Project Quantity Quality Control: ASCE

Rouhanizadeh, Kermanshachi, et al. The cost estimation process has undergone fundamental changes with the advancement of technology, and has been converted from cost estimation that employs two-dimensional maps to cost estimation using building information modeling (BIM). This technology has been recently implemented to estimate the costs of several transportation projects, but there is not a tool that accurately estimates the cost in a continuous spectrum and keeps pace with the progress of the transportation project. The main objectives of this study were to (1) create a cost estimation mechanism that operates in a continuous spectrum from the study phase to the construction phase of transportation projects, and (2) automate the cost estimation process. Open standards such as the industry foundation classes (IFC) were used, and the level of confidence (LOC) mechanism were introduced and implemented for determining the risk of the estimated costs. The developed cost estimation approach will be implemented as a web-based application developed by C# and ASP.NET MVC Core. The results of implementing this tool showed that a higher LOD level results in greater reliability in the cost estimation and quantity take-off, and will help transportation project managers accurately estimate project costs throughout the construction process. ASCE - can be downloaded from ODOT computers

Liu, Kwigizile, Huang. A construction cost index (CCI) measures the price changes of construction items over time. It allows owner agencies and contractors to monitor construction market fluctuations so that they can more accurately estimate construction costs and project long-term funding needs. However, various CCI calculation methods in the highway construction industry are limited in two respects: (1) inability to account for inconsistent pay items, primarily caused by changes in pay item catalogs, and (2) insufficiency in statistically cleaning pay item data, e.g., unbalanced bid prices. For this reason, the resulting highway construction cost index (HCCI) cannot accurately reflect the construction market. To address such limitations, this research develops a three-step holistic framework for automated HCCI development using inconsistent pay items. The three-step methodology encompasses (1) data cleaning, where a text analysis algorithm and outlier detection algorithms are developed to clean inconsistent pay items and unbalanced bid prices; (2) pay item sampling, which helps to select and edit pay items through various statistical analysis; and (3) HCCI calculation, where the chained Fisher index formula is applied to calculate HCCIs at the state level, as well as indexes for specific regions and item categories. A prototype application is developed to generate quarterly and annual HCCIs automatically using the Python programming language. Ten-year data, i.e., 251,033 records, were used to verify and validate the prototyped system. The resulting HCCI and sub-HCCIs provide reliable insights into construction market conditions with high granularity. This research contributes to the body of knowledge by offering a holistic framework for automated HCCI development that leverages the text analysis algorithm for accounting for inconsistent pay items and two-stage outlier treatments for cleaning pay item data.
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Liang, Ashuri, Li. There is no quantitative model to assist state DOTs in accurately forecasting expenditure cash flows for design-build projects. At the outset of awarding a typical design-build contract, the design has not been finalized to enable exact quantities for a detailed cost estimate. This issue represents a big difference between design-build and design-bid-build projects that makes estimating the project payouts more difficult for design-build projects. This research for the first time creates an expenditure cash-flow forecasting model for transportation design-build projects based on case-based reasoning and a genetic algorithm. The model utilizes information about project-specific characteristics and external market factors. The applicability of the proposed model is examined on a data set of 33 transportation design-build projects delivered by Georgia Department of Transportation (GDOT) from April 2007 to January 2020. The results show great accuracy in forecasting expenditure cash flows of these projects. Can be downloaded on ODOT computers.

Karaca, Gransberg, Jeong. A better understanding of top-down estimating practices and their contribution to budgeting accuracy allows public transportation agencies to allocate limited construction funds more efficiently. This paper builds on a recent study that evaluated the accuracy of early highway construction cost estimates for the Montana Department of Transportation (MDT). The study included 996 MDT projects awarded between 2006 and 2015, with more than $2.2 billion in construction costs, accounting for more than 82% of the agency’s construction spending. The results suggest that top-down models provide a means to improve the prediction accuracy of agency cost estimates (when measured as the mean absolute percentage error of project costs), particularly for projects with higher levels of complexity and lower sample sizes. These conclusions are drawn from a comparison of agency in-house estimates to predictions obtained through artificial neural network (ANN) and multiple regression models. In interpreting these findings, the paper demonstrates that the bias-variance trade-off, a common model building concern in the machine learning and artificial neural network literature, is likely a key factor in explaining the prediction performance of simplified models. Can be downloaded on ODOT computers

