Attachment_4 _Cost_Estimation_Procedures.pdf

Attachment 4

Cost Estimation Procedures

FA3022-15-R-0009

3/25/15

a. Throughout the duration of the contract, only the following cost data items shall be utilized:

1) RSMeans

TM

Heavy Construction Cost Data (hardcopy, current year), bare costs localized to Columbus Mississippi Cost City Index (CCI).

2) RSMeans

Heavy Construction Database (current year) with “RSMeans

Online Construction Cost Estimator” system, (Automated Estimating System), bare costs localized to Columbus, Mississippi.

3) Special Columbus Items (supplement to be created during contract period).

b. The contractor’s coefficient shall contain all costs other than the pre-priced unit prices contained in RSMeans

TM

. The coefficient is a numerical factor that represents the contractor costs (indirect and direct costs, sales tax, etc.) and profit not considered included in the RSMeans

TM

cost data. The contractor’s coefficient must contain all contractor’s costs inclusive of profit, all overhead (to include home office and field overhead), labor burden, bond premiums, insurance, inaccuracies in the RSMeans

TM

cost data and the CCI, general and administrative expenses, subcontractor markup, contingencies (such as changes in wage rates, inflation and geographical location of work), mobilization/demobilization other than heavy equipment transport, and all other costs including but not limited to, compliance and documentation required by law or these specifications, tax laws, protection and/or moving of Government property. The coefficient shall also include costs described as costs to provide submittals, interface with

Government representatives, coordination with occupants and other contractors. The coefficient shall also include costs for:

- Mobilization (office set-up, general transportation, etc. – this is not mobilization for heavy equipment) and close out for the total contract and each Task Order

- Clean up

- Surveying

- Destructive and non-destructive testing required for quality assurance

- Tarpaulins and other temporary controls

- Safety (e.g. safety rails, safety nets, tethers, face and clothing protection, etc.)

- Traffic and work site signs, barriers, and flag persons

- Project management and supervision

- Quality control

- Office management and equipment (to include specialized hardware/software)

- Depreciation of mobile office(s)

- Subcontractor profit

- Required Drawings, submittals, permits, licenses and other risk to doing business

- Site Security

- Portable toilets

- Keeping grass within worksite, staging area, and storage areas mowed to match adjacent areas

- Cost as described elsewhere in these specifications as being included in the coefficient

c. Contingencies will be adjusted by access to new RSMeans

Databases online. The offeror’s price percentage factor must contain all contractor costs including, but not limited to, overhead, G&A, profit, bond premiums, insurance, design costs, and subcontractor costs. No allowance whatsoever will be made later for any other purpose.

Coefficients will not be adjusted for the life of the contract.

d. The means of cost estimation shall be the most recent quarterly update of the

“RSMeans

TM

Online Construction Cost Estimator” estimating system. Included in the contractor’s submitted proposal shall be one hard copy (detailed level report) and two electronic copies of the contractor’s “RSMeans

TM

Online Construction Cost Estimator” estimate. One electronic copy will be Microsoft Excel format and the other will be in

Adobe Acrobat PDF format.

e. All cost estimates shall use the 50 division breakout following Master_Format 2010.

f. All estimates from the contractor shall use assembly type line items when available in the

RSMeans

TM

Heavy Construction Data. The contractor will not break out individual line items when an assembly line item is available that incorporates all applicable individual line items. Overhead and profit must be backed out of the assembly line price in order to arrive at the appropriate bare cost.

g. Each line item in the RSMeans

Heavy Construction Cost Data book and in the

“RSMeans

TM

Online Construction Cost Estimator” estimating software shall have unit prices localized / indexed to Columbus, MS.

h. The contractor shall use the notes section in the “RSMeans

Online Construction Cost

Estimator” to explain and justify the use of the line items and quantities in the contractor’s estimates.

i. When deciding on a line item that has a max, average, and min cost the average cost shall be used. If there is only a max and min cost, the negotiated quantity shall be equally split between the maximum and minimum line items. (i.e., if the negotiated quantity was 10, then 5 would be used under the max and 5 would be used on the min line items)

j. The “Special Columbus Items” (SCI) will be created throughout the life of the contract as a compilation of negotiated Non-Prepriced items (NPIs) with prices. Unit prices in the

SCI will be adjusted each year to account for changes in construction costs.

k. Each Task Order (TO) estimate shall use line item prices (bare costs, localized) from the

RSMeans

TM

Heavy Construction Cost Data book or the “RSMeans

TM

Online

Construction Cost Estimator” software system. These line item prices shall be multiplied by the quantities to be installed. Proposals and estimates shall be in the “unburdened” format, without overhead, profit, taxes, etc. The line items will be subtotaled and multiplied by the contractor’s coefficient. That final price will be the value of the TO issued to the contractor. There are no other multipliers or add-ons to the subtotal price.

