Draft FINAL
ENGINEER’S ESTIMATES PROCESS REVIEW
UTAH DIVISION STEWARDSHIP
PROGRAM
FY 2006
Draft FINAL
JOINT UDOT/FHWA
ENGINEER’S ESTIMATE PROCESS
REVIEW
Note: As of Sept 1, 2006, the Utah Department of Transportation and
the Utah Division of the Federal Highway Administration have
not held the required closeout meeting resolve the findings
contained in this draft report. The findings and
recommendations of this report may be revised based on the
outcome of the closeout meeting.
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FY 2006
Table of Contents
Executive Summary…………………………………………………………………..……….3
Chapter 1 – Introduction………………………………………………………….…..……….8
Chapter 2 – Documentation Review………………………………………………..………...10
Chapter 3 – Quarterly Final Estimates Reports…………………………………….………...14
Chapter 4 – Case Studies……………………….…………………………………….………25
Chapter 5 – Surveys and Interviews……………………………………………..….……..…32
Chapter 6 – Current UDOT Initiatives……………………………………………………….34
Chapter 7 – Findings and Recommendations…..……………………………………….……37
Appendix A – Documentation Review……………………………………………………..A-1
Appendix B – Quarterly Final Estimate Reports……………………………………….…..B-1
Federal and State Projects………………….………………..B-2
Maintenance Projects………………………………………..B-13
Appendix C – Case Studies…………………………………………….…………………..C-1
Comparison of Bids with the
Engineer’s Estimates for Specific Items……………………C-2
Comparison of Estimate Quantities with
Final Quantities for Specific Items…………………………C-24
Appendix D – Survey and Interview Questions……………………….…………………...D-1
Designers……………………………….……………………D-2
Contractors…………………………………………………..D-11
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UDOT Construction…………………………………………D-13
Executive Summary
The purpose of this joint FHWA/UDOT process review is to:
1) Examine UDOT’s procedures for producing engineer’s estimates before project
authorization and identify opportunities for improvement;
2) Evaluate the accuracy of UDOT’s engineer’s estimates, in relation to bids and final
construction cost, and;
3) Identify possible trends that could affect its accuracy. The trends that were looked at
in this report were UDOT philosophy, estimating methodology, the current
competitive bidding environment, and bidding behavior of contractors.
Below is a summary of the findings and recommendations that resulted from this review.
Finding: UDOT has adequate and detailed procedures in place in regards to reviewing the cost
estimates during the design phase and authorizations for cost increases. The procedures identify
specific thresholds that initiate the approval procedures for cost estimates.
Finding: UDOT has some measures in place relating to the engineer’s estimate and the quality
of the plans. However, when it comes to measuring the accuracy of the engineer’s estimate on
the project level, UDOT only looks at whether or not the low bid exceeds 110% of the engineer’s
estimate.
Recommendation: UDOT should develop a performance measure that measures the
accuracy of the engineer’s estimate, which covers both the high and low spectrum, on the
project level. One example of this would be to measure how many of the projects had the
low bid and/or final cost fall within +/- 10% of the engineer’s estimate.
Finding: FHWA has guidance that states the low bid should be within +/- 10% of the engineer’s
estimate for at least 50% of the projects. Below is a table of the results from the analysis of
UDOT’s Quarterly Final Estimate Reports and the 40 projects that were sampled for the Case
Studies.
Quarterly Estimate Reports
Federal and State Projects
Low Bid vs. Engineer’s Estimate Final Cost vs. Engineer’s Estimate
110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
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Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
49% 36% 15% 30% 41% 29%
Quarterly Estimate Reports
Maintenance Projects
Low Bid vs. Engineer’s Estimate Final Cost vs. Engineer’s Estimate
110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
37% 56% 7% 28% 40% 32%
Case Studies
Low Bid vs. Engineer’s Estimate Final Cost vs. Engineer’s Estimate
110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
60% 30% 10% 32.5% 42.5% 25%
Based on these results, UDOT is not meeting this criterion, except for maintenance
projects. Upon further review, it appears that the majority of these projects had the low bid fall
below 90% of the Engineer’s Estimate, which draws the conclusion that UDOT tends to
overestimate most of their projects.
