Cost Estimating Manual For Projects M 3034

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Cost EstimatingManual for ProjectsM 3034.04December 2020Engineering and Regional OperationsDevelopment Division, Design Office, SAEO

Americans with Disabilities Act (ADA) Information: This material can be made available in an alternateformat by emailing the Office of Equal Opportunity at wsdotada@wsdot.wa.gov or by calling toll free,855-362-4ADA(4232). Persons who are deaf or hard of hearing may make a request by calling theWashington State Relay at 711.Title VI Notice to Public: It is the Washington State Department of Transportation’s (WSDOT) policyto assure that no person shall, on the grounds of race, color, national origin or sex, as provided by TitleVI of the Civil Rights Act of 1964, be excluded from participation in, be denied the benefits of, or beotherwise discriminated against under any of its programs and activities. Any person who believes his/her Title VI protection has been violated, may file a complaint with WSDOT’s Office of Equal Opportunity(OEO). For additional information regarding Title VI complaint procedures and/or information regardingour non-discrimination obligations, please contact OEO’s Title VI Coordinator at 360-705-7090.

ForewordWSDOT’s vision is to be the best at providing a sustainable and integrated multimodaltransportation system. Its mission is to provide and support safe, reliable, and cost-effectivetransportation options to improve livable communities and economic vitality for peopleand 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 tokeep technical information relevant and current, as well as provide consistency with thedepartment’s vision.More of an art than a science, cost estimating requires a thorough understanding of projectscope, past price history, and current market conditions, as well as with a generousapplication 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 aninitial assessment of uncertainty Clearly defined and documented cost management endorsement processes toauthorize changes in scope and cost after the baseline estimate is established Dedicated resources that are focused on effective scoping, project cost estimating,and cost management2.Reliable and accurate estimates: Well-documented and complete cost estimates Clearly spelled-out assumptions, risks, and uncertainties that canbe easily communicated3.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 phasesCost Estimating Manual for Projects M 3034.04December 2020Page 3

Foreword4.Improved communication and credibility with external stakeholders: Consistent and clear communication of cost estimates to external stakeholders atmilestone points The ability to communicate cost estimates with confidence, leading to strongerrelationships with external stakeholders, greater possibility for collaboration, andincreased funding support of transportation initiatives5.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 processThis manual is intended as a guide for developing and managing project cost. It providespolicies, rules, procedures, and tools to aid WSDOT staff in preparing project cost estimatesand managing cost throughout WSDOT’s project development process. Although themanual is primarily written for project managers and estimators, it is strongly recommendedthat others involved in WSDOT’s project delivery activities familiarize themselves withthis information.The term “project cost estimate,” as used during the project development process, includesall direct capital outlay costs, including right of way, structures, and landscaping, but doesnot normally include indirect capital outlay support costs.Project cost estimates should be as accurate as possible. Estimates should never beartificially reduced to stay within the funding limits, nor should they be reduced tomake available more funding for region projects. Likewise, project cost estimates should notbe artificially raised beyond the contingency percentages provided for in this manual unlessadequately justified.Important NoticeThe detailed estimate of any phase of an estimate shall not be disclosed to the public andwill be kept confidential until the end of the bid opening.Page 4Cost Estimating Manual for Projects M 3034.04December 2020

DefinitionsA comprehensive glossary for cost risk estimating management is posted at:Cost Risk Estimating Management (CREM) Glossary (wa.gov)Key TermsAllowance – Additional resources included in an estimate to cover the cost of known butundefined 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 costrisk analysis and represents the reviewed and/or validated project cost estimate to beused in the quantitative risk analysis for a project. The base cost represents the cost thatcan reasonably be expected if the project materializes as planned, including PE, RW, andCN costs. The base cost estimate is unbiased and neutral—it is not optimistic and it isnot conservative. It does not include any risks, but does include the WSDOT standardconstruction contingency, since that amount is based upon historical usage. Base costsreported 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 structurecomponent, work package, or schedule activity), plus or minus approved project scope,cost, schedule, and technical changes. Generally refers to the current baseline, but mayrefer 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 fromplanning through the scoping and design phases of project development. Planning andscoping typically have separate budgets but are encompassed under Design or PreliminaryEngineering (PE). The terms “Design” or “Design Phase” are sometimes used interchangeablywith PE.Basis of Estimate (BOE) – Documentation to enable the agency to easily track changes toproject scope, cost, and schedule. A well-documented basis of estimate and documentationof assumptions used can eliminate overlap of future estimate assumptions. This documentprovides a trail about what is known about the project. This allows project “knowns” as wellas “unknowns” to be clearly identified. This documentation is important because multipleestimators may be involved on the project; complex projects in particular take years todevelop and estimates must be completed multiple times.Cost Estimating Manual for Projects M 3034.04December 2020Page 5

