Audience Focus: Intermediate
Application Type: Experience-Based
Time/Location: SUN 1:30-2:30/Salon A
Abstract: Stipulated sum open market bidding for design-bid-build is still a popular way to handle project delivery. In this highly competitive market, the primary qualification is financial, proven by the ability to post a bid bond, and once that hurdle is met, the contractor is selected by the apparent low bid.
In the author’s 25 years of experience in various roles in estimating, from materials surveyor to bid captain, he developed a process that could be implemented on all bids, and would allow for the best possible low bid while still working with a solid base of subcontractors. The process allows for quick resolution of subcontractor selections, achieving this goal at bid time, and allowing the project planning to start immediately after NTP without an extensive process of buy-out.
This process covers the entire bidding portion of the procurement from initial choice of projects to bid to scope of work evaluations, and at the same time eliminates the need to engage in the risky and potentially unethical bid shopping negotiations with subcontractors.
Abstract: This article will attempt to discuss the important items to consider when presenting an estimate to a client. Those that have never presented to clients, or perhaps find it challenging to do so will hopefully find value in this article. When presenting an estimate, one may wish to consider the following; preparing an agenda, preparing printed handouts which may include various estimate summaries, utilization of visual aids and preservation of backup documents. The single item which is undoubtedly the most important is the basis of estimate document, it is simply not possible to present any estimate without this document. The importance of historical references, benchmarks and a full internal review of the estimate are also critical elements that should not be overlooked. Regardless of the class of estimate and level of detail being presented, the overall fundamentals in documenting the estimating process in a clear, concise manner still apply. Presenting a well-documented estimate is an essential part in delivering a successful project.
(EST-1104) Pricing Contractor Delay Costs
Primary Author: Mr James G Zack Jr CFCC Navigant Consulting, Inc.
Co-author(s): Mr Peter V. Badala Navigant Consulting, Inc.
Audience Focus: Advanced
Application Type: Experience-Based
Time/Location: SUN 2:45-3:45/Salon A
Abstract: When contractors encounter owner caused (excusable/compensable) delay they are typically entitled under the contract to recover both the time resulting from the delay as well as delay damages. Idled equipment/labor and material escalation costs are fairly easily calculated in such situations. Typically, contractors also seek to recover their delay costs (extended field office overhead or general conditions costs) also. Calculating this cost is more complex than dealing with delayed direct costs. There are, at least, eight methods of calculating extended field office overhead costs. None of the calculations arrive at the same daily delay cost. This paper discusses all eight methods – offering commentary on the strong and weak points of each. The paper also offers a recommendation on how project owners can resolve this dilemma in advance of delays, thus making the issue less contentious should a contractor encounter an owner-caused delay.
Abstract: Monte Carlo analytical methods may be used to prepare cost estimates for the remediation and restoration of contaminated oilfield sites. Such methods may be superior to the use of conventional deterministic cost models alone since site characterization studies for contaminated oilfield properties are seldom comprehensive efforts, resulting in a whole host of unknown values for many parameters which drive the ultimate cost of remediation and restoration. Monte Carlo analysis helps the remediation engineer to address statistically the wide range of parametric values, such as quantities, unit rates, duration of groundwater remediation efforts, cost of money, contingency, and similar factors.
Abstract: Advocates of sustainable design and construction have asserted for years that sustainability can be designed and built into a building project without additional expense. The basis of the assertion is the potential accrued savings due to reduced life cycle costs such as utility bills. This argument may apply in the private sector, but in the public sector, the owner must estimate the capital costs of design and construction and obtain bond funding in an amount sufficient to deliver the entire project. Offsetting life cycle savings may furnish justification but they do not reduce the amount of funding necessary to deliver a green building. This paper presents a rational methodology for evaluating the additional costs of sustainable design and construction and then validates the process using a case study analysis of four public building projects that were constructed in Oklahoma City Oklahoma. The paper concludes that methodology is an effective decision-making tool for determining not only the cost of the green premium but also assisting the public owner in selecting which sustainable design and construction features it wants to include in a given public building project.
Abstract: For a typical project, in oil related industry costing several hundred million dollars or a small construction project costing few thousand dollars - the need for scope of work and accurate cost estimate is essential for each project. Both entities must ensure that the completed project is in line with the agreed-upon scope of work, with minimal change orders and at a cost close to the estimate. Today’s bottom-line-oriented senior project managers define success differently than did their predecessors. In order to alleviate the fear of misleading numbers in the corporate world, this paper presents a unique way of establishing the project scope of work before the start of any estimating related activity. The scope of work coupled with the availability of several cost estimating techniques and state of the art estimating tools, will ensure all project owner get what is required for cost and schedule, with few delays and within appropriated funding amounts.
Abstract: The construction marketplace in the USA experienced dramatic changes from 2002 through 2011. From 2002 to 2006, overall construction spending increased by 35%, an average of almost 7% per year. After the peak year of 2006, spending then decreased by 35% through the end of 2011.
The period of 2002 – 2011 has recorded the most significant upward and then downward change to have occurred in the last 40 years. As a result of the dramatic reduction in construction volume, exceptional competition has dropped bid prices 10%, 20% to even 40%. Construction volume remains constrained and bid prices remain very low.
This paper expands on one presented in 2011 that addressed how construction volume affects competition, how competition affects price, how to react to very low bids/prices and how to properly enhance competition. This paper further explores reasons why construction volume expands and contracts, presents an analysis of the latest data and pricing (2012) and offers projections on the construction marketplace to budget projects for the future.