Based on the analysis of specific bid items, the major items where the majority of the
bids were significantly lower than the engineer’s estimate (at least half below 90%) were traffic
control, public involvement, survey, clearing and grubbing, and structural concrete. The major
items where the majority of bids were significantly higher than the engineer’s estimate (at least
half above 110%) were mobilization, roadway excavation, borrow items, hot mix asphalt,
Portland cement concrete pavement, contractor furnished topsoil, pipe culverts, and erosion
control items.
Finding: UDOT relies heavily on historical bid price data to develop cost estimates. Typically,
this will provide a good estimate as long as unbalanced bid items are not averaged in, since those
bid items tend to skew the average. When it comes to the average unit bid prices, UDOT
designers use the average of all the bids or just the average of the bid items from the awarded
contractors, depending on their engineering judgment. This still leaves lots of room from
unbalanced bid items to be incorporated into the average.
Recommendation: UDOT should consider using a more detailed analysis in their
estimates for major contract items, such as structural steel, structural concrete, PCC and
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asphalt pavement, etc. This method is based on factors such as construction method,
production rates, equipment, and material costs.
Recommendation: If the historical data method is to be used, UDOT should experiment
with ways to reduce any skewness that would result from unbalanced bid items. An
example of this would be to take each bid item of a project and eliminate the high and
low bid for each item and incorporate the remaining items into the database for the
average unit bid prices.
Finding: Currently, UDOT does not keep the engineer’s estimate and the plan holders list
confidential during project advertisement. There are only four other state DOT’s that are known
to disclose the engineer’s estimate during advertisement. There are 44 other state DOT’s that
publish the planholders’ list on their webpage during advertisement. This knowledge can
influence bidding behavior among the contractors and increase the potential of bid collusion.
Recommendation: UDOT should consider removing the engineer’s estimate and plan
holders’ list from the webpage and keep them confidential during advertisement.
Finding: Although most of UDOT projects appear to have adequate competition, there are a
couple of patterns that were noted in this area.
There has been a steady decline in the number of bidders per project. In 2005, UDOT
averaged 2.54 bidders per project. This is the lowest it has been since UDOT started
tracking this measure in 1993. When comparing this measure with 14 other western State
DOT’s, UDOT ranked 14th out of 15 in terms of highest average bidders per project in
2005. The average number of bidders for all these 15 states was 3.32 for 2005. This
means that even though this decline in the number of bidders is a problem that is
occurring nationwide, the decline appears to be occurring to a greater extent in Utah.
Less than half of all the projects that had only one bidder showed adequate competition
based on the FHWA guidelines discussed on page 18, which was significantly lower than
the rest of UDOT’s projects.
Projects in Region 4 appear to have the most difficulty achieving adequate competition.
70% of their projects show adequate competition when the other regions ranged from
85% to 95%. This may be due to the fact that most of projects in Region 4 typically get
fewer bidders than in other regions. Based on the review of the quarterly final estimate
reports, Region 4 averaged the fewest number of bidders per project with 2.98 for
projects completed in 2004 and 2005. The other UDOT regions ranged between 3.5 and
3.8 bidders per project. Also, Region 4 had about twice as many projects with only one
bidder than any of the other UDOT regions.
Recommendation: UDOT should take aggressive steps to attract more bidders on their
projects. This may include working heavily with AASHTO, WASHTO, and/or the AGC
to develop solutions to this problem.
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Finding: There appears to be some inconsistency in certain aspects of estimating on UDOT
projects. The primary ones that were noticed were the different rates that were applied for
inflation from each designer that was surveyed and how UDOT and the consultants defined
contingency.
Finding: Currently, UDOT does not have any guidance or training for cost estimating available
for designers.
Recommendation: UDOT should develop cost estimating guidance and training to assist
designers in developing a cost estimate.
Finding: Personnel involved in developing the engineer’s estimate are not involved in the bid
analysis and in the decision to award the contract.
