why we're working to continuously improve our processes by:

Inviting review of our processes by peers and external experts
Consulting with the heavy construction and engineering industry to better understand how contract restrictions affect bid prices
Exploring ways to attract a larger number of project bidders
Implementing specialized training on project-cost estimating to enhance our engineers' skills
Like a home remodel project, in transportation construction you never really know what lies hidden until you start digging below the surface. It's similar to tearing the shingles off your roof and finding the plywood is rotten below. Although some things are beyond our control, we'll continue delivering the best results we can, using all the tools that are available to us.


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