LRWRP_Design_Report_Appendix_B.pdf

APPENDIX B

MEMORANDUM

TO:

FROM:

Cc:

Azee Malik Ken Fonda Michael Anderson

Don Snowden

Butch Matthews

SUBJECT: Basis of Estimate of Probable Construction Cost Lompoc Regional Water Reclamation Plant Consolidation of Plantwide Individual Estimates Conceptual Estimate 12/17/04

This memorandum presents an overview of the estimate of probable construction cost (estimate) prepared for the Lompoc Regional Water Reclamation Plant Upgrade project. The memorandum contains the following information:

Evolution of this Estimate Type of Estimate Estimating Methodology Direct Cost Development Indirect Cost Development Bidding Assumptions Contractor Markup's Construction Schedule Contingency

Evolution of this Estimate

This estimate represents a consolidation of several previously prepared estimates prepared for individual process improvements. The individual process estimates for the Headworks Improvements and the Solids Handling Facilities were prepared by the Estimating Department, with the balance of the estimates prepared by the Design Team with review by the Senior Estimator.

The estimate for the Headworks was prepared using information contained in the Technical Design Memorandum from Mike Anderson. The estimate for the Solids Handling Facilities was prepared c:\aawork\saa~mlu\estimates\lompoc consolidated\basis of assumptions-lompoc consolildated.doc//// Page 1 of 20 using conceptual flow schematic and process sizing furnished by Ken Fonda in his October 7th e-mail to Butch Matthews, and as modified in several subsequent e-mails by Ken Fonda and Azee Malik of the BC Irvine office. The balance of the estimates were prepared using information contained in Technical Design Memoranda from Mike Anderson, Dave Murray, Ron Appleton and Azee Malik.

Type of Estimate

This is a Class 4 estimate. A Class 4 estimate is defined as a Pre-Study or Feasibility estimate prepared at the 1 percent to 15 percent design completion level that has an expected accuracy of minus 30 percent to plus 50 percent of the actual construction cost. Class 4 estimates are used for project screening, economic and/or feasibility analysis, and approvals to move to the next stage. It is our understanding that the site layout diagram and sizing documents provided to us are equivalent to a 5 percent design.

Estimating Methodology

This estimate was prepared using parametric factors, with scaled detailed pricing for equipment and specifically known linear quantities.

This estimate includes direct labor costs, bulk purchased materials, process equipment outlined in the process listing, and construction equipment.

Construction labor crew hours were calculated from production rates contained in documents and/or electronic databases published by R.S. Means, Mechanical Contractors Association (MCA), National Electrical Contractors Association (NECA), Rental Rate Blue Book for Construction Equipment (Blue Book), and Richardson Engineering Services.

The estimate was prepared using Brown and Caldwell's estimating system, which consists of a Windows based commercial estimating software engine, and utilizing Brown and Caldwell's Material and Labor database, modified to include historical project data and the latest vendor and material cost information, and other costs specific to the locale of the project.

Direct Cost Development

The costs associated with the General Provisions and the Special Provisions, which are collectively referred to as Contractor General Conditions (CGC), were estimated. The estimates for CGC's are divided into two groups: a time-related group (e.g., field personnel), and non-time-related group (e.g., bonds and insurance). Labor burdens such as Health and Welfare, Vacation, Union Benefits, Payroll Taxes and Workers Compensation Insurance are included in the labor rates used. No trade discounts were considered.

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Indirect Cost Development

Sales tax at the rate of 8.25% is included. A percentage allowance for home office expense was applied to categories of cost at a rate of 3.9 percent. This rate is typical for a construction contractor with an annual volume of over $10,000,000 and is based on Means Heavy Construction Cost Data, 2004.

The contractor's cost for Builder's Risk, Liability and Auto Insurance has been included in this estimate. Based on historical data, this is typically 2 percent of the overall construction contract amount. This amount has been included in this estimate of probable cost as a lump sum item and is added to the totals after the markups have been applied to the appropriate items.

Bidding Assumptions

The following are the assumptions considered in the development of the estimate.

Bidders must hold a valid, current General Contractor's License.

Bidders will develop estimates with a competitive approach to material pricing and labor productivity, and will not include allowances for changes, extra work, unforeseen conditions, or any other unplanned costs.

Estimated costs are based on a minimum of four bidders. Actual bid prices may increase for fewer bidders or decrease for a higher number of bidders.

Bidders will account for General Provisions and Special Provisions of the contract documents and will perform all work except Electrical and Sludge Removal, which will be performed by traditional specialty subcontractors.

