National Academies Press: OpenBook
Page i
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R1
Page ii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R2
Page iii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R3
Page iv
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R4
Page v
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R5
Page vi
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R6
Page vii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R7
Page viii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R8
Page ix
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R9
Page x
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R10
Page xi
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2007. Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction. Washington, DC: The National Academies Press. doi: 10.17226/14014.
×
Page R11

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2007 www.TRB.org N A T I O N A L C O O P E R A T I V E H I G H W A Y R E S E A R C H P R O G R A M NCHRP REPORT 574 Subject Areas Planning, Administration, and Environment • Design • Public Transit • Rail Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction Stuart Anderson TEXAS TRANSPORTATION INSTITUTE College Station, TX Keith Molenaar UNIVERSITY OF COLORADO Boulder, CO Cliff Schexnayder DEL E. WEB SCHOOL OF CONSTRUCTION ARIZONA STATE UNIVERSITY Tempe, AZ Research sponsored by the American Association of State Highway and Transportation Officials in cooperation with the Federal Highway Administration

NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Systematic, well-designed research provides the most effective approach to the solution of many problems facing highway administrators and engineers. Often, highway problems are of local interest and can best be studied by highway departments individually or in cooperation with their state universities and others. However, the accelerating growth of highway transportation develops increasingly complex problems of wide interest to highway authorities. These problems are best studied through a coordinated program of cooperative research. In recognition of these needs, the highway administrators of the American Association of State Highway and Transportation Officials initiated in 1962 an objective national highway research program employing modern scientific techniques. This program is supported on a continuing basis by funds from participating member states of the Association and it receives the full cooperation and support of the Federal Highway Administration, United States Department of Transportation. The Transportation Research Board of the National Academies was requested by the Association to administer the research program because of the Board’s recognized objectivity and understanding of modern research practices. The Board is uniquely suited for this purpose as it maintains an extensive committee structure from which authorities on any highway transportation subject may be drawn; it possesses avenues of communications and cooperation with federal, state and local governmental agencies, universities, and industry; its relationship to the National Research Council is an insurance of objectivity; it maintains a full-time research correlation staff of specialists in highway transportation matters to bring the findings of research directly to those who are in a position to use them. The program is developed on the basis of research needs identified by chief administrators of the highway and transportation departments and by committees of AASHTO. Each year, specific areas of research needs to be included in the program are proposed to the National Research Council and the Board by the American Association of State Highway and Transportation Officials. Research projects to fulfill these needs are defined by the Board, and qualified research agencies are selected from those that have submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Research Council and the Transportation Research Board. The needs for highway research are many, and the National Cooperative Highway Research Program can make significant contributions to the solution of highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement rather than to substitute for or duplicate other highway research programs. Published reports of the NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: http://www.national-academies.org/trb/bookstore Printed in the United States of America NCHRP REPORT 574 Project 8-49 ISSN 0077-5614 ISBN 978-0-309-09875-5 Library of Congress Control Number 2007922065 © 2007 Transportation Research Board COPYRIGHT PERMISSION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, or Transit Development Corporation endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the National Cooperative Highway Research Program conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. Such approval reflects the Governing Board’s judgment that the program concerned is of national importance and appropriate with respect to both the purposes and resources of the National Research Council. The members of the technical committee selected to monitor this project and to review this report were chosen for recognized scholarly competence and with due consideration for the balance of disciplines appropriate to the project. The opinions and conclusions expressed or implied are those of the research agency that performed the research, and, while they have been accepted as appropriate by the technical committee, they are not necessarily those of the Transportation Research Board, the National Research Council, the American Association of State Highway and Transportation Officials, or the Federal Highway Administration, U.S. Department of Transportation. Each report is reviewed and accepted for publication by the technical committee according to procedures established and monitored by the Transportation Research Board Executive Committee and the Governing Board of the National Research Council. The Transportation Research Board of the National Academies, the National Research Council, the Federal Highway Administration, the American Association of State Highway and Transportation Officials, and the individual states participating in the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of this report.