Recommendation: UDOT should allow personnel involved in the development of the
engineer’s estimate to be involved in the bid analysis and the decision to award the
contract. This would mean that someone who is knowledgeable about the estimate for a
particular project would be involved in the decision to award the project and it would
provide them an opportunity to spot bidding trends.
Finding: 367 estimated quantities of significant bid items, as defined on page 28, were
reviewed. From those items, 66% of those items were verified as being accurate with the plan
sheets. 3% of those items were identified as inaccurate with quantities that were obviously not
incorporated into the estimates. 2% of the items could not be verified due to lack of information
in the plans that showed how an item was estimated or dimensions that were not clearly defined
where sections and profiles were irregular. 34% were lump sum items and could not be verified.
Finding: When comparing the estimated quantities to the final for significant bid items,
approximately half of them had the final quantity within +/- 10% of what was estimated. From
the analysis of specific bid items, two main issues were noticed.
20% of the borrow items were removed from the contract, which raises the question of
why they were put in the plans in the first place.
The variability of the quantities for Dust Control and Watering was very significant. The
standard deviation for this item was significantly higher than any of the other items that
were reviewed. In fact, with the exception of the borrow items, the standard deviation
was at least twice as high as the rest of the items.
When occurrences like this happen on a regular basis, contractors may eventually become aware
of them and it can lead to bid unbalancing.
Finding: Currently, UDOT has no formal process for detecting materially unbalanced bids other
than spot-checking for irregularities.
During the case studies, significantly unbalanced bid items were identified. Out of the
809 bid items that were considered significant to the contract as defined on page 28, 221 of those
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items (27.3 %) had the low bid for that item identified as significantly unbalanced, as defined on
page 29. This means approximately 1 out of every 4 significant bid items raised the question of
whether or not the entire bid for the project was materially unbalanced. Specifically, items such
as Dust Control and Watering, Contractor Furnished Topsoil, and erosion control items showed
the most frequent occurrences of unbalancing. At least half of bids for these three items were
identified as significantly unbalanced.
Recommendation: UDOT should develop a formal process to aggressively detect and
track unbalanced bids.
Finding: Even though there is an anti-collusion statement in the UDOT standard specifications
that contractors must certify when submitting bids and information on bid history is collected in
PDBS, UDOT does not regularly look at this information with the purpose of identifying
possible bid rigging patterns, such as complementary bids, territorial allocation, joint ventures,
and bid rotation.
Recommendation: UDOT should regularly check for possible patterns of bid rigging.
There are software packages available for this from AASHTO and FHWA.
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CHAPTER 1 – INTRODUCTION
The Utah Department of Transportation (UDOT) and the Utah Division of the Federal
Highway Administration (FHWA) conducts biannual joint risk assessments to determine which
programs are at high risk of severely damaging the overall delivery of highway projects. Those
programs that are determined to be high risk are selected for a major joint UDOT/FHWA process
review to assess the current condition of the program and recommend improvements. The 2005
Joint FHWA/UDOT Risk Assessment identified the Engineer’s Estimate as high risk and was
selected for a major process review. This review focuses on construction cost estimating for bid
items that appear in the engineer’s estimate.
Purpose of the Review:
The purpose of this joint FHWA/UDOT process review is to:
1) Examine UDOT’s procedures for producing engineer’s estimates before project
authorization and identify opportunities for improvement;
2) Evaluate the accuracy of UDOT’s engineer’s estimates, in relation to bids and final
construction cost, and;
3) Identify possible trends that could affect its accuracy.
Scope of the Review:
The review consisted of four parts:
1) A documentation review of UDOT’s process based on current policies and manuals for
preparing Engineer’s Estimate.
2) A review of UDOT’s Quarterly Final Estimate Reports, which includes project
information, engineer’s estimate, original contract amount (low bid), and final
construction cost.
3) Case studies involving a review of bid tabulations from 40 sample projects.
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4) Surveys and interviews that involve questionnaires to personnel responsible for preparing
and reviewing engineer’s estimates and contractors that have worked on UDOT projects.