Estimating Assumptions

Contractor markup is based on conventionally accepted values, and then adjusted for project-area economic factors.

Contractors perform the work during normal business hours of 7 a.m. to 5 p.m., Monday through Friday. No allowance has been made for shift work or weekend work.

Contractors have total access for lay-down areas and mobile equipment.

Major equipment costs are based on scaled historical pricing of like equipment.

There is sufficient electrical power to feed the specified equipment. The local power company will supply power and transformers suitable for this facility.

Process Equipment vendor training, using vendors' standard Operations and Maintenance (O&M) material, is included in the purchase price of major equipment items where so stated in that quotation.

Dewatering of the site will be minimal; 'cost for incidental dewatering is assumed included.

No Piling was assumed for any of the structures.

9. A disposal site which accepts removed soil/debris exposed to municipal sewage/sludge is available within 10 road miles.

10. Demolition of the existing Trickling Filter assumed a bottom thickness of 1.0 ft.

11. Demolition of the existing Trickling Filter assumed a bottom slab thickness of 1.5 ft.

12. Demolition of the existing Trickling Filter assumed filter blocks 10 inches thick.

13. Demolition of the existing Trickling Filter assumed a side wall thickness of 1 ft.

14. Demolition of the existing Trickling Filter assumed a center pier/foundation of 10 ft x 10 ft x 5 ft tall.

15. Demolition of the existing Trickling Filter assumed a 5 ft x 5 ft collection trough with wall and bottom thickness of 1 ft.

16. The new DAFT tank walls were assumed to be 1.5 ft thick.

17. Excavated earth is suitable for dike construction. A balanced cut/fd was assumed.

18. Calculations for the Bentonite lining of the ponds assumed 2# / s.f. application rate. The application rate can vary considerably with the type of soil being sealed, with 2#/ s.f. being a rough average for all soil types. The actual cost for the bentonite option may vary considerably upon actual permeability testing of the soil.

19. Rough scaling of existing lagoons yielded a 240 ft x 270 ft top dimension.

20. Side slopes for all lagoon calcs were assumed at 2'/2:1.

21. Sidewater depth for lagoon calcs was assumed at 13 ft, with 2 ft freeboard.

22. Divider Wall calcs assumed a 2 ft thick base, with a 1 ft bury.

23. No new structure was interpreted for the Air Drying Beds, except for the specifically mention pre-engineer open sided building over the smaller Storage Area.

24. The new Pump Station in Alt "B" was assumed to consist of a 2' thick bottom slab, with 1.5' walls and a 1 ' thick roof.

25. The new Grit Basin was assumed to consist of a 2' thick bottom slab, with 1' thick walls.

The pump shed portion of the Grit Facility consists of a 1' thick bottom slab, with N O walls and a metal roof. The Troughs portion of the Grit Facility consists of 1' thick bottoms and walls. Trough width and height was assumed to be 5' each.

26. Grit Bins vary widely in cost. Because of the small amount of grit included in the Technical Memorandum, the lower priced Grit Bin was used for this estimate.

Estimating Exclusions

1. No rock excavation or imported fill was included.

2. Excavated material was assumed to be in demand within 10 miles of the project. No disposal fee has been included for the excavated material.

3. 0&M costs for the project with the exception of the vendor supplied 0&M manuals.

4. Asbestos remediation/disposal from existing buildings.

5. Utility agency costs for power modifications.

6. Removal of soil/debris contaminated by hazardous material.

7. None of the existing structures to be demolished include piling.

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Contractor and Estimate Markup's

Item Rate % Prime contractor

Labor (Employer Payroll Burden) Material

Subcontractors

Performance Bond 1 1

Equipment General Conditions / Profit

Payment Bond 1

- - - I A ,.?

Sales l'ax I 8.23

Subcontractor M a r k u ~ s : I Same as Prime Escalation to midpoint of1 8.71 construction: I

Labor Markup, 18 Percent. The labor rates used and shown in the estimate were derived chiefly from the wage rates published by R.S. Means, 2004 edition (Means). The Means labor rate manual, (page v, paragraph 3), outlines those items that are not included in the published wage rates, which are Payroll Tax and Insurance (PT&I), FICA, Medicare, Workers Compensation Insurance, travel subsistence, etc. Means notes that their published wage rates must be adjusted to compensate for these items. The local State Prevailing Wage Rates, April 2004, is consistent with the wage rates published by Means, and the State identifies the additional costs that are beyond the raw labor hourly rate. In addition to these, the General Contractor (GC) typically adds a percentage to each raw labor dollar to cover the following:

overhead and profit, payroll and accountirig cost, additional insurance, retirement, 401k contributions, and sick leave/vacation cost.

