As its economy develops, China is moving from the manufacturing of small consumer goods into larger, sophisticated products, such as fabricated structural steel. Contractors bidding on fixed-price contracts rely on lower quotes for Chinese steel products. However, our case study indicates that the true cost of steel fabrication in China may not be as low as China's basic labor rates suggest, and owners may find themselves paying higher prices than expected for change orders. A Monte Carlo model was developed to forecast the labor cost of steel fabrication for a bridge, to compensate the fabricator for change-order work, and to allow the project's management to assess acceleration alternatives. It takes into account current Chinese national and local labor laws, company benefits, and work schedules. The model results support the use of a "two-thirds" rule of thumb to estimate Chinese steel fabrication costs at two-thirds of the US costs.
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