The Federal Highway Administration requires the construction cost estimate of the highway engineer to be a projection of the low bid, and be within +/- 10 percent of the low bid for at least 50 percent of the projects awarded. Construction cost estimates developed by the Estimating Staff of the Kentucky Department of Highways have not always met this criterion in years past.

The Estimating Staff of the Kentucky Department of Highways use an actual cost approach to generate construction cost estimates. It was concluded that the Department's estimating staff possess the ability to do very thorough and accurate work. The Estimating Staff produce a construction cost estimate for a project that is considered to be a reasonable and equitable price for an average contractor to complete the proposed work in an approved manner. The Kentucky Department of Highways considers the engineer's estimate to be a fair price for the project. The percent o!the engineer's estimates within +/- 10 percent of the low bid improved during the period reviewed. Proper assessment of the affect of competition on the bids for bituminous projects would virtually guarantee compliance with FHWA's accuracy standard.

Advantages and disadvantages of determining a fair price tor a construction project versus predicting the low bid were examined.

Report Date


Report Number


Digital Object Identifier



The contents of this report reflect the views of the author, who is responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the University of Kentucky, the Kentucky Transportation Cabinet, or the Federal Highway Administration. This report does not constitute a standard, specification, or regulation. The inclusion of manufacturer names or trade names are for identification purposes and are not to be considered as endorsements.