About the research
The review of any bid depends on the reliability of the estimate it is being compared to, and making estimates is an essential element in the project approval process. Thus, departments of transportation (DOTs) need to put great effort into estimate preparation given that under-estimating can lead to project delays, while over-estimating leads to inefficient use of funds.
Since delivering more lump sum projects is an Engineering Services Division strategic initiative for the Minnesota DOT (MnDOT) and lump-sum items are often more difficult to price, it is important to develop an effective practice for consistent cost estimating. Risk-based estimating combines both risk management and traditional cost-estimating to develop an estimate that includes the risk in the project cost. Risk-based estimating thus serves as an excellent estimating technique that generates reliable estimates.
The objectives of this research were as follows:
- Conduct literature review of risk-based estimating
- Conduct state-of-practice review of risk-based estimating used by DOTs and other construction organizations
- Based on the state-of-practice and literature review conducted, give recommendations on how these practices can be incorporated into MnDOT’s business practice
The recommendations reached through this research are anticipated to help the MnDOT estimating team get a better understanding of risk-based estimating and how it can be employed in the MnDOT estimation process.