How to Estimate the Cost of Asphalt Paving of Streets

Eric Soukup
Eric Soukup provides a brief overview of his recent paper which looks at estimating the costs of asphalt paving of streets.

Introduction

This feature outlines the background, concepts, process and considerations of estimating asphalt paving of streets, including:

  • types and methods of measurement
  • project specific factors and their effects
  • overview of costs and markups
  • risk considerations
  • sample takeoff and pricing exercise

Main CSI Division (MasterFormat 2004)
Division 32 – Exterior Improvements
Sub-Division (MasterFormat 2004)
32 12 13 – Preparatory Coats
32 12 16 – Asphalt Paving
32 12 19 – Asphalt Paving Wearing Courses

Assumptions

  • Sample cost estimate is from the viewpoint of an asphalt paving contractor quoting a Prime / General Contractor.
  • The asphalt is internally produced at a commercial asphalt plant and quoted to the project.
  • The aggregate base is placed and brought to the grade tolerance by others and no prime coat is required.
  • All equipment is owned.  

Types and methods of measurement

  • Tack coat (emulsified asphalt) will be measured in square yards (SY) and converted to gallons (GAL).
  • Asphalt paving will be measured in square yards (SY) and, with the corresponding depth in inches (IN), converted to tons (TN).
  • Pavement marking will quoted by others and represented by the lump sum (LS).
  • Mobilization and Traffic Control will be priced by the lump sum (LS).

Emulsified liquid asphalt or tack coats/ tack oil are a surface applied material and are taken off in a two dimensional quantity. This two dimensional area is converted into a volume base on the application rate.

Asphalt (hot mix asphalt or HMA) is applied at a specified depth. Asphalt is measured by the area, by depth, and converted to a measurement of weight. The weight, represented in tons, is also the measurement used in purchasing asphalt.

Mobilization, traffic control, and quotes from subcontractors will each be represented as a lump sum.

In public works projects, the contractor usually provides unit prices to the quantities established in the owner or engineer’s proposal. Regardless, it is the contractor’s responsibility to perform due diligence by completing a quantity take-off to confirm and further break down the quantities.

Project specific factors in take-off and pricing

Some factors vary from project to project and are detailed in the plans and specifications, arising from sources such as:

Project size and constructability: Economies of scale. The project may call for a product or method not economically procured or performed.

Schedule: The schedule, as it relates to duration, acceleration, season, time of day, and potential for escalation, needs to be accounted for.

Material and related specifications: The specifications must be considered during take-off (different mix types, etc.) and pricing. 

Permitting: Permits may be required by local, state, and/or federal regulatory agencies as well as private companies (e.g. work within railroad right-of-way).

Overview of labor, material, equipment, indirect costs and approach to mark-ups

Internal material costs will depend on the transfer price (price negotiated within the contractor’s company), typically on a project-by-project basis. The estimator must ensure accurate quantities and account for waste in applying the per ton rate to the estimate quantities.

External costs are those quoted by suppliers. In both cases the estimator is responsible for ensuring that the material quoted meets the project’s specifications.

Labor costs are established rates based upon labor base plus burden on a per hour basis. The base rate will vary depending on open-shop versus union wages and predetermined wages (often based on region). Burden includes fringe benefits and taxes. Any premium time expected needs to be accounted for as well.

Equipment costs are typically developed internally on a per hour basis to cover maintenance and depreciation or based on rental rates.

Labor and equipment costs are often used in tandem within a crew cost.

Subcontractor costs for portions of work will be obtained by requesting quotes. The estimator should scrutinize quotes to fully understand what is included.

Indirect costs also need to be included in the estimate’s final price, e.g. general and special conditions costs, permitting, bonds, applicable taxes, management and general overhead.

Profit, typically as a percentage of the overall estimate, will need to be considered. Should there be any conservatism built into the estimate it should be included in the profit and not estimated costs; this is crucial in order to evaluate project success on an “apples-to-apples” basis.

Special risk considerations

  • Is the contractor bidding as Prime/General Contractor, quoting another contractor on the project, or both?
  • Consider the unit type (tons of asphalt placed versus square yardage of area paved) when working on a pay item basis, and which items are included.
  • Which items may be considered incidental?
  • The amount of waste included by the estimator
  • Current workload and how it affects ability to complete the project
  • The past and current working relationship with the project owner and/or engineer

Ratios and analysis – testing the bid

After all take-off, pricing, application of in-directs and mark-ups, and other relevant considerations, the estimate should be reviewed for mathematical accuracy, and tested against benchmarks.

Other pertinent information

  • Competition
  • Market conditions
  • DBE/WBE and minority business goals
  • Utility locates

The “How to Estimate the Cost of Asphalt Paving of Streets” technical paper was published in the June 2012 issue of “Estimating Today” produced by the American Society of Professional Estimators (ASPE). ASPE serves construction estimators by providing education, fellowship and opportunity for professional development.

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