The data analysis of all four parts of the review was used to develop the findings and
recommendations in this report.
Review Personnel:
Joe Gregory FHWA, Utah Transportation Engineer (Team Leader)
Todd Emery FHWA, Utah Transportation Engineer
Everett Taylor FHWA, Central Federal Lands Rotational Engineer
Howard Anderson UDOT Engineering Services
Steve Anderson UDOT Engineering Services
Tony Lau UDOT Rotational Engineer
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CHAPTER 2 – DOCUMENTATION REVIEW
The following chapter describes UDOT’s current process for preparing engineer’s
estimates based on a review of current policies and manuals. The following documents were
reviewed:
o Design Process – September 2003
o Quality Control/Quality Assurance (QC/QA) Checklists
o UDOT’s Webpage
o UDOT’s Policy and Procedure
o Project Development Business System (PDBS)
o Quarterly Final Estimate Reports
o Project Delivery List
o Construction Cost Index
DESIGN PROCESS/ QC/QA CHECKLISTS:
UDOT’s Design Process is a manual for UDOT Region personnel outlining all the
activities that need to be performed during the environmental and design phase of the project.
Each activity sheets lists the description of the activity along with who is responsible and what
the deliverables are.
QC/QA checklists were developed in August 2004 by UDOT to assign those responsible
to perform quality control and quality assurance for specific design activities. In addition, each
checklist outlines the specific QC/QA activities that must be performed. The person responsible
for QC and QA must sign the checklist to verify that he/she did perform this activity.
Several activities in this manual refer to cost estimating. A summary table of these
activities is located on pages A-2 to A-12 of Appendix A. This is a very detailed process that
allows plenty of opportunity for the key personnel in both the UDOT Region and Headquarters
to constantly review and revise the cost estimate through the entire project development process.
COST ESTIMATING GUIDANCE:
Currently, UDOT has no written guidance for preparing engineer’s estimates available
for the region designers.
UDOT POLICY AND PROCEDURE:
UDOT Policy 08A6-3, “Advertising and Awarding Construction Contracts”, revised
8/3/98, describes what needs to happen when a project exceeds the budget by a certain amount.
Projects must be referred to the Commission if the engineer’s estimate, preconstruction
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engineering, construction engineering, right-of-way, and utility and agreements costs exceed the
programmed amount by 25% or $250,000 whichever is less. The Commission will consider and
decide whether or not to increase programmed funds. When bids exceed the engineer’s estimate
by more than 10%, the Executive Director may accept or reject the low bid either before or after
consulting with the Commission when the amount in excess of 110% of the Engineer’s Estimate
is not more than $100,000. When the excess is over $100,000 the Executive Director will
consult the Commission before accepting or rejecting the bid. In the event the Executive
Director accepts the low bid without consulting the Commission, a report of that action will be
given to the Commission at its next or subsequent meeting.
UDOT WEBPAGE:
UDOT’s website has information available to the general public regarding project cost
estimates. When UDOT advertises a project, their webpage includes what appeared to be the
exact amount of the total engineer’s estimate for that project. Upon further inquiry, it was
discovered that the amount that was posted on the webpage is actually 96% of the engineer’s
estimate. When asked why this was the case, no one from UDOT Engineering Services or
Construction could explain the reasoning behind it. If the amount posted on the webpage were
96% of the engineer’s estimate on all projects, it would not be difficult for contractors to realize
this when the bid tabulations are made public after the project is bid opening. In addition, the list
of plan holders is made available on the website during advertisement. This list includes all the
prime contractors, subcontractors, and suppliers who have picked up plans for that project. Each
company is coded as B (Bidder) or NB (Non-bidder). Examples from the UDOT webpage are
shown on pages A-12 to A-16 in Appendix A.
Once a bid opening has occurred, UDOT posts the bid tabulations on their website.
These bid tabulations include all the bids and the engineer’s estimate for each bid item. Also,
UDOT posts the Average Unit Bid Prices on their webpage and updates them quarterly. As a
result, contractors are currently bidding on UDOT projects knowing two things: the exact
amount of the engineer’s estimate and who the other potential bidders are.