Elsayegh, El-Adawy, et al. The goal of this paper is to present contractual guidelines for contractors working under projects funded by six southeastern DOTs, namely, Tennessee, South Carolina, North Carolina, Georgia, Alabama, and Florida. The choice of both the southeastern region as well as these particular DOTs was triggered by their significance in terms of vehicle-miles driven, maintenance requirements, and unbalance between allocated and needed funds. To this end, the authors (1) analyzed the standard contract documents used by the six DOTs under investigation; (2) highlighted commonalities and differences in key subject areas including bidding, award, and selection criteria, payment and measurement, and project control acceptance and claims; (3) emphasized the opportunities and risks present in each standard specifications for each DOT; and (4) developed a checklist of the important contractual considerations to be incorporated by associated contractors. This research will have direct benefits for contractors working on infrastructure and transportation projects in these states through developing a better understanding of the different contractual obligations and the interrelated risks. Eventually, this will help mitigate construction conflicts, claims, and disputes, thus reducing the risk of excessive cost overruns and/or schedule delays. Can be downloaded from ODOT computers.

Le, Le et al. Historical bid items from previous projects are an important source of data for project cost estimation. State highway agencies have widely used this data source for budget planning of highway projects. Current practices on using the data are, however, not efficient and fail to provide a reliable estimate. The estimate is simply based on the mean value, which is then manually adjusted by professionals using their knowledge and experience. A highway project is unique, and its price is highly dependent on various factors including location and the type of construction activities. A geospatial analytic method for project cost estimates would be highly useful for automated assessment of these influencing factors. The state of the art has applied interpolation methods to location cost-adjustment factors to adjust the total costs of two similar projects in two different cities. However, existing methods are mostly beneficial to conceptual cost estimation without considering variances between two projects in the same city and various effects of location on different work activities. This study contributes to the body of knowledge by proposing a geographic information system–based framework that leverages historical bid data for unit-price estimation and visualization with consideration of the effects of project-specific location on different bid items. Apart from applying established spatial interpolation methods to unit-price estimation, various strategies such as the use of quantity in interpolation models are proposed to improve the accuracy of the estimates. Temporal changes in unit prices and relationships between quantities and unit prices are also explored. Can be downloaded from ODOT computers.

Kermanschachi, Anderson, et al. Accurate project cost estimating has been known as a major challenge for state transportation agencies (STAs). This challenge could significantly influence project performance and its ultimate success. To yield accurate cost estimates, a successful estimator needs to have expertise in converting the early scope of the project into costs and also visualizing completed facilities from the construction documents at different levels of project progress. Therefore, to achieve the required cost estimation and cost management skills, STAs should organize specialized trainings for both junior and senior cost estimators at different levels. However, very little cost estimates development training or guidance is nationally available, and most STAs have developed their own estimating processes based on history, experience, and available resources. As a result, this study aims to develop national cost estimating and cost management training and also assess transportation junior and senior cost estimation workforce training and education needs. To successfully perform this study, the research team initially collected and reviewed all the existing cost estimation and management training materials from several different resources. Based on the literature review materials, the team developed annotated outlines and twelve training modules categorized into two cost estimation and cost management sections. The final training materials were piloted in Texas and Maryland Departments of Transportation (DOTs) cost estimation and management workshops. Based on the workshop participants’ survey results and feedback, the effectiveness of the training modules was assessed both quantitatively and qualitatively. The outcome of this study helps DOTs to advance the knowledge and skills of their cost estimation and cost management workforce.

An, Li, et al. Unbalanced bidding has presented a significant issue in the construction industry. The award of a contract to an unbalanced bid poses a significant threat to the construction cost, as well as construction activities. The nature of an unbalanced bid, irrespective of the form, consists of quotations higher or lower than the reasonable unit price. In this paper, the engineer’s estimated price was chosen as the evaluation criterion. Consequently, a model was developed in order to identify unbalanced bids based on unascertained model. The unbalanced bid can be identified, which provides useful inputs for bid evaluation. As a result, unbalanced bids can be prevented. The feasibility of the method was verified via a case study. The method proposed in this paper facilitates an effective and efficient quantitative assessment of unbalanced bids. This model not only assists owners in effectively and efficiently identifying unbalanced bids, but also discourages bidders from unbalancing their bids.

