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OCR for page 113
78 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects
costs) illustrates a higher increasing trend over this time period. This pattern is more prevalent
and statistically significant for the heavy rail projects than for the light rail projects.
These soft cost percentages of construction costs by project development phase figures are
consistent with the findings of Figure 37. Soft costs of all kinds have risen since the 1970s, but
the pattern is strongest in heavy rail projects. Causes of this trend may include increasingly
stringent environmental or mitigation requirements, the trend from new construction toward
extending existing rail lines, or changing institutional roles or construction management
techniques.
The opposite logic is also likely true and may have a greater impact on these results, although
in the same direction. Many of the heavy rail projects started in the 1970s were extension proj-
ects along already well-established networks and constructed by sponsoring organizations with
significant engineering and design capability. Light rail projects, by contrast, were constructed
at emerging agencies that had to contract and develop their engineering and design capabilities.
The project development demands may have increased for all of the projects; the actual percent-
age increase was relatively larger for the heavy rail agencies since they started from a lower soft
cost percentage due to more limited learning curve effects.
C.7. Soft Costs by Complexity: Overall Project Size
Soft costs can generally be expected to rise with the technical complexity of the project.
However, there are myriad ways to quantify complexity, and the choice of soft cost measure-
ment may be important since construction costs can also generally be expected to rise with
technical complexity.
Figure 41 shows that soft cost percentage is not dependent on the total cost of the overall proj-
ect. There is virtually no relationship or correlation of the soft cost percent of construction to
the total project expense. This is consistent for each of the light and heavy rail modes and the
total project database.
In a similar vein, Figure 42 shows that soft costs do not depend on the total cost for the con-
struction portion of the project either. As noted above, there was no soft cost percentage relation-
ship with total project cost and also here with project construction costs. If anything, soft costs
appear to decline as construction costs decline, suggesting some economies of scale in engineer-
ing and management. The correlations, however, are not statistically significant.
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
Soft Costs (% of Construction)
Soft Costs (% of Construction)
Soft Costs (% of Construction)
100% 100% 100%
90% 2 90% 90% 2
R = 0.01 2
R = 0.02 80% R = 0.04
80% 80%
70% 70% 70%
60% 60% 60%
50% 50% 50%
40% 40% 40%
30% 30% 30%
20% 20% 20%
10% 10% 10%
0% 0% 0%
$0.0 $0.5 $1.0 $1.5 $2.0 $0 $2 $4 $6 $- $2 $4 $6
Billions Billions Billions
Total Proj. Cost (National 2008$) Total Proj. Cost (National 2008$) Total Proj. Cost (National 2008$)
2 2 2
R =0 .01 t-Stat = -0.43 R = 0.02 t-Stat = -0.66 R = 0.04 t-Stat: -1.47
Figure 41. Soft costs as a percentage of construction versus overall project cost.
OCR for page 114
Supplementary As-Built Cost Analysis 79
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
Soft Costs (% of Construction)
Soft Costs (% of Construction)
Soft Costs (% of Construction)
100% 100% 100%
90% 2 90% 2 90%
R = 0.05 R = 0.04 2
R = 0.07
80% 80% 80%
70% 70% 70%
60% 60% 60%
50% 50% 50%
40% 40% 40%
30% 30% 30%
20% 20% 20%
10% 10% 10%
0% 0% 0%
$0.0 $0.5 $1.0 $1.5 $0 $1 $2 $3 $- $1 $2 $3
Billions Billions
Billions
Construction Cost (2008$) Construction Cost (2008$)
Construction Cost (2008$)
2 2 2
R =0 .05 t-Stat = -1.04 R = 0.04 t-Stat = -0.98 R = 0.07 t-Stat: -1.94
Figure 42. Soft costs as a percentage of construction versus construction cost.
Figure 43, Figure 44, and Figure 45 disaggregate the analysis in Figure 42 summarizing the soft
costs by project development phase as defined earlier: preliminary engineering and final design,
construction administration and management, and all other soft costs.
Figure 43 presents the combined engineering and design phase costs as a percentage of total
construction costs. These subsets combine the project development aspects of the engineering
and design phases, the various development functions during the construction phase, and then
all of the other supporting project development efforts. The light rail, heavy rail, and combined
analysis show no relationship. Heavy rail projects are more complex, especially those with higher
project costs. This greater complexity would predict a flat or slightly increasing soft cost percent-
age of construction costs, yet the combined project database mixes these contrasting relation-
ships with a slightly declining relationship with little statistical reliability. These results confirm
that engineering and design costs as a percentage of construction cost do not consistently depend
on the total cost of the overall construction project, other things being equal.
Figure 44 presents construction phase soft costs as a percent of construction costs against the
dollar value construction cost of a project. In light rail, these project administration and man-
agement costs fall in percentage terms as the magnitude of the project grows; however, no sta-
tistically significant pattern holds for heavy rail or the combined project database. This finding
for light rail is consistent with the same pattern for final design costs and further supports the
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
50% 50% 50%
45% 2 45% 45%
R = 0.00
PE + FD Costs (% of
PE + FD Costs (% of
PE + FD Costs (% of
40% 40% 2 40% 2
R = 0.01
R = 0.02
Construction)
Construction)
Construction)
35% 35% 35%
30% 30% 30%
25% 25% 25%
20% 20% 20%
15% 15% 15%
10% 10% 10%
5% 5% 5%
0% 0% 0%
$0 $500 $1,000 $1,500 $2,000 $0 $2,000 $4,000 $6,000 $- $2,000 $4,000 $6,000
Millions Millions Millions
Construction Cost (2008$) Construction Cost (2008$) Construction Cost (2008$)
2 2 2
R = 0.00 t-Stat =- 0.16 R = 0.02 t-Stat =0 .65 R = 0.01 t-Stat: = -0.78
Figure 43. Preliminary engineering and final design costs as a percentage of construction versus
construction cost.
