FLH PDDM Chapter 9 - Eastern Federal Lands Highway Division

9.4.J. Engineer’s Estimate. (continued)There are four basic methods of determining contract time that are in general use throughout the highwayindustry. They are as follows:a. Construction Season Limits. The contract time ends at, or shortly following, the end of the constructionseason. This is a very effective approach on surfacing and paving projects, small bridges, and similar typesof construction. The contract time must begin early in the year to ensure materials are available and timeframes are reasonable.b. Quantity or Production Rates. This method determines contract time by allowing a daily production ratefor each controlling item of work in the contract that significantly affects the project time. The concept couldallow time for every item of work, but this is generally not necessary as many minor items are completedconcurrently with the more costly items of work. Experience and past data from completed projects helps inestablishing the production rates used.c. Work Flow Techniques. Determining contract time under this method involves preparation of a bar orprogress chart on normal projects to developing full critical path method (CPM) analysis on large, complicatedprojects. A CPM plan requires extensive coordination of materials, equipment, personnel, and administrativesupport. The more complicated this technique becomes, the more dependent it is on experience, judgment,and data sources.d. Estimated Costs. Under this method of determining contract time, the contract costs relate to time orworking days (e.g., contractor expected to earn $15,000 per working day over life of the contract). Using thismethod requires an accurate and current data base.Any or all of the above methods are acceptable. It is not unusual to combine a bar time chart with productionrate analysis on a project. The designer should use the method or combination of methods that are mostpractical using the data bases available.3. Development of Prices. The engineer's estimate shall reflect the actual cost to the contractor of doingbusiness, including a reasonable profit. There are two methods commonly used to determine this cost;historical costs (bid based estimating) and actual costs (cost based estimating). With either method, thedesigner shall strive to target the expected low bid.a) Bid-Based Estimating. This method uses historical bid data as a basis for estimating current costs. Lowbids received for projects (within the past 2 to 5 years) under similar conditions usually represent thecontractor's cost plus a reasonable profit for those projects. The low bid is generally the best indicator of theexpected actual cost for a project. The average of the low bids received on previous projects in similarlocations should be the basis for current projects.Each Engineer's Estimating software in each Federal Lands Highway Division office provides a listing of unitbid prices on contract items from previous projects. Generally only the low bid on each similar project shouldbe used to develop unit prices (average bids inflate prices above the low bid). However, the bids from thelowest three bidders are generally considered to insure the low bid is reasonable. The designer should usethese prices and modify them to fit the conditions on the project. Allow for any factors that may have a directbearing on the prices. These would include such factors as availability of construction material; proximity ofaccess roads; railroads, distance from towns, traffic, time of construction, inflation, quantities etc. Thehistorical bid price approach, tempered with engineering judgment, works quite well with almost all the minoritems of work on a project.9 - 143