Liu, Fang, Liu. With the accelerated pace of the new urbanization, it is particularly important to save the construction cost and maximize the utilization of funds; therefore, the application results of the lowest bidding price evaluated in some typical areas are analyzed through the field research, the bid evaluation model of the method of the lowest bidding price evaluated is analyzed by the comparative study, at the same time, it’s proposed that the bidding evaluation mechanism and guarantee mechanism should be established adhering to the principles of compliance, systematization, and applicability.

Hyrai, Shatarat, Khalafallah. Unit-price contracts are awarded based on estimated quantities while payment to the contractor is based on actual quantities of work. In many cases, estimated and actual quantities never perfectly match each other for several reasons. This divergence has direct impact on the contractor’s profitability and poses additional risks to owners and contractors alike. This paper presents a price adjustment model for quantity variations in measurement contracts. The model adjusts unit rates for items based on the deviation from estimated quantities in order to allow the contractor to recover his indirect costs when quantities of work underrun. At the same time, it does not allow the contractor to obtain a windfall when quantities overrun. This balances the interests of both the contractor and the owner. The model is expected (1) to reduce submitted bid prices as contractors will not need to increase their submitted prices to account for risks caused by quantity fluctuations; (2) to reduce the motive for unbalanced pricing of line items to take advantage of perceived errors in estimated quantities; (3) to reduce the disputes arising around the interpretations of changed quantity clauses in contracts; and (4) to reduce the need for renegotiating unit prices when variations exceed the allowable range in the contract.

Hyari. Unbalanced bidding continues to be a controversial issue in the literature as well as in actual competitive bidding practices. Although a considerable amount of the past research advocated unbalanced bidding and viewed it as a legitimate bidding strategy, public bidding regulations discourage this practice and may disqualify unbalanced bids as nonresponsive offers. In an attempt to ease the controversy and present for the first time a balanced perspective on unbalanced bidding, this paper examines the two conflicting perspectives and conducts a review of the literature reflecting the owners’ and the contractors’ perspectives and an analysis of the conflicting impacts of bid unbalancing on the owner and the contractor. The root causes of disagreement around this practice are discussed and criteria are suggested that draw a line between acceptable and unacceptable bid unbalancing. The proposed criteria seek equitable risk-sharing between owners and contractors and are expected to minimize the ambiguity in evaluating unbalanced bids and while preserving the integrity of the competitive bidding process, as all bidders will know in advance how their offers are going to be evaluated.

Hyari. Skewed bidding is advocated as a contractor bidding strategy to obtain higher profit at the expense of the owner or gain competitive advantage over other bidders. Many scholars presented bid-skewing models to maximize a contractor’s benefits from unbalanced bids. Excessive skewing of bids has negative impacts on the owners and the integrity of the competitive bidding process. This paper presents a multitude of counterstrategies that can be utilized by owners and bidding officials in order to mitigate adverse impacts of skewed pricing on the owner. Some of the presented measures are preventive measures and intend to deter contractors from manipulating the pricing of their bids, and the rest are remedial measures that can mitigate the impacts of imbalance in bidding on the owner. The analyzed countermeasures are categorized according to the type of bid skewing sought by the strategy. Bidding officials can adopt one or combine a number of counterstrategies that suit their needs and go along with the jurisdictions governing their bidding process. It is expected that the diversity of the discussed countermeasures will provide indispensable support to bidding officials in their endeavors to protect public interests and ensure an efficient use of the public money. The presented counterstrategies should also prove to be useful to contractors because they prevent some contractors from taking unfair competitive advantage over other contractors who follow bidding instructions and bid balanced prices.