DefinitionsConstruction Contingency – A standardized markup applied to the construction cost ofa project that accounts for uncertainties in quantities, unit costs, and minor risk eventsthat typically take place during construction. Refer to the Plans Preparation Manual, Section800.03, for guidance on estimating construction contingency.Construction Engineering (CE) – The project management effort (budget/cost) applied tothe contract execution and construction phases of the project. Refer to the Plans PreparationManual, Section 800.03, for guidance on estimating the CE cost.Cost Estimate – A prediction of quantities, cost, and/or price of resources required by thescope of an asset investment option, activity, or project. As a prediction, an estimate mustaddress risks and uncertainties. Estimates are used primarily as inputs for budgeting; costor value analysis; decision making in business; asset and project planning; or for projectcost and schedule control processes. Cost estimates are determined using experience andcalculating and forecasting the future cost of resources, methods, and management within ascheduled time frame. (Source: Copyright 2007, AACE International, Inc., AACE InternationalRecommended Practices, Number 10S-90)Estimator – A knowledgeable professional assigned to evaluate the probable costof 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 todefine parameters related to the cost of a typical transportation facility construction, suchas cost per lane mile, cost per interchange or cost per square foot. Percentages can alsobe 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 scopingestimates. (Source: WSDOT working definition)Risk-Based Estimate – An approach that involves simple or complex risk modeling basedon inferred and probabilistic relationships among cost, schedule, and events related to theproject. Risk-based estimating uses historical data and/or cost-based estimating techniquesand an expert’s best judgment to develop the project “base cost” (project cost if the projectproceeds as planned). Risk elements (defined as opportunities or threats) are then definedand applied to the Base Cost through risk modeling to provide a probable range for bothproject cost and schedule. (Source: WSDOT working definition)Risk – The effect of uncertainty on objectives. (Source: ISO 31000, Risk management –Principles and Guidelines)Page 6Cost Estimating Manual for Projects M 3034.04December 2020

ContentsChapter 1Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1Chapter 2Cost Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12-1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12-2Determine the Basis of Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12-3Prepare a Base Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12-4Review the Base Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-22-5Perform a Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32-6Determine the Estimate Communication Approach . . . . . . . . . . . . . . . . . . . . . . . . . . 2-32-7Obtain Management Endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4Chapter 3Cost Estimating Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1Chapter 4Cost Estimating and Project Development Phases . . . . . . . . . . . . . . . . . . . . . . . 4-14-1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14-2Preconstruction General Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-24-34-44-54-64-2.1WSDOT Estimating Documents and Steps . . . . . . . . . . . . . . . . . . . . . . . . . 4-24-2.2Cost Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54-3.1Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-54-3.2Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5Scoping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-74-4.1Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-74-4.2Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-94-5.1Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-104-5.2Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10PS&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-124-6.1Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-124-6.2Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-12Cost Estimating Manual for Projects M 3034.04December 2020Page 7

ContentsChapter 5Chapter 6Cost Estimate Training and Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-15-1Training (courses with a may have a cost associated) . . . . . . . . . . . . . . . . . . . . . . . . 5-15-2Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-25-3American Association of State Highway and Transportation Officials (AASHTO)Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3Documentation/Basis of Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16-1Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16-2Estimate Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16-2.16-3Purpose of the Basis of Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1Basis of Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2Chapter 7Cost Estimating – Estimate Markups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1Chapter 8Specialty Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1Chapter 9Page 88-1Bridges, Nonstandard Retaining Walls, and Structures . . . . . . . . . . . . . . . . . . . . . . . 8-18-2Right of Way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-18-3Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28-4Traffic Design and Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-28-5Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2Preliminary Engineering Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1Cost Estimating Manual for Projects M 3034.04December 2020

ContentsChapter 10Major Factors that Influence Estimating Practice . . . . . . . . . . . . . . . . . . . . . . . 10-110-1Geographic Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-110-2Restrictive Work Hours or Method of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-210-3Quantity Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-210-3.1Separate Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-3.2Handwork and Inefficient Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-4Item Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-5Scheduling/Lead Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-6Difficult Construction/Site Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-7Estimating Lump Sum Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-310-8Force Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-510-9Timing of Advertisement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-610-10 Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-710-11 Expected Competition/Contractor Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-810-12 Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-910-13 Specialty Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-910-14 Material Shortages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1010-15 Standard Items vs. Nonstandard Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1010-16 First-Time-Use Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1010-17 Soil Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1110-18 Permit Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1110-19 Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1210-20 Construction Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1210-21 Other Funding Sources/Agreement Work for Others . . . . . . . . . . . . . . . . . . . . . . . 10-12Chapter 11Independent Estimate/Estimate Review Introduction . . . . . . . . . . . . . . . . . . . . 11-111-1Internal Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-211-2Peer Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-211-3Region/Headquarters Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-211-4External . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-3Cost Estimating Manual for Projec

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 .

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