FLOOD09689

• County: Statewide
• Community: State of Colorado
• Basin: Statewide
• Title: A Guide for the Engagment of Engineering Services
• Date: 1/1/1975
• Prepared For: State of Colorado
• Prepared By: American Society of Civil Engineers
• Floodplain - Doc Type: Educational/Technical/Reference Information

CONSULTING ENGINEERING

39

Structures built u~der. the project, of course, are not useful, nor can they' 'earn
money" until completed and put into operation. In many cases, the Client
borrows money for all construction costs and an additional amount so that he can
pay the interest during construction. The Client will borrow money during con-
struction, say, at 10% and, if his construction period is one year, then to all of his
costs he should add about 5% to cover his interest during construction. In the
case of projects financed by revenue bonds, it may be necessary to provide for
the, interest on the entire investment for the entire period of construction.
As an example of how the preliminary estimate of the total project cost of a
construction project may be developed, assume that the estimated construction
cost for a system of sanitary sewers less than 24 in. in diameter is $2,500,000
with a one year construction period and that the project will be financed by 6%
revenue bonds. Further, assume that all the Special Services necessary are sur-
veys for design and construction and full-time services of Resident Project
Representatives and that they are furnished by the Engineer. The estimate may
be shown as follows:

Construction Cost
Contingencies @ 15 %
Subtotal
Engineering Costs (Basic and
Special Services) @ 13%'
Legal and Administrative Cost @ 3%
Subtotal
Financing Cost @ 3%
Subtotal
Interest during Construction @ 6%
TOTAL PROJECT COST

In %
100.00
15.00
115.00

14.95
3.45
133.40
4.00
137 .40
8.24
145.64

This tabulation shows that to the Engineer's preliminary estimate of construc-
tion cost there should be added 46% to obtain the total cost of the project. Upon
completion of detailed designs, the cost of construction can be estimated with
greater accuracy, so that it may be possible to reduce the contingency factor to as
little as 5% in some cases. The other elements, such as engineering, legal, and
financing costs, are not subject to substantial reduction.
In addition to the foregoing project costs, it usually is necessary to add the cost
of land or rights-of-way, which may add substantially to the overall project cost.

"'Basic Services - from Curve A. Median Compensation -
Surveys for design and construction -
Services of full-time Project Representatives -
Total engineering costs -

6.8%
3.0%
3.2%
13.0%