Somewhat OT - Cost of Dirt Work

[Tim_Weiman]

I am involved in an oil transportation project out in Eddy County, New Mexico. Project is building track to move unit trains of crude oil.

Contractor charging us $800,000 for about three weeks of work. Area being prepared is about 8,000 feet by 50 feet. Soil appears to be heavy clay. Task is just to make area perfectly flat to lay track. Contractor estimates total dirt to be moved is 150,000 cubic feet.

Cost just doesn't seem right (too high).

Compared to dirt moving on a golf course project, how does this number compare?

[Mike Nuzzo]

Hey Tim
Give me and Don a call - we will get in the Oil field services business for you at those prices!!
Actually Don is very familiar with both Oil Field services and excavation for golf.
Let me know if you'd like to chat.
Cheers
Mike

[Tim_Weiman]

Mike,

Happy to talk. Can be reached at 615-390-0694.

Just in terms of expectations, I am afraid the deal I described is a done deal, but who knows?

[Ally Mcintosh]

Where is the earth going? The answer to that could make a big difference to your number.

[Tim_Weiman]

Ally,

The earth (dirt) - really isn't going anywhere. Client owns 800 acres in the middle of oil fields. All that needs to be done is preparing the land for the track.

[Jonathan Mallard]

I am involved in an oil transportation project out in Eddy County, New Mexico. Project is building track to move unit trains of crude oil.

Contractor charging us $800,000 for about three weeks of work. Area being prepared is about 8,000 feet by 50 feet. Soil appears to be heavy clay. Task is just to make area perfectly flat to lay track. Contractor estimates total dirt to be moved is 150,000 cubic feet.

Cost just doesn't seem right (too high).

Compared to dirt moving on a golf course project, how does this number compare?

Cubic yards? or Cubic feet?

Another option would be to search out the bids received for public projects. There should be a line item for earthwork with a unit cost. Now, any good contractor will know how to unbalance a bid, so you'll need to pay attention, but that should be a good place to start.

[Steve Lang]

  Where's Barney when you need him??

just on dozer days, grader days, and roller days alone it looks high, so where are these folks coming from??  Looks like they could buy used equipment, and leave it there and still make a very handsome profit...

[Tom_Doak]

Contractors rarely talk about earthmoving in terms of cubic feet.

If it's 150,000 cubic yards, the cost of moving the earth would usually be $2 to $3 per cubic yard.  [It was $1 when I started 30 yrs. ago.]  But if you have to get it perfectly flat, that number would go up quite a bit.

Even so, $800k for three weeks' work seems pretty rich.

[Bill_McBride]

8,000' x 50' x 2' = 800,000 SF / 27 = >< 30,000 CY.  There is more to this than meets eye - unless there's a "deal."

[Jeff_Brauer]

Tim,

Golf course dirt is usually $2-3, as TD alludes, but can be different, since bid forms have a separate number for "shaping" after the dirt is hauled and placed.  That usually absorbs some of the cost which might not be the case in your engineers bid form.

Other factors might be the compaction spec for a railroad, the length of haul (rarely more than 1500 feet on a golf course, with most of it less than 1000 feet) and "other specifications."  We don't know the cost of bonds, insurance, environmental mitigation, etc.  We also don't know the amount of testing or inspection, etc.  I am guessing that those costs (which make Don Mahaffey cringe!) are driving the high price.

It could also just be that just as consultants charge way more per hour when they go in as expert witnesses, because they know the legal system is used to it, that the bidders all know (as they once did with golf) that the railroads and oil companies are both doing quite well right now hauling oil, and the general pricing level has simply risen to what the market will bear.

I can tell you GC contractors (and architects....) bid less now than in the heyday, and materials have gone up, so it all came out of the "what the market would bare" portion of the cost.

[Tim_Weiman]

Jeff Brauer,

You have probably touched on an important point. Between the railroad and the client the cost of project delay is in the range of $150-200,000 a day.

[archie_struthers]

 

The devil as they say is in the details.  Does any material need to be imported in ?  Compaction testing will no doubt be an issue. When we sold fill material to the state for the Borgata project , our material was tested constantly. If the clay has to be removed and a material more resembling I-5 gravel is necessary to construct the bed , its a whole different ball game, as it might not be readily available and might have to be imported from a distance.

[Jonathan Mallard]

 

The devil as they say is in the details.  Does any material need to be imported in ?  Compaction testing will no doubt be an issue. When we sold fill material to the state for the Borgata project , our material was tested constantly. If the clay has to be removed and a material more resembling I-5 gravel is necessary to construct the bed , its a whole different ball game, as it might not be readily available and might have to be imported from a distance.

Seems like an investment in a few Standard or Modified Proctor tests would go a long way towards verifying the suitability. Way cheap given the costs cited in this example.

[Jeff_Brauer]

Jeff Brauer,

You have probably touched on an important point. Between the railroad and the client the cost of project delay is in the range of $150-200,000 a day.

Tim,

Ah, the old "liquidated damages" and delay clauses. We debate what those should be for when the contractor runs late.  Sometimes, it is tempting to push those way up high to scare the contractor into being on time.  It also scares them into adding to their bid.  So, it turns out something reasonable usually works out better.  In other words, you pay more up front in higher bids to avoid possible delay costs that may never happen.  At some point, the value of payment for being late balances out.

It would be interesting to know exactly what the details of the LD's are.  Some recent highway projects around DFW have $1M per day late payments to stimulate the contractors sense of urgency.  Certainly, they want to get at that oil while the prices are pretty high.

[Bill_McBride]

Jeff Brauer,

You have probably touched on an important point. Between the railroad and the client the cost of project delay is in the range of $150-200,000 a day.

In commercial construction projects, a bonding company would never bond a job with liquidated damages at 20-25% of the contract amount per day.   LD of 1/2 - 1% a day would be more acceptable and still on the high side. 

[Tim_Weiman]

Jeff,

I haven't seen the contract and am not even sure if a liquidated damages clause exists in this case. The figure I cited was the combined cost to the railroad and the shipper (who is funding the project) of project delay.

Actually, the project has been delayed significantly, largely due to the railroad imposing requirements that were not originally anticipated. Tough to argue with those guys in any situation, but especially when they dangle the safety card.

In any case, the dirt work cost sure seemed hard to me, but at this point the client just needs the work to get done ASAP. Delays on oil projects can really add up.