I can’t get in my car these days without considering all of the moving pieces and parts it took to enjoy our nation’s highway infrastructure. It’s much like the software we develop in that our customers identify a pain point and report it. We then document, design, and make decisions on how to improve their user experience. This process could be compared to how transportation infrastructure evolves. Federal, state, and local agencies collect data from citizens and traffic reports to identify pain points to make our roads safer and more sustainable. This is no small feat, and as with most things in life, the capital to make this happen is a crucial piece of the puzzle.Â
Ensuring that funds are being spent wisely and that owner-agencies hold contractors accountable is why it is so important to develop accurate estimates at every stage of the project life cycle. A recent audit from FHWA recommends “reducing the reliance on historical data when developing an engineer’s estimate.”Â
It’s a well-known fact that estimators often wear many hats. They are planners, design engineers, cost analysts, and so much more. So, with all of these responsibilities, how can they invest enough time, often against deadlines, into developing estimates that truly reflect what an infrastructure project will cost? The transportation estimating community often recommends the Pareto Principle. For estimating, this means focusing on the 20% of bid items that make up 80% of the project costs.Â
Using cost-based estimating tools is an effective way to dig deeper into an item of work for a project plan. This method considers the labor, equipment, and materials required. For example, a work item might involve a crew with various laborers, different pieces of equipment, and specific materials. Each of these components is quantified, assigned an hourly or unit rate, and then totaled. The combined cost of labor, equipment, and materials is then divided by the daily production rate to determine the unit price for one unit of the work item.
AASHTOWare Project Estimation™ is an example of software that allows for the creation of cost sheets for items that typically represent the bulk of project costs. These cost sheets are stored and linked to corresponding work items. When an item is added to a cost estimate, the relevant cost sheet is readily available for the estimator to modify as needed. This resource streamlines the process for estimators when analyzing major cost items. The primary challenge lies in the initial data setup. Some agencies take the approach of simplification. The idea is to concentrate on a single item to gain deeper insights.
For a deeper dive into Cost-Based Estimating, check out our white paper on Understanding the Benefits of Cost-Based Estimating. Infotech is here to help agencies get started with cost-based estimating in AASHTOWare Project Estimation. Please reach out to us for more information.
Authors
Jeff Derrer, P.E.
Senior Consultant
Mr. Derrer has nearly 40 years of experience in transportation project management and engineering. He has been a Senior Consultant with Infotech since 2001, providing data analysis services to state transportation agencies. He previously worked for the North Carolina Department of Transportation as Head of the Contract Monitoring Section for more than 10 years, and for the Virginia Department of Transportation as Head of the Antitrust Section for four years. In those roles, he directed activities that analyzed contractor’s bids to ensure a competitive market place.