Hyari, Tarawneh, Katkhuda. Unbalanced pricing of bid line items is considered an undesirable practice by owners and may lead to rejection of the bid on the basis of nonresponsiveness to the bidding regulations. This paper presents the development of a detection model to help owners detect objectionable unbalanced bidding. The proposed model quantifies the risk afforded by deviations of the actual quantities of work from the estimated quantities of the bid line items. The proposed model also considers the impact of multiple uncertainties in line item quantities on the owner’s total project cost based on the unit prices submitted by all the bidders for the project. Historical deviations from the estimated quantities during previous construction projects are used as an indicator of future fluctuations in the estimated quantities. The proposed model allows uncertainty in the quantities of work to be incorporated into the bid evaluation stage to assess each bidder’s likelihood of being the truly lowest bidder (i.e., yielding the lowest cost to the owner). An application example, based on actual bid results submitted to the California Department of Transportation, was used to illustrate the effectiveness of the model in detecting objectionable unbalanced bids. The model is expected to provide much needed support for owners in the bid evaluation stage and to reduce the controversy around unbalanced pricing because it targets material unbalancing rather than the whole practice of unbalanced pricing.

Hyari. Unbalanced bidding is a common practice associated with both unit price and lump sum contracts. This practice is not usually in the owner’s best interests and is used in different forms by contractors for various reasons. Bid evaluation practices try to identify unbalanced bids and may reject the lowest bid if it is perceived to be unbalanced. Previous research on this topic focused on either helping contractors unbalance their bids or detecting imbalance in bids in order to reject them. This paper proposes a model based on a prevention, rather than detection, approach to handling unbalanced bidding. The proposed model balances all the bids submitted for a project and thereby neutralizes the impact of manipulating bid prices to obtain undeserved payments from owners. This approach protects the interests of the owners while maintaining the essence of competitive bidding by awarding the project to the bidder who submitted the lowest bid in a fair competitive process. Two examples, representing the bidding results of two projects, are analyzed to demonstrate the capability of the model in handling various forms of unbalanced bidding. Use of the model by owners will help protect them from the negative consequences of unbalanced bidding. It is also expected that, as owners begin to use the developed model, contractors will be less motivated to practice unbalanced bidding since it will not be possible to attain the desired objective by manipulating bid prices.

Fontan-Pagan, Gonzalez-Quevedo. Highway infrastructure projects are characterized by change and extra work orders which result from the uncertainty in the quantities of particular items. These items are specifically related to earthwork, where earth movement amounts are affected according to the excavation depth and soil type. The unit price contract is used to control discrepancies in quantities presented during construction, however, many of items can be precisely measured from the plans and specifications like traffics signs, concrete pavement and safety barriers. The hybrid bidding method called “CHICA” is a system which integrates a unit price contract with a lump sum contract to create a unique mixed contract. Setting unit prices for items with uncertain quantities and lump sum for items with precise known quantities, and incentives for early completion could produce reductions in extra costs, and reduce change and work orders, risks, and time. This research presents a comparison between the hybrids contracting method used in the second phase of construction of the highway PR-66, with the traditional unit price contracting method used in the first phase of construction of the same highway. The research demonstrates a significant reduction in costs, change orders, extra work orders, and time when using the hybrid contracting method in this particular situation which suggests that CHICA has great potential.

Du, Bormann. In recognition of the importance of historical knowledge in decision making, case based reasoning (CBR) is utilized as a form of an expert system to tackle construction management issues such as quantity takeoff in the proposal development phase of a project. It builds on a proposition that past projects similar to the new one would suggest a reasonable range of craft quantities. This paper finds that when measuring the similarity between the new project and historical projects, traditional similarity measure methods fail to consider the nonlinearity and muticollinearity embedded in the problem, as well as differences across crafts. An innovative similarity measurement algorithm was therefore proposed to tackle the above issues with a carefully designed orthogonalization process and Sobol’s total sensitivity analysis. The application of the proposed algorithm to the craft quantity takeoff of a power plant project was introduced, demonstrating a better result compared with traditional methods. It is likely that the proposed algorithm will advance current CBR practices in construction management.

Aram, Eastman, Beetz. This paper reports on the first part of ongoing research with the goal of designing a framework and a knowledge-based system for 3D parametric model-based quantity take-off and cost estimation in the Architecture, Engineering and Construction (AEC) industry. The authors have studied and analyzed current cost estimation methods used in both the AEC and non-AEC industries in terms of their requirements, use contexts, methodologies, limitations and strengths to lay the groundwork for selecting the most suitable problem decomposition methods and cost estimation techniques to design a new framework. We have focused on determining the underlying methodologies of different cost estimation models and not just the techniques. Both qualitative methods used in early stages of design and quantitative methods used in more mature design stages are reviewed and their structures are analyzed.