OCR for page 115
80 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
Admin. Costs (% of Construction)
Admin. Costs (% of Construction)
Admin. Costs (% of Construction)
25% 25% 25%
2 2
R = 0.18 2
R = 0.01 R = 0.04
20% 20% 20%
15% 15% 15%
10% 10% 10%
5% 5% 5%
0% 0% 0%
$0 $500 $1,000 $1,500 $0 $1,000 $2,000 $3,000 $4,000 $- $1,000 $2,000 $3,000 $4,000
Millions Millions Millions
Construction Cost (2008$) Construction Cost (2008$) Construction Cost (2008$)
2 2 2
R = 0.18 t-Stat =- 2.13 R = 0.01 t-Stat =- 0.45 R = 0.04 t-Stat: = -1.46
Figure 44. Project administration and construction management costs as a percentage of construction versus
construction cost.
hypothesis that light rail is less complex and therefore its soft costs do not scale up with construc-
tion costs.
Lastly, Figure 45 completes the analysis by measuring the relationship between dollar value
construction cost and all other soft costs not explicitly accounted for in the engineering and con-
struction phases. No relationship is shown, which indicates the relatively inconsistent makeup
of other soft costs.
The next refinement of soft costs is to examine the phase breakdown for the engineering and
design phases into the preliminary engineering and final design phases. Figure 46 presents the
preliminary engineering phase soft costs compared to overall construction costs. The prelimi-
nary engineering phase suggests an increase in the soft cost percentage of construction cost with
increasing construction costs for both modes, but since the relationship is not significant in sta-
tistical terms, it is not clear that the relationship is not zero. Figure 47 presents the same analy-
sis structure for the final design phase. The light rail analysis shows a more (but not profoundly)
statistically significant decline in soft cost percentage with the increasing project construction
cost. The heavy rail mode results are flat for the full range of construction costs, indicating that
the increasing complexity of more expensive heavy rail projects requires greater soft cost resources
through a consistent percentage of construction costs.
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
Other Costs (% of Construction)
Other Costs (% of Construction)
Other Costs (% of Construction)
25% 25% 25%
20% 20% 20%
2
R = 0.00 2 2
R = 0.10 R = 0.06
15% 15% 15%
10% 10% 10%
5% 5% 5%
0% 0% 0%
$0 $500 $1,000 $1,500 $0 $1,000 $2,000 $3,000 $4,000 $- $1,000 $2,000 $3,000 $4,000
Millions Millions Millions
Construction Cost (2008$) Construction Cost (2008$) Construction Cost (2008$)
2 2 2
R = 0.00 t-Stat =0 .09 R = 0.10 t-Stat =- 1.60 R = 0.06 t-Stat: = -1.67
Figure 45. Other soft costs as a percentage of construction versus construction cost.
OCR for page 116
Supplementary As-Built Cost Analysis 81
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
25%
PE Costs (% of Construction)
25% 25%
PE Costs (% of Construction)
PE Costs (% of Construction)
20% 20% 20%
2
R = 0.08 2 2
R = 0.03 R = 0.06
15% 15% 15%
10% 10% 10%
5% 5% 5%
0% 0% 0%
$0 $500 $1,000 $1,500 $0 $1,000 $2,000 $3,000 $4,000 $- $1,000 $2,000 $3,000 $4,000
Millions Millions Millions
Construction Cost (2008$) Construction Cost (2008$) Construction Cost (2008$)
2 2 2
R = 0.08 t-Stat = 1.33 R = 0.03 t-Stat =0 .88 R = 0.06 t-Stat: = 1.73
Figure 46. Preliminary engineering costs as a percentage of construction versus construction cost.
This analysis suggests economies of scale in light rail construction, primarily through the
reduction of final design expenses, but the results are inconclusive. Heavy rail shows no such
trend, nor does the pattern appear for preliminary engineering.
An alternative explanation for the notion of economies of scale in light rail is that certain con-
struction conditions, such as tunneling and bridging, cause overall construction costs to rise
much faster than the design and engineering of these conditions. This would cause engineering
costs as percent age of construction to decline, not because of economies of scale but because of
the way soft costs are measured. The heavy rail analysis in Figure 47 may not show this pattern
because of the complexity of heavy rail. This possibility is explored further in sections below.
The preceding exhibits focused on project magnitude as a proxy for complexity, and have
magnitude as overall costs and construction costs. Two alternative ways to measure project mag-
nitude may be alignment length and number of stations, as the following figures explore.
Figure 48 measures project magnitude by alignment length (linear feet of guideway) and
shows only a weak and statistically insignificant correlation with percentage soft costs. No con-
clusion can be drawn here.
Number of stations also indicates overall project size. Locating and designing stations can
present challenges to the project development process and could be factors influencing soft costs
LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL
25%
FD Costs (% of Construction)
25% 25%
FD Costs (% of Construction)
FD Costs (% of Construction)
2
R = 0.06 2
R = 0.00
20% 20% 20% 2
R = 0.07
15% 15% 15%
10% 10% 10%
5% 5% 5%
0% 0% 0%
$0 $500 $1,000 $1,500 $0 $1,000 $2,000 $3,000 $4,000 $- $1,000 $2,000 $3,000 $4,000
Millions Millions Millions
Construction Cost (2008$) Construction Cost (2008$) Construction Cost (2008$)
2 2 2
R = 0.06 t-Stat = -1.11 R = 0.00 t-Stat = -0.30 R = 0.07 t-Stat: = -1.91
Figure 47. Final design costs as a percentage of construction versus construction cost.