Material Markup, 15 Percent. This markup consists of the additional cost the contractor must bear beyond the raw dollar amount for material and/or equipment. This includes shop drawing preparation, submitting and/or re-submittal cost, purchasing and scheduling materials and equipment, accounting charges which included invoicing and payment, inspection of received goods, receiving, storage, overhead and profit.

Subcontractor Markup, 5 Percent. This markup consists of the GC's costs for subcontractors who perform work on the site. This includes the costs associated with shop drawings, review of subcontractor's submittals, scheduling of subcontractor work, inspections, processing of payment requests, home office accounting and overhead and profit on subcontracts.

Equipment Markup, 15 Percent. This markup consists of the costs associated with operating the equipment used in the project. Most GC's will rent rather than own the equipment and then will charge each project for its equipment cost. The equipment rental cost does not include fuel, delivery and pick-up charges, additional insurance requirements on rental equipment, accounting cost related to home office receiving invoices and payment. The crew rates used in the estimate, however, do account for the equipment rental cost. Also, some of the larger contractors will have some or all of the equipment needed to accomplish the particular task, but in order to recoup their initial purchasing cost they will charge the project an internal rate for the equipment use, which is similar to the rental cost of equipment. The GC will include an overhead and profit percentage to each individual piece of equipment whether rented or owned.

Sales Tax (Material and Equipment). This is the tax that the contractor must pay according to state and local taxation laws. The percentage is applied to both the material the GC purchases as well as the equipment cost for rental equipment. The percentage is based on the local rates in place at the time the estimate was prepared.

Performance and Payment Bonds, 1 Percent Each (2 percent Total). BC applies a rate of 1 percent for each bond required in the contract documents. Based on historical and industry data, this range can be 0.75 percent to 1.25 percent of the project total, and is based on several factors. The contributing factors include such items as size of the project, regional costs, contractor's historical record on projects this size, project complexity, and current bonding limits. Based on these, BC uses 1 percent for each, which we have determined to be reasonable, on average, for heavy construction projects.

Material Shipping & Handling. This can range from 0.5 percent to a high of 2 percent, and is based on the type of project, material makeup of the project, and the region and location of the project relative to central distribution cities. This cost covers delivery cost from the vendors, unloading cost (and in some instances loading and shipment back to vendors for rebuilt equipment), site paper work, and inspection of materials prior to unloading at the project site.

BC typically adjusts this percentage up or down based on the amount of materials and whether the vendors have included the shipping cost k the quotes we have used to prepare the estimate.

Also, this cost includes the GCYs cost to obtain local supplies, e.g., oil, gaskets, bolts, and the like, that may be missing from the equipment or materials shipped.

Contractor Startup, Training, and O&M Manuals. This cost markup is often confused with either vendor startup or owner startup. This is the cost the GC incurs on the project in addition to the vendor startup and owner startup. The G C generally will have project personnel assigned to facilitate the installation, testing, startup, and 0 & M Manual preparation for equipment that is put into operation by either the vendor or owner. These project personnel often include an electrician, pipe fitter or millwright, and/or I&E technician. These personnel are not included in the basic crew makeup to install the equipment and are there to assist and trouble shoot the startup and proper running of the equipment. The GC incurs a cost for startup, i.e., consumables (oil, fuel, filters, etc.), startup plans and schedules, startup meetings and coordination with the plant personnel in other areas of the plant operation.

Builders Risk, Liability, and Auto Insurance, 2 Percent (Total). This is a combined percentage to address all three items. There are many factors which make up this item, including c:\aawork\aaa~mlu\estimates\lompoc consolidated\basis of assumptions-lompoc consolildated.doc//// Page 6 of 20 the contractor's track record for claims in each of the categories. Another factor affecting insurance rates has been a dramatic price increase across the country over the past 2 years due to domestic and foreign influences. Consequently, in the construction industry we have observed a range of 0.5 percent to 1 percent for Builders Risk, 1 percent to 1.25 percent for General Liability, and 0.85 percent to 1 percent for Automobile Insurance. Many factors affect each area of insurance, including the individual project complexity and the contractor's requirements and history. Rather than use numbers from a select few contractors, we believe it is more prudent to use a combined percentage of 2 percent to better reflect the general cost across the country.

Depending on the criteria previously outlined, the actual cost could be higher or lower based on the bidder, region, and insurance climate at the time the project is bid, and the contractor's insurability.

