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Suggested Citation:"Chapter 8 - Conclusions." National Academies of Sciences, Engineering, and Medicine. 2009. Procedures Guide for Right-of-Way Cost Estimation and Cost Management. Washington, DC: The National Academies Press. doi: 10.17226/14289.
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Page 88
Page 89
Suggested Citation:"Chapter 8 - Conclusions." National Academies of Sciences, Engineering, and Medicine. 2009. Procedures Guide for Right-of-Way Cost Estimation and Cost Management. Washington, DC: The National Academies Press. doi: 10.17226/14289.
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Page 89
Page 90
Suggested Citation:"Chapter 8 - Conclusions." National Academies of Sciences, Engineering, and Medicine. 2009. Procedures Guide for Right-of-Way Cost Estimation and Cost Management. Washington, DC: The National Academies Press. doi: 10.17226/14289.
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Page 90

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SHAs face a major challenge in controlling project budgets over the time between project ini- tiation and the completion of construction. ROW costs are among the most difficult to control and, therefore, necessitate disciplined estimating and cost management procedures. Yet, in many agencies, the existence of stovepipe divisional structures lead to failure in communicating impor- tant project information affecting scope, design, and cost. The objective of this Guide is to assist SHAs in achieving better ROW estimate consistency and accuracy during planning and project development. It was developed after a focused review of current SHA ROW practices and an extensive examination of recent ROW estimation research. SHAs, representing all geographical sections of the country, provided input on their current practices and the problems they are experiencing. A critical review of the literature and SHA information served to identify viable and successful approaches to ROW cost estimation practice and ROW cost estimation management. A Structured Approach No single estimating technique or tool will ensure the development of accurate estimates. ROW cost estimation practice and cost estimation management require a structured approach and the completion of each step in the process. The cost estimation and estimation management process necessitates completion of five basic steps that are applicable to the process across each development phase. These cost estimation and management steps are usually performed sequen- tially and repeatedly as planning and project development proceeds: 1. Determine ROW estimate basis, 2. Prepare ROW base estimate, 3. Determine ROW risk and set contingency, 4. Review ROW Cost Estimate, and 5. Approve and communicate ROW Cost Estimate. To achieve accurate ROW cost estimates, it is necessary to 1. Complete every step in the estimation process during all phases of project development. 2. Document estimate basis, assumptions, and back-up calculations thoroughly. 3. Identify project risks and uncertainties early, and use these explicitly identified risks to establish appropriate contingencies. 4. Anticipate external cost influences and incorporate them into the estimate. 5. Perform estimate reviews to confirm that the estimate is accurate and fully reflects the project scope. 88 C H A P T E R 8 Conclusions

Conclusions 89 Finally, it is important that, throughout the appraisal and acquisition process, the actual ROW expenditures are used as the basis for forecasting total ROW expenses. Comparing the forecast against the budget allows the project development team to respond to potential changes in cost. This cost management focus requires the following steps: 1. Assess ROW scope, conditions, and cost; 2. Evaluate potential cost effect; and 3. Adjust ROW budget. Although cost management is more difficult at this time, the project development team should start when the first property acquisitions are made so as to establish cost trends and monitor these trends as they affect total forecasted ROW costs relative to baseline budgets. Decisions can still be implemented that will influence the effective use of project and program funds. Collaborative Atmosphere The 2006 Best Practices in Right-of-Way Acquisition and Utility Relocation scan-tour report stated that a common trait of those agencies that “experienced considerable success in improv- ing their ROW acquisition and utility relocation processes” was a supportive institutional environment (Cambridge Systematics, 2006). Agency management should encourage a col- laborative atmosphere where actions that affect more than one discipline receive full consid- eration from all affected parties. Supporting divisions such as ROW should have open com- munication with the project development team and project manager because alignment and design decisions affect ROW cost. In this context, management should insist that ROW activ- ities are performed as much as possible in parallel with other functions, rather than waiting for a “hand-off” from an upstream function. Thus, management should do the following: 1. Create an environment for success • Dedicate resources to ROW estimator training and development of a ROW estimating pro- cedures manual. Trained ROW estimators can efficiently produce accurate estimates. • Dedicate resources to creating accurate ROW databases and provide staff resources to man- age the databases. 2. Create procedures for establishing a Baseline ROW Cost Estimate • Agencies must have procedures to support the establishment of a baseline ROW estimate for each project. The Baseline ROW Cost Estimate establishes a measure for project per- formance throughout project development. 3. Create processes to identify risk and for setting appropriate contingency • Early identification of ROW risk and uncertainty will help focus design efforts that miti- gate ROW cost. Setting a contingency amount that reflects these risks and uncertainties will allow for the appropriate understanding and communication of estimate accuracy. 4. Require ROW estimate reviews • A peer review of every ROW estimate and the use of a formal approval process after the review will improve accuracy and accountability. 5. Demand ROW estimate documentation • Documentation provides the information necessary for managing the project and making informed decisions. Management cannot properly correct a problem without knowing how an estimate was prepared or what changes were made during project development. 6. Create ROW cost control mechanisms • The Baseline ROW Cost Estimate, together with the documentation supporting estimate updates, will provide management with the information to make timely decisions.

• Cost control continues throughout the appraisal and acquisition process as actual expen- ditures for right-of-way form the basis for comparing forecasted ROW costs with the updated baseline budget. 7. Support good communication practices • Identification and communication of a project’s early stage uncertainty and the fact that unknowns can affect scope, costs, and time will help in managing project cost expectations. • The communication between disciplines of ROW estimate precision, uncertainty, and risks and to stakeholders can affect project success significantly. Challenges Implementing new concepts recommended in this Guide will involve facing the challenges that accompany change. Meeting those challenges will ultimately require a commitment by the agency’s senior management to direct and support change. SHA executive management must provide the leadership to institute the practices described herein and provide members of their ROW staff with the resources to participate in training and AASHTO ROW activities that enhance their base of knowledge. The benefit of such commitment will be manifested in proj- ects that are consistently within budget and on schedule and that fulfill their need and purpose, as defined by their scope. This benefit will also improve program management by allowing for better allocation of funds to projects to meet the needs of the ultimate customer: the public. 90 Procedures Guide for Right-of-Way Cost Estimation and Cost Management

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TRB’s National Cooperative Highway Research Program (NCHRP) Report 625: Procedures Guide for Right-of-Way Cost Estimation and Cost Management explores approaches for developing right-of-way (ROW) cost estimates. The report also examines ways to track and manage ROW cost during all phases of project development, including planning, programming, and preliminary and final design.

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