Cost Estimating Manual
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NYC Department of Environmental Protection Bureau of Engineering Design and Construction Cost Estimating Manual Issued June 2008 Table of Contents Cost Estimating Manual - Issued June 2008 Table of Contents Chapter 1 – Introduction Introduction ...................................................................................................................................1-1 Estimating Framework ..................................................................................................................1-2 Manual Organization .....................................................................................................................1-4 Compliance with Cost Estimating Manual .................................................................................... 1-4 Chapter 2 – Inputs to Estimating Process Introduction ...................................................................................................................................2-1 Estimate Preparation Services ......................................................................................................2-1 Estimate Work Breakdown Structure (WBS) ................................................................................ 2-2 Project Scope ................................................................................................................................2-7 Project Risks ...............................................................................................................................2-10 Project Schedule .........................................................................................................................2-11 Pre-Estimate Meeting ..................................................................................................................2-11 Chapter 3 – Estimate Preparation Estimating System Requirements ................................................................................................3-1 Estimating Methodology ...............................................................................................................3-2 Estimate Structure and Definitions ...............................................................................................3-4 Estimating System Rates and Supporting Calculations ............................................................ 3-10 Estimate Inputs ...........................................................................................................................3-12 Escalation of Construction Cost Inputs ......................................................................................3-13 Estimate Sections .......................................................................................................................3-14 Chapter 4 – Estimate Output Basic Estimate Reports .................................................................................................................4-1 Basis of Estimate Report ...............................................................................................................4-3 Chapter 5 – Contingency Introduction ...................................................................................................................................5-1 Contingency Definitions ................................................................................................................5-2 Key Source of Risk and Variability ................................................................................................5-3 Methods for Setting Contingency .................................................................................................5-8 Chapter 6 – Estimate Review and Approval Introduction ...................................................................................................................................6-1 Cost Estimating Team Review ......................................................................................................6-1 Project Management and Design Team Review ........................................................................... 6-3 Design Consultant Senior Management Endorsement ............................................................... 6-5 i Cost Estimating Manual June 2008 Cost Estimating Manual - Issued June 2008 Table of Contents List of Attachments Attachment 1-1 AACE 18R-97 Attachment 2-1 BEDC Work Packages by CSI Division Attachment 2-2 Design Content by Estimate Class Attachment 3-1 Sample Wage Rate Calculation Attachment 3-2 Sample Work Week Differential Calculations Attachment 3-3 Estimator Inputs 3-3A Equipment 3-3B Earthwork 3-3C Structural Concrete 3-3D Electrical 3-3E Process Piping 3-3F Indirect Project Cost Attachment 3-4 Indirect Project Costs Checklist Attachment 4-1 Estimating Reports 4-1A WBS Level 1 Summary Report 4-1B WBS Level 2 Summary Report 4-1C Scope Review Report Summarized to Assembly 4-1D Scope Review Report Detailed 4-1E Labor Productivity Detail Report (Assembly) 4-1F Labor Productivity Detail Report (Item) Attachment 4-2 AACE 34R-05 Attachment 5-1 Guidance on Contingency Levels for Primary Construction Inputs ii Introduction Chapter 1 Chapter 1 Introduction Chapter 1 Introduction Chapter 1 – Introduction Introduction Accurate cost estimating is essential for the effective management of the New York City, Department of Environmental Protection’s Capital Program. To ensure consistency across all projects and to facilitate review and approval of all cost estimates prepared for the Capital Program, the Bureau of Engineering Design and Construction (BEDC) has developed this Cost Estimating Manual. Key objectives of Manual include the following: • Standardization in engineering inputs (scope) at all estimating milestones to drive consistency in the expected accuracy range of cost estimates • Standardization of estimating format to facilitate development, review, and historical data capture • Guidance on development of appropriate contingency levels to facilitate better transparency and decision-making in Capital Program budgeting • Standardization in the submittal of estimate supporting documentation including sources of information and assumptions used to develop the estimate • Minimum quality requirements for estimate review prior to submittal to BEDC The Manual identifies requirements of the entire estimating process covering the following eight major steps in cost estimating: E I G H T M A J O R 1 Communicate Project Scope to Estimating Team ST E P S I N C O S T (Scope Input from Engineer to Estimator) ESTIMATING 2 Plan the Estimate Preparation (Work Breakdown Structure and Estimate Structure) 3 Develop Estimate 4 Risk Analysis and Contingency Development 5 Output Estimate 6 Document Basis of Estimate 7 Quality Review (Estimating Team and Engineering Team) 8 Submit Estimate to BEDC 1-1 Cost Estimating Manual June 2008 Estimating Framework The estimating framework described in this Manual is largely based on the Association for the Advance- ment of Cost Engineering (AACE) Recommended Practice No. 18R-97: Cost Estimate Classification Sys- tem – As Applied in Engineering, Procurement and Construction for the Process Industries. This AACE Recommended Practice has been adapted and expanded to the specific needs and characteristics of the BEDC Capital Program. A copy of this Practice can be obtained from the AACE website at www.aacei.org/ technical/rp.shtml and is included as Attachment 1-1 to this Manual. AACE Practice 18R-97 utilizes a five level Class System (5, 4, 3, 2, and 1) which corresponds to estimate types prepared at various stages of project development. Type 5 cost estimates are developed a project conception when little project information or scope has been developed. Type 1 estimates are complete detailed unit cost and take off estimates with complete or near complete scope definition. For planning and budgeting purposes, BEDC requires development of project cost estimates at the various milestones within the project life cycle. The correlation between the estimates produced at each of the key BEDC project life cycle milestones and AACE estimate classes is shown in Figure 1.1. For each delivery milestone, the generally accepted estimating methods, expected level of accuracy, level of scope definition, and the key scope content requirements necessary to develop the estimate are identified. 1-2 FIGURE 1-1 SU mm A R Y O F C O S T E S TI M AT E C L A ss I F I C ATION S A PPLI E D T O NY C D E P BUREAU OF ENGINEERING DESIGN AND CONSTRUCTION CAPITAL PROJECTS Life Cycle Phase Initiation Facility Planning 30% Design: 90/100% Milestone 60% Milestone Milestone ESTIMAT E CHARA C T E RISTI C S AACE Estimate Class Class 5 Class 4 Class 3 Class 2 Class 1* Semi-Detailed Unit Detailed Unit Cost Parametric or Equipment Factored Detailed Unit Cost Estimate Methodology Costs with Assembly with Forced Detailed Capacity Factored or Parametric with Detailed Take-off Level Line Items Take-off Expected Level of Accuracy -50% to +100% -30% to +50% -20% to +30% -15% to +20% -10% to +15% Key Content Requirements 0 to 2% 1 to 15% 10 to 40% 40 to 70% 95 to 100% (Scope Content Hydraulic Capacity Process Flow Diagram Final Equipment Lists Preliminary to Complete Annotated Examples) Advanced Drawings Drawings Design Criteria Site Layout (Earthwork) Major Specifications Complete General Site Layout Building/Facility Plans Specifications Pipeline Corridors Major Sections Prelim. Equipment Concrete Quantities Lists Final P&IDs Chapter 1 Prelim. Electrical Loads Electrical Single Lines * Per AACE 18R-97,