Each TO becomes a firm, fixed price contract and there will be no changes to price, quantities, or negotiated methods except as modified by the CO. Each estimate the contractor submits becomes the property of the Government. The contractor is encouraged to thoroughly investigate the requirements of each TO and include those costs into the estimate. Prior to negotiations, the Government will make reasonable effort to discover line items which are missing from the contractor’s estimate. After TO award there will be no modifications to compensate the contractor for line items accidentally excluded. Conversely, there will be no modifications to extract items inadvertently left in the contract. The contractor shall not insert non-relevant or duplicate line items.

l. Estimates shall include all pertinent line items for the project as described in the SOW, in project drawings and sketches, and at the site visit. Calculations used in preparing estimates for TOs shall be based on “net,” “in-place” quantities. Pre-priced line items are

“in-place” requirements and inclusive of all work necessary to provide a complete, functional product. Additional quantities for waste, lap, shrinkage, expansion, compaction, damage due to delivery, etc., will not be allowed unless specifically stated in the RSMeans

TM

Heavy Construction Cost Data book and in the “RSMeans

TM

Online

Construction Cost Estimator” estimating system as a component of the line item cost, (i.e.

it is specifically stated in the aforementioned references to allow 5% waste for concrete ground pours).

m. The cost estimation procedures and RSMeans line items are used as a means for determination of a fair and reasonable price for the work described in the SOW. The contractor shall be responsible for completing all work required by the SOW, drawings, submittals, and other contract documents. The only instances in which funds will be added or removed after TO award will be Government directed addition to or modification of existing work, differing site conditions, or liquidated damages.

Non-Prepriced Items

a. Non-Prepriced work (i.e. work not priced by RSMeans or the SCI) shall not exceed

25% of the total Task Order amount. The Contracting Officer may negotiate items of work not covered by this contract but within its scope and general intent at any time during the contract term. Non-prepriced work shall be noted on the contractor’s proposal; include bare costs for materials, equipment, and labor; and shall be multiplied by half the contractor’s coefficient (i.e. if contractor’s coefficient 1.10, NPI would be multiplied by 1.05).

b. Any subcontractor overhead, profit, taxes, bond, or design costs shall NOT be included in the non-preprice unit cost as these items are covered by the contractor’s coefficient.

Non-prepriced items may subsequently be added to the basic task defined in the

Technical Specifications and the Unit Price Book (UPB) by modification of the contract.

Non-prepriced work shall be so noted on the negotiated proposal of each task order.

c. In the event that an NPI will be required, the cost per unit must be negotiated. The burden of justification for the dollar value of the NPI falls on the Contractor, who must provide documentation from three independent sources of the actual item cost.

Documentation shall be provided at negotiations.

d. NPI’s shall be added to the SCI twice each year, on the last day of October and April each year. After being added to the SCI, the item of work will no longer be considered an NPI, and therefore will not be counted for determination of the 25% limit.

e. Once each year, all existing SCI line items will be adjusted to account for changes in market trends using the “Economic Price Adjustment” as stated below:

The Market Trends Construction Cost Index (CCI) for the city of Columbus, MS as published in the McGraw Hill publication “Engineering News Record (ENR)” shall be used to determine adjustments to the SCI line items for each calendar year of the ordering period under this contract. To determine the amount of adjustment, the CO will calculate the change in the index appearing in the issue of

ENR published during the month prior to the beginning of the subsequent yearly ordering period from the index of one year prior. Eighty percent of this variation will be applied to each SCI line item. If the publication of the index should discontinue, the parties to the contract will negotiate a replacement index or new contract provision. If a replacement index or contract provision cannot be agreed upon, the CO may unilaterally determine the contract adjustment method, and the contractor may dispute the determination under the Disputes Clause. Adjustments to SCI line items shall be determined in accordance with the following formulae:

1) To calculate the Adjustment Factor use:

F = ((CCIc – CCIi) * 0.8 +1

Where:

F = adjustment factor

CCIc = the ENR index for the new year

CCIi = the ENR index from the year previous

2) To calculate the new SCI line item cost use:

C = Ci * F

Where:

C = the new SCI line item cost

Ci = the current SCI line item cost

F = adjustment factor

Adjustment calculations for second year of ordering period and subsequent years shall each be based on the SCI line item and the ENR index from one-year prior.

Sample Economic Price Adjustment Calculations

Action ENR Index Adjustment Factor SCI Price

Year 1 110.0 N/A $25.00

Year 2 115.4 1.039 $25.98

Year 3 130.2 1.103 $28.66

Year 4 125.1 0.969 $27.77

Year 5 100.0 0.840 $23.33

NOTE: Round calculations as done in this example. ENR indices and SCI line item prices listed are fictitious and for demonstration purposes only.