Other State DOT’s were reviewed to see how many publish the engineer’s
estimate and planholders’ list during project advertisement. As of 2001, 4 other State DOT’s
publishes the engineer’s estimate. Most recent data indicated that 44 other State DOT’s publish
the planholders’ list. When bidders have this knowledge, they can easily manipulate their bids
and increase the potential for bid collusion.
PROJECT DEVELOPMENT BUSINESS SYSTEM (PDBS):
UDOT currently uses PDBS as an internal online database that provides project cost
information. PDBS has an Estimates Section that is used to assist designers in estimating.
PDBS provides a database of average historic bid prices that designers can apply the following
filters:
o Date Range
o Region
o County
o All bids or Awarded Only
o Units (Inch/Pound or Metric)
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o Project Funding (All, Fed/State. Federal, Maintenance, State)
o Quantity Range
The results of this search can be presented by Item Summary, Projects, or Contractors.
Based on a review of this, the Projects and Contractors list appear to be the same. Examples of
PDBS outputs using various filters are shown on pages A-17 to A-20 in Appendix A. All of
these tools are currently available to designers. Whether or not designers use these tools on all
UDOT projects is uncertain.
QUARTERLY FINAL ESTIMATE REPORTS:
UDOT produces final estimate reports on a quarterly basis. This report lists all the
projects that were completed in the reported quarter. They include project information,
contractor, engineer’s estimate, original contract amount and final cost. They also have a
measure that compares the final cost with the original amount. This data is separated by
federal/state and maintenance projects.
Also in this report is a graph that compares the total annual dollar amount of the
engineer’s estimate, the original contract amount, and the final amount with previous years. This
report includes a thorough breakdown of project overruns and change orders. This report has a
breakdown of projects where the low bid was 110% over the engineer’s estimate. Examples of
these outputs are located on pages A-21 to A-23 of Appendix A.
PROJECT DELIVERY LIST:
UDOT’s produces a project delivery list based on data entered into Electronic Program
Management (ePM). This includes a list of all the projects that have not been advertised yet and
another list of all the projects that have recently been advertised. These lists are color-coded to
highlight items of concern. For example, projects where the current cost estimate is greater than
the commission approved amount between 0% and 10% are coded yellow. Projects where the
current cost estimate is greater than the commission approved amount by greater than 10% are
coded red.
For projects that have been advertised and awarded, UDOT uses the Bid Variation Index
(BVI) as a measure for the quality of the plans that were advertised. The BVI is calculated using
the following formula:
Standard Deviation of all the bids($)
BVI 1
Low Bid($)
According to this formula, the closer the BVI is to 1.00, the higher quality there is in the
plans. The BVI correlates the variability in the bids with the quality of the plans. This is based
on the premise that higher quality plans means less uncertainty in the project, which means less
risk that is place on the contractor, which means less variability there will be in the bids.
UDOT color-codes the BVI as follows:
0.85 110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
49% 36% 15% 30% 41% 29%
Quarterly Estimate Reports
Maintenance Projects
Low Bid vs. Engineer’s Estimate Final Cost vs. Engineer’s Estimate
110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
37% 56% 7% 28% 40% 32%
Case Studies
Low Bid vs. Engineer’s Estimate Final Cost vs. Engineer’s Estimate
110% of 110% of
Engineer’s 10% of Engineer’s Engineer’s 10% of Engineer’s
Estimate Engineer’s Estimate Estimate Engineer’s Estimate
Estimate Estimate
60% 30% 10% 32.5% 42.5% 25%
Based on these results, UDOT is not meeting this criterion, except for maintenance
projects. Upon further review, it appears that the majority of these projects had the low bid fall
below 90% of the Engineer’s Estimate, which draws the conclusion that UDOT tends to
overestimate their projects.
Based on the analysis of specific bid items, the major items where the majority of the
bids were significantly lower than the engineer’s estimate (at least half below 90%) were traffic
control, public involvement, survey, clearing and grubbing, and structural concrete, and. The
major items where the majority of bids were significantly higher than the engineer’s estimate (at
least half above 110%) were mobilization, roadway excavation, borrow items, hot mix asphalt,
Portland cement concrete pavement, contractor furnished topsoil, pipe culverts, and erosion
control items.