CRP STAFF FOR NCHRP REPORT 574 Robert J. Reilly, Director, Cooperative Research Programs Crawford F. Jencks, Manager, NCHRP Ronald D. McCready, Senior Program Officer Eileen P. Delaney, Director of Publications Beth Hatch, Editor NCHRP PROJECT 8-49 PANEL Field of Transportation Planning—Area of Forecasting G. Scott Rutherford, University of Washington, Seattle, WA (Chair) Nigel Blampied, California DOT Christopher D. Crachi, New York State DOT Greg Davis, Florida DOT Daryl J. Greer, Kentucky Transportation Cabinet, Frankfort, KY Timothy A. Henkel, Minnesota DOT Cheryl A. Kyte, Glendale, CA Robert J. Munchinski, H.W. Lochner, Inc., Bellevue, WA Jeffrey M. South, Illinois DOT Larry Anderson, FHWA Liaison Kimberly Fisher, TRB Liaison C O O P E R A T I V E R E S E A R C H P R O G R A M S

This guidebook presents approaches to cost estimation and management to overcome the root causes of cost escalation and to support the development of consistent and accu- rate project estimates through all phases of the development process, from long-range plan- ning, through priority programming, and through project design. The problem of cost escalation has become a major concern in virtually every field of capital project development. Within the transportation sector, cost escalation has attracted attention at the federal, state, regional, and local government levels for highways, transit, and other modes. State departments of transportation (DOTs), transit agencies, and other government entities responsible for delivering transportation projects historically have experienced increases in project cost estimates from the time that a project is first proposed or programmed until the time that it is completed. Recent studies have shown that this has been a worldwide problem, particularly for large projects. Cost estimate increases that occur after a project is first identified in a plan but before the project is designed create a substan- tial disruption in priority programs, because other projects have to be delayed or removed in order to accommodate higher cost estimates. The challenges of accurate cost estimation and management of costs are faced by almost every state DOT, transit agency, and metro- politan planning organization (MPO) in the country as projects evolve from concept in the long-range planning process, are prioritized within programs, and are subject to detailed development prior to construction. Cost estimates increasing over the course of project development may be caused by any number of factors, such as an inadequate project scope at the time of planning or program- ming, insufficient information on the extent of utility relocation requirements, insufficient knowledge of right-of-way costs and locations, required environmental mitigation costs to avoid certain impacts, traffic control requirements, and work-hour restrictions. As is often the case with very large and complex projects, the project scope and concept may not be fully understood until well after a substantial commitment has been made to its construc- tion. In addition, the project scope often expands as more internal and external stakehold- ers provide input on what elements should be included. Sometimes, if the cost of an item is not known, it is not included in early project cost estimates. In other instances, items such as right-of-way or construction engineering may be included with only tentative or super- ficial information to support their estimated costs. Initial cost estimates may be prepared by an agency other than the agency responsible for project delivery; this can result in different understandings of project requirements and vastly different estimates. There is sometimes speculation that, to secure funding for projects, items may be purposefully excluded from initial project scopes and costs with the intention of adding them later. Questions about F O R E W O R D By Ronald D. McCready Staff Officer Transportation Research Board

honesty or competence can threaten the credibility of the planning and programming process and that of the transportation agency and create increased frustration by profes- sional staffs, policy makers, elected officials, and the general public. Both the Federal Highway Administration and the Federal Transit Administration have initiated major efforts to overcome this problem in federally aided projects. In recent years, states, transit agencies, and local public works agencies have studied the problem and attempted to find causes and solutions to improve the procedures, with varying degrees of success. There is a need for research into all aspects of cost estimation management and cost estimation procedures aimed at addressing consistency and accuracy throughout the entire project development process, from long-range planning, through priority programming, up to preconstruction engineering and design. The objective of this project was to develop a guidebook on highway cost estimation and management practice aimed at achieving greater consistency and accuracy between long-range transportation planning, priority programming, and preconstruction cost esti- mates. The guidebook provides strategies, methods, and tools to develop, track, and docu- ment more realistic cost estimates during each phase of the process. Under NCHRP Project 8-49, “Guidance on Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction,” a research team led by Texas Transportation Institute carried out a comprehensive investigation into cur- rent and effective practices for cost estimation and management during the various plan- ning and project development phases prior to construction. The project resulted in a prac- tical guidebook designed to provide users with the most appropriate practices to develop and manage realistic cost estimates throughout the project development process. The guidebook should be of significant use to managers, practitioners, and decision makers interested in development and management of realistic and accurate cost estimates for transportation projects from the earliest stages of planning through final project design. The guidance provided is intended to provide methods and tools that will reduce un- intended or unanticipated escalation of costs as transportation projects proceed through the development process.

