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Project Estimates Volatility of Material Costs

Project Estimates Volatility of Material Costs. California Transportation Commission Tab 7, Reference # 4.5 Action Item Presentation by: California Department of Transportation November 3, 2005. Recent Trends. Increasing Bids Increasing Costs and Volatility in the Materials Market

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Project Estimates Volatility of Material Costs

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  1. Project Estimates Volatility of Material Costs California Transportation Commission Tab 7, Reference # 4.5 Action Item Presentation by: California Department of Transportation November 3, 2005

  2. Recent Trends • Increasing Bids • Increasing Costs and Volatility in the Materials Market • Decreasing Number of Bidders • Less Competition • Higher Prices

  3. Volatility of Material Cost

  4. Sample ProjectAsphalt Concrete PavementPercentage of Total Project Cost

  5. Bidding Summary from July 1 thru October 20

  6. Objectives • Improve Department’s Estimating Practices to Better Forecast Costs at time of Bid Opening • Get Better at Estimating Future Projects. • Vote the Correct Funds. • Outcome: Engineer’s Estimate at time of Vote Within 10% of Low Bid. • Improve Contractor Confidence that Reasonable Low Bids will be Awarded. • Ensure Contract Award (where reasonable). • Outcome: More Bidders, Greater Competition, and Lower Prices.

  7. Proposed Material Cost Adjustment Material Cost Adjustment Engineer’s Estimate

  8. Adjusted Call Number vs Actual Bids on Projects >$5M

  9. Update Engineer’s Estimate At Vote Monitor Monthly

  10. Materials Cost Update Enhanced Process • Office Engineer will Establish an Adjustment Forecast Reflecting Expected Material Cost at Bid Opening. • Apply Adjustment, if Needed, at Vote for Material Cost Forecast. • Monitor Estimate Monthly During Advertisement Period.

  11. Action to Restore Contractor Confidence Maximizing the use of delegated approval of supplemental funds requests (July action). • Outcome: Timely Award of Contracts. • Outcome: Faster Contract Awards • Outcome: Reasonable Low Bid will be Awarded.

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