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Cost Escalation MitigationCost Escalation MitigationFlorida DOT ApproachFlorida DOT Approach

Greg DavisGreg Davis State Estimates EngineerState Estimates Engineer

October 20, 2006October 20, 2006

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Reasons for Cost Escalation

• Material Prices• Bidder Competition• Saturated Construction Market• Labor Shortages• Hurricanes

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Earthwork - Statewide

$4.96 $4.38

-11.7%

$7.27

+66.0%

$8.64

+18.8%

NOTE: Lump Sum, Design/Build Contracts not included in this graph

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Earthwork

• Borrow Pit Availability

• Hauling Cost

• Real Estate Pressures

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Asphalt – Statewide

$53.93 $61.63

+14.3%$77.57

+25.9%

$99.54

+28.3%

NOTE: Lump Sum, Design/Build Contracts not included in this graph

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Asphalt

• Oil prices

• Bitumen Prices

• Aggregates

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Structural Concrete – Statewide

$549.82 $564.12

+2.6%

$760.89

+34.9%

$868.90

+14.2%

NOTE: Lump Sum, Design/Build Contracts not included in this graph

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Structural Concrete

• Global Demand

• Aggregates

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Structural Steel – Statewide

$1.06 $1.48

+39.6%

$1.57

+6.1%$1.72

+9.5%

NOTE: Lump Sum, Design/Build Contracts not included in this graph

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Structural Steel

• Global Demand for Steel

• Fabrication Backlog

• Transportation Cost

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Reinforcing Steel - Statewide

$0.52 $0.75

+44.2%

$0.91

+21.3%

$0.96

+5.5%

NOTE: Lump Sum, Design/Build Contracts not included in this graph

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Reinforcing Steel

• Global Demand for Steel

• Production Backlog

• Transportation Costs

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SummaryStatewide Weighted Average Prices

Pay Item Pay Item GroupGroup

UnitUnit 20032003 20042004 ChangeChange 20052005 ChangeChange 20062006(Jan-Sept)(Jan-Sept)

ChangeChange

Earthwork CY $4.96 $4.38 -11.7% $7.27 +66.0% $8.64 +18.8%

Asphalt TN $53.93 $61.63 +14.3% $77.57 +25.9% $99.54 +28.3%

Structural Concrete

CY $549.82 $564.12 +2.6% $760.89 +34.9% $868.90 +14.2%

Structural Steel

LB $1.06 $1.48 +39.6% $1.57 +6.1% $1.72 +9.5%

Reinforcing Steel

LB $0.52 $0.75 +44.2% $0.91 +21.3% $0.96 +5.5%

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FDOT STRATEGIES

•Deferred Projects– $1.0 Billion in projects (over 3-

years)

•Refine Awards Criteria– Normal Criteria– Additional Criteria– Rejected Contracts

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FDOT STRATEGIES

•Revised Inflation Rates

Year Current Past– 1 7.0% 4.5% – 2 4.5% 4.0% – 3 4.0% 3.5% – 4 3.5% 3.3% – 5 3.5% 3.3%

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FDOT STRATEGIES

•Alternative Contracting Methods–Bid Alternates–Bid Options

•Bid Maximum Specification

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FDOT STRATEGIES

• Comprehensive Price Index

• DOT Borrow Pits

• Temporary/Portable Asphalt Plants

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Questions/Comments

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CONTACT INFORMATION

Phillip “Greg” Davis, P.E.State Estimates Engineer

phillipgreg.davis@dot.state.fl.us(850) 414-4170

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