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Finding: From the 367 estimated quantities of significant bid items that were reviewed, 66% of
those items were verified as being accurate with the plan sheets. 3% of those items were
identified as inaccurate with quantities that were obviously not incorporated into the estimates.
2% could not be verified due to extreme variability in measure earthwork items of or lack of
information in the plans that showed how an item was estimates. 34% were lump sum items and
could not be verified.
Finding: When comparing the estimated quantities to the final for significant bid items,
approximately half of them had the final quantity within +/- 10% of what was estimated. From
the analysis of specific bid items, two main issues were noticed.
20% of the borrow items were removed from the contract, which raises the question of
why they were put in the plans in the first place.
The variability of the quantities for Dust Control and Watering was very significant. The
standard deviation for this item was significantly higher than any of the other items that
were reviewed. In fact, with the exception of the borrow items, the standard deviation
was at least twice as high as the rest of the items.
When occurrences like this happen on a regular basis, contractors may eventually become aware
of them and it can lead to bid unbalancing.
TRENDS:
Several factors can influence the engineer’s estimate, some of which are outside of the state’s
control. Below are some trends that were observed during this review.
ESTIMATING METHODOLOGY:
Finding: UDOT’s primary method for estimating is based on historical bid price data. This
means that the average bid prices (either for all the bids or just the bids from the awarded
contractor, depending on the designer’s preference) are used to establish a unit cost estimate and
adjusted for project conditions. For items where there are no historic data, designers rely on
contractors and suppliers for cost estimates. Typically, the use of historic bid prices will provide
a good estimate as long as unbalanced bid items are not average in, since those bids will skew
the average.
Recommendation: UDOT should experiment using a more detailed analysis in their
estimates for major contract items, such as structural steel, structural concrete, PCC and
asphalt pavement, etc.. This method is based on factors such as construction method,
production rates, equipment, and material costs.
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Recommendation: If the historical data method is to be used, UDOT should experiment
with ways to reduce any skewness that would result from unbalanced bid items. An
example of this would be to take each bid item of a project and eliminate the high and
low bid for each item and incorporate the remaining items into the database for the
average unit bid prices.
UDOT PHILOSOPHY:
Finding: Like most programs, what a State DOT views as important will determine what
direction the program is going. When it comes to engineer’s estimates, UDOT views funding as
the most important component. UDOT has some measures in place related to the engineer’s
estimate and the quality of the plans.
However, when it comes to measuring the accuracy of the engineer’s estimate on the
project level, UDOT only looks at whether or not the low bid exceeds 110% of the engineer’s
estimate. It is this threshold that defines their contingency and determines whether additional
funding is needed to in order to award with the project. Although this measure is good from a
project and funding standpoint, it does not give a complete picture as to the accuracy of the
engineer’s estimate, since it doesn’t take into account extremely low bids. As shown in the
review of the quarterly final estimate reports and the case studies, the majority of the low bids
were below 90% of the engineer estimates. Based on further analysis, the argument can be easily
made that UDOT tends to overestimate their projects. Again, this is not necessarily bad from a
project and funding standpoint, but the intent of the engineer’s estimate is to give an accurate
picture of the cost of the project.
The closet measure that UDOT uses to determine the accuracy of the engineer’s estimate
is a comparison of the annual sum of the engineer’s estimate, the low bid, and the final cost.
This may give an indication of the accuracy as a whole, but it does not reflect it on the project
level.
Recommendation: UDOT should develop a performance measure that measures the
accuracy of the engineer’s estimate, which covers both the high and low spectrum, on the
project level. One example of this would be to measure how many of the projects had the
low bid and/or final cost fall within +/- 10% of the engineer’s estimate.
