Challenges in Engineering Estimates for Best Value Design–Build Highway Projects

Abstract

Traditional design–bid–build guidelines suggest that engineering estimates should be within +/−10% of the lowest contractor bid and recommend this value as a reference to identify anomalies in the bidding process. This guidance, however, neglects delivery approaches such as design–build (D–B). This research examines 305 D–B highway projects procured using best-value and identifies the underlying reasons for bid dispersion and cost estimates inaccuracies. This study found an average bid dispersion of 27%, suggesting that a larger threshold (i.e., 25%) is needed to account for the inherent variability of D–B projects. This study also found that engineering estimates are on average 2% more than the awarded price. This result contradicts findings in existing literature and suggests that current practice in D–B best-value may be more conservative than other procurement methods. The study explores four potential reasons for bid dispersion and engineering estimate inaccuracies and suggests strategies for improvement. By providing a better understanding of bid dispersion and engineering estimate accuracy, this study will ultimately assist in the development of new policies and processes for D–B best-value projects.