189
Views
5
CrossRef citations to date
0
Altmetric
Original Articles

Forecasting the Unit Price of Water and Wastewater Pipelines Capital Works and Estimating Contractors’ Markup

, , , &
Pages 46-68 | Published online: 11 Apr 2016
 

Abstract

Municipalities and water utilities need to make realistic estimates for the replacement of their aged water and wastewater pipelines. The two main objectives of this article are to present a method to forecast the unit price of water and wastewater pipelines capital works by investigating inflation in their construction price, and to quantify the markup that contractors add to bid a project price. The Geometric Brownian Motion model with drift is used for investigation. Results show that the inflation in water and wastewater pipelines reference projects were 6.41% and 5.52% per annum, respectively. These values compare to the inflation in the Standard & Poor’s/Toronto Stock Exchange (S&P/TSX) Composite Index of 6.93% per annum. In contrast, inflation in Canada’s Consumer Price Index (CPI), and Engineering News-Record’s Construction Cost Index (ENR’s CCI) for Toronto are estimated to be 2.53% and 2.85% per annum, respectively. The spread in the inflation rate between the reference price indices and that of either ENR’s CCI or CPI is a measure of the market price of catchall financial premium (defined as markup) that contractors add to project cost to account for profit, risk, and market conditions. This spread is estimated to be 3.56% and 2.67% per annum for water and wastewater pipeline capital works, respectively.

Acknowledgments

The authors would like to thank Filip Budimir and Atif Nazir for their contributions to this work.

Funding

Financial support for this work came from The University of Waterloo Center for Trenchless Technologies (CATT); Natural Sciences and Engineering Research Council of Canada (NSERC) CRD grants (CRDPJ-472212-14) sponsored by the Region of Waterloo as well as the cities of Waterloo, Niagara Falls, Cambridge, and London, Ontario, Canada; and an NSERC Discovery grant held by Andre Unger.

Additional information

Funding

Financial support for this work came from The University of Waterloo Center for Trenchless Technologies (CATT); Natural Sciences and Engineering Research Council of Canada (NSERC) CRD grants (CRDPJ-472212-14) sponsored by the Region of Waterloo as well as the cities of Waterloo, Niagara Falls, Cambridge, and London, Ontario, Canada; and an NSERC Discovery grant held by Andre Unger.

Notes on contributors

Rizwan Younis

Dr. Rizwan Younis is Technical Director and Research Associate at the Centre for Advancement of Trenchless Technologies, Department of Civil and Environmental Engineering, University of Waterloo, Waterloo, Ontario, Canada. His research interests include asset management of buried urban infrastructure, condition assessment of water and wastewater pipelines, infrastructure finance, and trenchless construction for rehabilitation and replacement of pipelines.

Rashid Rehan

Dr. Rashid Rehan is an Assistant Professor at the National Institute of Urban Infrastructure Planning, University of Engineering and Technology, Peshawar, Pakistan. He received his Ph.D. from the University of Waterloo, Ontario, Canada. His research interests include condition assessment of water and wastewater infrastructure assets, deterioration modeling, infrastructure asset management, utility financing, and service delivery.

Andre J. A. Unger

Dr. Andre J. A. Unger is an Associate Professor at the University of Waterloo, Canada and a professional engineer in the Province of Ontario. His research interest include: water infrastructure finance; project risk and uncertainty; computational hydrology; and, water resources management.

Soonyoung Yu

Dr. Soonyoung Yu is a quantitative hydrogeologist at the Research Institute of Social Criticality, Pusan National University, Busan, Korea. Her research interests include: hydrogeological and financial risk at Brownfield redevelopment sites; risk exposure from geo-hazards; and, groundwater and surface water flow and contaminant transport systems.

Mark A. Knight

Dr. Mark A. Knight is Executive Director at the Centre for Advancement of Trenchless Technologies and Associate Professor at the Department of Civil and Environmental Engineering, University of Waterloo, Waterloo, Ontario, Canada. His expertise include trenchless renovation and replacement of pipelines, geotechnical investigations, condition assessment of buried pipelines, and asset management of buried infrastructure. Mark and his team have developed industry leading software and online tools for the trenchless industry that include: Pressure pipe calculator for PE and PVC water pipelines (PPIPACE), Horizontal Directional Drilling programs (BOREAID and PPI-BOREAID, and Cured-In-Place Pipe design calculator (CIPPCALC).

Log in via your institution

Log in to Taylor & Francis Online

There are no offers available at the current time.

Related Research

People also read lists articles that other readers of this article have read.

Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine.

Cited by lists all citing articles based on Crossref citations.
Articles with the Crossref icon will open in a new tab.