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Calculating Watermain and Sanitary Sewer Unit Costs from Historical Tender/Bid Data

The client is a Canadian municipality which manages both a watermain and sanitary sewer network.
The municipality has maintained tender/bid summaries and contractor progress payments for for watermain, sanitary sewer, storm sewer and road construction projects from 1981 to 2014.
The municipality wanted to calculate unit cost information for watermain and sanitary sewer projects from their historic tender/bid summaries and contractor progress payments. The objective was to standardize project costs and allow a comparison of projects with different scopes, lengths, materials and sizes.

To represent prevailing market conditions (labour, material, equipment, contractor markup, etc.), unit costs are calculated using construction cost data from the winning tender bids and actual contractor progress payments.
Unit costs are calculated for the most commonly observed items from watermain and sanitary sewer projects (i.e. pipe, valve, hydrant, maintenance hole), known as standard components.
All unit costs represent installation by open cut; which is the most common construction method in this municipality.
A reference project is then composed of standard components in order to consistently track watermain and sanitary sewer unit costs over the time interval of interest.

To calculate the unit cost information, construction cost data for the standard components is decomposed into labour, material and equipment costs. These costs are then scaled to the reference size and material of the standard component.
The full cost of the project is maintained by surcharging the unit costs with a proportional contribution of the general and provisional items.
Scaling and surcharging allows for a direct comparison of watermain and sanitary sewer projects with different scopes, length, item materials and item sizes.

Our approach standardized and automated the calculation of unit cost information for the municipality utilizing a scalable, consistent and reproducible methodology.
The unit cost information provides a basis for auditable, and defensible decision making on the municipality’s watermain and sanitary sewer network.
Our approach provides municipalities with a geographical comparison of construction costs within different regions of utility itself, with neighbouring municipalities, and with general market trends.

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