C O N T E N T S 1 Summary 3 Chapter 1 Introduction 3 Background 3 Industry Problem 3 Guidebook Concepts 4 Guidebook Development 4 Guidebook Organization 5 Use of Guidebook 5 Implementation Thrust 6 Topic Focus 6 Summary 7 Chapter 2 Agency Cost Estimation Practice and Cost Estimation Management Processes 7 Transportation Development Phases 7 Cost Estimation Practice and Cost Estimation Management Overview 10 Cost Estimation Practice and Cost Estimation Management Steps 11 Summary 13 Chapter 3 Factors and Strategies 13 Cost Escalation Factors 13 Internal Cost Escalation Factors 15 External Cost Escalation Factors 16 Strategies 16 Management Strategy 16 Scope and Schedule Strategy 16 Off-Prism Strategy 17 Risk Strategy 17 Delivery and Procurement Strategy 17 Document Quality Strategy 17 Estimate Quality Strategy 17 Integrity Strategy 17 Summary 19 Chapter 4 Guidebook Framework 19 Background 19 Strategy, Method, and Tool Integration 19 Structure and Layout of Content 21 Tool Appendix 21 Summary 22 Chapter 5 Guide for Planning Phase 22 Introduction

24 Methodology 25 5.1 Strategy: Management 25 5.1.1 Budget Control 26 5.1.2 Communication 26 5.1.3 Consistency 27 5.1.4 Recognition of Project Complexity 27 5.1.5 Risk Analysis 27 5.2 Strategy: Scope and Schedule 27 5.2.1 Buffers 28 5.2.2 Communication 29 5.2.3 Computer Software 29 5.3 Strategy: Off-Prism Issues 29 5.3.1 Communication 30 5.3.2 Identifying Off-Prism Issues 30 5.4 Strategy: Risk 30 5.4.1 Identification of Risk 31 5.4.2 Right-of-Way 31 5.4.3 Risk Analysis 32 5.5 Strategy: Delivery and Procurement 32 5.5.1 Delivery and Procurement Method 33 5.6 Strategy: Document Quality 33 5.6.1 Computer Software 33 5.6.2 Document Estimate Basis and Assumptions 34 5.6.3 Identifying Off-Prism Issues 34 5.7 Strategy: Estimate Quality 34 5.7.1 Computer Software 35 5.7.2 Conceptual Estimation 35 5.7.3 Estimate Review—External 36 5.7.4 Estimate Review—Internal 36 5.7.5 Project Scoping 37 5.7.6 Right-of-Way 37 5.8 Strategy: Integrity 37 5.8.1 Computer Software 38 5.9 Summary 39 Chapter 6 Guide for Programming and Preliminary Design Phase 39 Introduction 41 Methodology 41 6.1 Strategy: Management 41 6.1.1 Budget Control 43 6.1.2 Communication 44 6.1.3 Computer Software 44 6.1.4 Consistency 45 6.1.5 Gated Process 45 6.1.6 Recognition of Project Complexity 46 6.2 Strategy: Scope and Schedule 46 6.2.1 Buffers 46 6.2.2 Communication 47 6.2.3 Creation of Project Baseline 48 6.2.4 Delivery and Procurement Method