Construction Contingency, 23 Percent. The contingency factor is used to cover items that are not designed due to the design development stage of the project, unforeseen conditions, area economic factors, and general project complexity that can not be addressed in each of the labor and/or material installation costs. Based on industry standards, this can range from 10 percent to 50 percent and is based on the completeness of the project documents, project complexity at the current design stage and area factors. Below is an excerpt from the standard used by both the Association for the Advancement of Cost Engineering (AACE) and the American Society of Professional Estimators (ASPE). The types of estimates and the associated contingency factors for each are identified in ANSI Standard Reference 294.2-1 989.

"Expected Accuracy Range: Typical accuracy ranges for Class 4 estimates are -15% to -30% on the low side, and +20°/o to +50°/o on the high side, depending on the technological complexity of the project, appropriate reference information, and the inclusion of an appropriate contingency determination. Ranges could exceed those shown in unusual circumstances."

Escalation to Midpoint for Labor, Materials and Subcontractors, 8.71 Percent per year per each item. In addition to contingency, it is customary for projects that will be built over several years to include an escalation to midpoint in the estimate to account for escalation of labor, material, and equipment costs beyond present day values over the life of the project.

Typically, this is calculated by extrapolating the Engineering News Record (ENR) Building Cost Index (BCI) for the project area to the midpoint of construction, using an anticipated rate of escalation.

Construction Schedule & Escalation

Construction of this project is anticipated to begin March 27,2006 and extend over a period of 24.8 months, resulting in a completion date of April 9, 2008. Therefore, the midpoint of construction is approximately 27.9 months from now, resulting in an escalation factor of 8.71% based upon Engineering News-Record's latest projected escalation rate for 2005.

Contingency

This estimate of probable construction cost is based on a site layout schematic with elemental process sizing. At this level, contingency may vary from -30 to 4-50 percent. For a project of this size and complexity, it is reasonable to expect that the contingency would be in the mid to high range.

Allowances for Known but Undefined Work

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E L L

Monday, December 20,2004 12:22:22 PM

Project Name: Lompoc RWRP, Upgrade Project

Project Number:: 1265 17-1 19-000

Client:

Estimator(s)::

Estimating Office::

Estimate Issue Number::

Estimate Original Issue Date::

Estimate Revision Number::

Estimate Revision Date::

BC Project Manager::

Estimate QAJQC Reviewer::

Estimate QAIQC Date::

Lompoc Regional Water Reclamation Plant:

Don Snowden West Monroe December 20,2004

Azee Malik Butch Matthews December 20,2004

PROJECT LOCATION / PROCESS AREA

TM 1 - Headworks Improvements

TM2 - Secondary Treatment Facility

TM3 - Metals Removal Facility

TM4 - Effluent Filters

TM5 - Ultra Violet Disinfection

TM6 - Solids Handling Facility

TM7 - Electrical, instrumentation & Controls

TM8 - Cogeneration (Omitted, Not Recommended)

TM9 - Miscellaneous Improvements (Boiler Contingency)

TM 10 - Yard Piping

Lompoc Regional Water Reclamation Plant Lompoc RWRP, Upgrade Project

TMOI - Headworks Improvements (AH "B")

TM02 - Secondary Treatment Facilities 17,120,128

TM03 - Metals Removal Facilities 4,364,088

TM04 - Effluent Filters

TM06 - Solids Handling Facilities (Base Option) 5,270,975

TM07 - Instrumentation & Controls

TM09 - Miscellaneous Improvements 1 Boiler Allowances 1,648,851

Lompoc Regional Water Reclamation Plant Lompoc RWRP, Upgrade Project

Grand Item Item Description Total

TMOI - Headworks lmprovements (Alt "B')

I 1 02 - Pump Station Bulkheads

1103 - Inffuent Pump Station

I 1 05 - Grit Removal Facilities

1106 - Emergency Holding Basin Return Pump Station

11 07 - Vactor Unloading Station

1 108 - Sitewide Allowances

4,509

1,523,021

I , 135,421

72,681

231,728

51 4,398

TMO7 - Headworks lmprovements (Alt "8'7 Total 3,481,758

Lompoc Regional Water Reclamation Planr Lompoc RWRP, Upgrade Project

Grand Item Item Description Total

TM06 - Solids Handling Facilities (Base Option)

11 00 - Demolition

11 02 - Plumbing Allowance

I 107 - Lagoons

I I 0 8 - Air Drying Beds

1125 - Thickening

50,288

1,590,797

63,023

3,410,137

TM06 - Solids Handling Facilities (Base Option) Total 5,270,975