PROJ00283

• Contract/PO #: FS0009X
• Contractor Name: Swink, Town of
• Contract Type: Loan
• Water District: 0
• County: Otero
• Loan Projects - Doc Type: Feasibility Study

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6 - ESTIMATED COSTS OF IMPROVEHENTS

6.1 GENERAL COST INFORMATION

Due to the extreme fluctuation in the national economy during the past few years~
the estimation of construction costs for some future period is an extremely diffi-
cult task. Construction costs depend on several complex variables such as: labor
rates, materials prices, equipment and raw materials costs, mobilization and
overhead costs, and the complexity, type, and quantity of the work. The quantity
of total construction work available in the area and the time of year when a project
is offered for bids have a direct impact on the number of responsible bidders and
their respective bid amounts. With these variables in mind it should always be
remembered' that a cost "estimate" is not a rigid and firm cost. It represents the
estimator's best judgment of prices and conditions prevailing at the time of the
estimate and projecting these prices and conditions to a future date for con-
struction.

Construction costs are developed from a combination of current labor and materials
costs, materials,quotations, an analysis of recent project awards, and cost pre-
dictions for the Colorado Springs area from the "1976 Dodge Guide for Estimating
Pub~ic Works Con!3truction Costs." .., The tabulation of costs has been escalated to
reflect 1977 prices.

An overall construction contingency of approximately 9.4% is included in the cost
estimate. This amounts to a 10% contingency on distribution mains, 5% contingency
on the storage facilities, and approximately 12%' contingency on the well houses
and water treatment facilities.

Construction cost indexes published by various private and governmental agencies have
increased at an average rate of 4% annually from 1954 to about 1967. The annual
rate of increase changed drastically in the period 1967 through 1972, reaching an
average rate of plus 9% annually with quarterly rates as high as plus 12-13%.
The annual rate of increase has been somewhat moderated and suppressed during
the past four years, first by partial federal wage and price controls and then by
a'generally depressed national economy. Inflation is expected to continue throughout
the 1970's, and cost escalations for future construction are estimated to be
6% compounded annually through 1981, then 4% compounded annually throughout the
design period. Escalation multipliers are shown below through a 20-year period
(1976-1995). .,

Escalation Escalation Escalation Escalation
Year Multiplier Year Multiplier Year Multiplier Year Multiplier
1976 1.00 1981 1.338 1986 1. 628 1991 1. 981
1977 1.06 1982 1.392 1987 1.693 1992 2.060
1978 1.124 1983 1. 447 1988 1. 761 1993 2.143
1979 1.191 1984 1. 505 1989 1. 831 1994 2.228
1980' 1. 262 1985 1. 566 1990 1. 905 1995 2.317
Other costs included in the Summary of Estimated Project Costs are: land and
rights-ofway acquisition, interest during construction, engineering fees, inspection.
fees, administrative and legal costs, and fiscal costs for bonding or loan program.
These costs for Stage I construction are estimated as follows:

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