48 6.2.5 Identification of Changes 49 6.2.6 Constructability 49 6.2.7 Value Engineering 50 6.3 Strategy: Off-Prism Issues 50 6.3.1 Communication 51 6.3.2 Right-of-Way 51 6.3.3 Public Involvement 52 6.3.4 Estimate Review—Internal 52 6.3.5 Identifying Off-Prism Issues 52 6.4 Strategy: Risk 53 6.4.1 Communication 53 6.4.2 Identification of Risk 54 6.4.3 Right-of-Way 54 6.4.4 Risk Analysis 55 6.4.5 Delivery and Procurement Method 55 6.5 Strategy: Delivery and Procurement 55 6.5.1 Delivery and Procurement Method 56 6.6 Strategy: Document Quality 56 6.6.1 Computer Software 57 6.6.2 Constructability 57 6.6.3 Estimate/Document Review 58 6.7 Strategy: Estimate Quality 58 6.7.1 Computer Software 58 6.7.2 Consistency 60 6.7.3 Creation of Project Baseline 60 6.7.4 Gated Process 60 6.7.5 Right-of-Way 61 6.7.6 Communication 61 6.7.7 Design Estimation 62 6.7.8 Document Estimate Basis and Assumptions 62 6.7.9 Estimate Review—External 63 6.7.10 Estimate Review—Internal 63 6.7.11 Project Scoping 63 6.8 Strategy: Integrity 63 6.8.1 Communication 64 6.8.2 Computer Software 65 6.8.3 Design to Mandated Budget 65 6.8.4 Consistency 66 6.8.5 Estimate Review—External 66 6.8.6 Estimate Review—Internal 66 6.8.7 Validate Costs 67 6.8.8 Verify Scope Completeness 67 6.9 Summary 69 Chapter 7 Guide for Final Design Phase 69 Introduction 69 Methodology 69 7.1 Strategy: Management 70 7.1.1 Budget Control 71 7.1.2 Consistency 73 7.1.3 Estimate Review—External

73 7.1.4 Estimate Review—Internal 73 7.1.5 Gated Process 74 7.1.6 Identification of Changes 74 7.1.7 Plans, Specifications, and Estimates (PS&E) 75 7.2 Strategy: Scope and Schedule 75 7.2.1 Buffers 76 7.2.2 Communication 76 7.2.3 Estimate Review—External 77 7.2.4 Estimate Review—Internal 77 7.2.5 Identification of Changes 77 7.2.6 Value Engineering 78 7.3 Strategy: Off-Prism Issues 78 7.3.1 Communication 79 7.3.2 Right-of-Way 79 7.3.3 Risk Analysis 79 7.4 Strategy: Risk 80 7.4.1 Communication 80 7.4.2 Identification of Risk 81 7.4.3 Risk Analysis 81 7.5 Strategy: Delivery and Procurement 81 7.5.1 Off-Prism Issues 82 7.5.2 Constructability 82 7.6 Strategy: Document Quality 83 7.6.1 Computer Software 83 7.6.2 Estimate/Document Review 83 7.6.3 Document Estimate Basis and Assumptions 84 7.7 Strategy: Estimate Quality 84 7.7.1 Estimate Review—External 85 7.7.2 Estimate Review—Internal 85 7.7.3 Consistency 86 7.7.4 Plans, Specifications, and Estimates (PS&E) 86 7.8 Strategy: Integrity 86 7.8.1 Estimate Review—External 87 7.8.2 Estimate Review—Internal 87 7.9 Summary 88 Chapter 8 Implementation 88 Introduction 88 Step 1: Implementation of Strategies—Organizational Change 89 Establish Steering Committee 89 Conduct Agencywide Workshop 90 Step 2: Implementation of Methods—Programmatic Change 90 Assess Current Practices 90 Develop Policies and Procedures 91 Develop Education and Training 91 Step 3: Implementation of Tools—Project Change 91 Assess Current Practices 92 Test New Tools 92 Develop Agency-Specific Tools 92 Step 4: Integrating the System—A Strategic Plan 92 Implement the Long-Term Strategic Plan 93 Summary

94 Chapter 9 Path Forward 94 Industry Problem 94 Guidebook Development 94 A Strategic Approach 95 Keys to Success 95 Challenges 96 References A-i Appendix A Tools B-i Appendix B Implementation Framework C-i Appendix C Definitions

Next: Summary »
Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

TRB’s National Cooperative Highway Research Program (NCHRP) Report 574: Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction explores approaches to cost estimation and management designed to overcome the root causes of cost escalation and to support the development of consistent and accurate project estimates through all phases of the development process, from long-range planning, through priority programming, and through project design.

NCHRP Web-Only Document 98 details the steps followed by the research team in the development of NCHRP Report 574.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!