CONFIDIENTIALITY:
Finding: Currently, UDOT does not keep the engineer’s estimate confidential during project
advertisement. This knowledge can influencing bidding behavior among the contractor and
increases the potential of bid collusion. Even though the engineer’s estimate on UDOT’s
webpage is 96% of the actual engineer’s estimate, contractor’s can easily detect that given the
fact that the bid tabulations, along with the actual engineer’s estimate, is placed on the webpage
after bid opening. There are only four other state DOT’s that are known to disclose the
engineer’s estimate during advertisement.
Also, UDOT does not keep the plan holder’s list confidential during advertisement.
There are 44 other state DOT’s that publish the planholders’ list on their webpage during
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advertisement. When contractors know whom their potential competitors are when bidding a
job, that can influence bidding behavior and increase the potential for bid collusion.
Recommendation: UDOT should remove the engineer’s estimate and plan holders’ list
from the webpage and keep them confidential during advertisement.
COMPETITION:
Finding: Based on the analysis of the quarterly reports and the case studies, approximately 80%
of all the UDOT projects show adequate competition based on FHWA guidelines. Although
most of UDOT projects appear to have adequate competition, there are a couple of patterns that
were noted in this area.
There has been a steady decline in the number of bidders per project. In 2005, UDOT
averaged 2.54 bidders per project. This is the lowest it has been since UDOT started
tracking this measure in 1993. When comparing this measure with 14 other western State
DOT’s, UDOT ranked 14th out of 15 in terms of highest average bidders per project in
2005. The average number of bidders for all these 15 states was 3.32 for 2005. This
means that even though this decline in the number of bidders is a problem that is
occurring nationwide, the decline appears to be occurring to a greater extent in Utah.
Less than half of all the projects that had only one bidder showed adequate competition
based on the FHWA guidelines discussed on page 18, which was significantly lower than
the rest of UDOT’s projects.
Projects in Region 4 appear to have the most difficulty achieving adequate competition.
70% of their projects show adequate competition when the other regions ranged from
85% to 95%. This may be due to the fact that most of projects in Region 4 typically get
fewer bidders than in other regions. Based on the review of the quarterly final estimate
reports, Region 4 averaged the fewest number of bidders per project with 2.98 for
projects completed in 2004 and 2005. The other UDOT regions ranged between 3.5 and
3.8 bidders per project. Also, Region 4 had about twice as many projects with only one
bidder than any of the other UDOT regions.
Recommendation: UDOT should take aggressive steps to attract more bidders on their
projects. This may include working heavily with AASHTO, WASHTO, and/or the AGC
to develop solutions to this problem.
UNBALANCING OF BIDS:
Finding: Even though a State DOT cannot fully prevent contractors from unbalancing their
bids, but they can take steps to identify bids that are materially unbalanced and take appropriate
action when they do occur. Currently, UDOT has no formal process for detecting materially
unbalanced bids other than spot-checking for irregularities.
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Draft FINAL
ENGINEER’S ESTIMATES PROCESS REVIEW
During the case studies, significantly unbalanced bid items were identified. Out of the
809 bid items that were considered significant to the contract as defined on page 28, 221 of those
items (27.3 %) had the low bid for that item identified as significantly unbalanced, as defined on
page 29. This means approximately 1 out of every 4 significant bid items raised the question of
whether or not the entire bid for the project was materially unbalanced. Specifically, items such
as Dust Control and Watering, Contractor Furnished Topsoil, and erosion control items showed
the most frequent occurrences of unbalancing. At least half of bids for these three items were
identified as significantly unbalanced.
Recommendation: UDOT should develop a formal process for detecting materially
unbalanced bids.
BID RIGGING:
Finding: Like unbalanced bids, the State DOT cannot fully prevent bid rigging, but they can
take steps to identify such collusion like complementary bids, territorial allocation, joint
ventures, and bid rotation. Even though there is an anti-collusion statement in the UDOT
standard specifications that contractors must certify when submitting bids and information on bid
history is collected in PDBS, UDOT does not regularly look at this information with the purpose
of identifying possible bid rigging patterns.
Recommendation: UDOT should regularly check for possible patterns of bid rigging.
There are software packages available for this from AASHTO and FHWA.
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