Shrestha, Shrestha, Joshi. Construction sustainability relates to three main factors: economic, environmental, and social. Under the economic impact, the project should be built within the stipulated cost. One of the reasons to investigate the bidding pattern of contractor is to make sure that the contractor will complete the project within the stipulated budget. If the contractor had balanced bid, there is higher possibility of completing the project within budget and on time. If the bid is not balanced, then the contractor might not finish the project on estimated budget. The majority of public road projects are bid based on unit price. Bidders use one of three methods to get maximum profit from their bid: front end loading, individual rate loading, and back end loading. Each method has unique advantages. There are various methods that owners use to detect whether the bids are unbalanced. Using historical data from 264 bids of 70 road projects undertaken by the Clark County Department of Public Works in southern Nevada from 1992 through 2008, this study determines whether unbalanced bidding was present. The total value of construction is equivalent to $364 million when converted into a June 2011 base cost. The study determines the most frequently used items of road construction, and analyzes the bid data of these items to determine whether the unbalanced bidding existed. The analysis shows that bidders of public road projects were bidding the projects based on front end loading thus the unbalanced bidding is challenging the Economic Sustainability.

Cattell, Bowen, Kaka. Unbalanced bidding describes an activity otherwise known as item price loading. It is a practice used to some extent by building contractors to determine the prices that they will allocate to the individual component items within a project. This practice takes advantage of the contractor’s opportunity to manipulate these prices without this affecting their overall bid price for a project. Three types of loading are described, namely those of “front-end loading,” “back-end loading,” and “quantity error exploitation” (otherwise known as “individual rate loading”). Several scientists have expressed an interest in this field, starting with Marvin Gates in 1959. All of these scientific endeavors have entailed the attempt by which to mathematically determine the optimum method of item pricing. These efforts are seen as potentially significant given that it has become recognized that this practice can contribute substantially to a contractor’s profit as well as their risk. It is therefore interesting to note that although some research has found that some forms of unbalanced bidding are being practiced, there is no published research known to the writers that describes any practical application of any of the mathematical models that have been advocated by the aforementioned scientific community. A critical assessment is made of all of the scientific contributions known to the writers that have been in this field. This critical assessment finds flaws with all of the existing scientific proposals. In particular it finds fault with the technique that is incorporated into many of them by which prices are bounded by arbitrary upper and lower limits that have no scientific basis. It also concludes that further research is required to test the practical efficacy of some of these academic models.

Wang. Construction lump sum lowest bid procurement is one of the most prevalent methods of awarding construction contracts. For a lump sum bidding practice in Taiwan, after the lowest bidder is awarded a construction project contract, the contractual unit price for each cost item is taken as the product of the owner’s estimated unit price and a discounting ratio equal to the total bid price divided by the owner’s project cost estimate. This owner-based approach is inequitable because the bidder is denied the right to allocate the risks associated with the costs of performing the work. In U.S. practice, while the unit prices submitted by the bidder are usually considered as the contractual ones, unbalanced bids may occur. This work presents a bidder-based quantitative procedure, built on an electronic-based bidding process for effectively and efficiently supporting reviewing and adjusting the bidder’s proposed unit prices for a lump sum procurement project. The advantages of this procedure include that the unit prices electronically obtained from the owner and all qualified bidders are included in analyses during unit-price evaluation, and that rules for unit-price adjustment along with maintaining the total contractual price are included. The novel procedure has been successfully applied to several construction projects in Taiwan and the results have been greatly appreciated by both governments and contractors.

Teicholz, Ashley. In this type of contract, the work is broken down by the owner into bid items with an estimated work quantity for each item. In preparing a bid, a contractor estimates the direct cost of each item and then has to spread overhead, profit, and contingency to the bid items, so that these amounts will be recovered when the project is complete. The contractor's bidding strategy is complicated by the uncertainties of the work quantities and which items may be deleted from the contract. To minimize the cash investment required by the contract and maximize the expected profit, it is beneficial to unbalance the bid prices by allocating a larger than proportional share of the margin and overhead to those items performed early in the life of the project and those likely to overrun the owner's estimated quantity. This paper develops an easily implemented model of the preceding problem which permits the calculation of optimal unbalanced bid prices that will maximize the expected net worth of the project for a given desired margin.