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90 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL 100% 100% 100% Soft Costs (% of Construction) Soft Costs (% of Construction) Soft Costs (% of Construction) $1,000 $10,000 $100,000 $1,000 $10,000 $100,000 $1,000 $10,000 $100,000 2 2 2 R = 0.12 R = 0.37 R = 0.30 10% 10% 10% Construction Cost (2008$) per Construction Cost (2008$) per Construction Cost (2008$) per Linear Foot Linear Foot Linear Foot 2 2 2 R = 0.12 t-Stat = -1.72 R = 0.37 t-Stat = -3.32 R = 0.30 t-Stat: = -4.27 Figure 64. Soft costs as a percentage of construction versus construction costs per linear foot on a logarithmic scale. In general, Figure 62 and Figure 63 (and Figure 30 in Section 4.5.5) show that all categories of capital costs tend to grow together. These three figures help explain why the data show that soft costs rise in dollar terms but not percentage terms when plotted against expected complexity vari- ables such as alignment profile. To further support this point, Figure 64 can be compared to Fig- ure 30. Both display the same variables on the x- and y-axes; however, Figure 64 measures soft costs as a percentage of construction costs whereas Figure 30 measures these in dollar value terms. When one variable is expressed in percentage terms, as in Figure 64, the correlation is non-existent. The preceding figures demonstrate that despite the relatively stronger cost relationships pro- duced by measuring soft costs in dollar terms, such a measurement may not provide an accurate understanding of the changing relationship between soft costs and other project characteristics. Indicators of project complexity are correlated with higher soft costs in dollar terms, and with higher costs in all categories. C.12. Soft Costs by Complexity: Right-of-Way Costs Right-of-way costs, which are primarily the cost to acquire real estate and relocate existing res- idences and businesses, appear to be mildly related to soft costs as a percentage of construction costs. High expenditures to acquire real estate and relocate land uses may be correlated with proj- ects in more dense, urban areas where soft costs might be relatively high in proportion to the construction budget. Figure 65 compares soft costs as a percentage of construction cost to right- of-way costs and shows that right-of-way costs as a percentage of total costs appear to explain a small amount of soft cost variation. Figure 66, however, shows that ROW costs per linear foot are not correlated with soft cost per- centages. These relationships indicate that soft cost percentages do not change significantly as right-of-way costs increase per linear foot. C.13. Soft Costs and Project Development Budget As a project is developed through the planning and design phases, its budgeted cost is likely to change as the project is further defined. Similarly, a project can face cost overruns during con- struction phases due to a variety of factors such as unforeseen subsurface conditions, inaccurate
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Supplementary As-Built Cost Analysis 91 LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL 60% 60% 60% Soft Costs (% of Construction) Soft Costs (% of Construction) Soft Costs (% of Construction) 50% 50% 50% 40% 40% 40% 30% 30% 30% 2 2 R = 0.01 2 R = 0.07 R = 0.10 20% 20% 20% 10% 10% 10% 0% 0% 0% 0% 10% 20% 0% 10% 20% 0% 10% 20% ROW Costs as % of Total Cost ROW Costs as % of Total Cost ROW Costs as % of Total Cost 2 2 2 R = 0.01 t-Stat = 0.40 R = 0.10 t-Stat = 1.645 R = 0.07 t-Stat: 1.87 Figure 65. Soft costs as a percentage of construction with right of way costs as a percentage of total cost. preliminary estimates, and unexpectedly high bids from contractors. To explore the potential effects of early budget estimates on actual soft cost expenditures, this report used data from the report from TCRP Project G-07 (Booz Allen Hamilton Inc., 2005). This data, provided for 22 projects in the original database, is summarized in Table 18. Figure 67 graphs the data above (outliers removed) and show that budget overruns have lit- tle impact on a project's final proportion of soft costs. Cost overruns were measured by dividing the actual as-built cost by the total project cost as it was estimated during the preliminary engi- neering phase. The outlier shown with significant cost overruns is the Tren Urbano project in San Juan, whose project requirements and design sequence changed substantially during project development, impacting the budget of the project. Soft costs as a percentage of construction decline slightly as the projects increase in cost esca- lation, but this trend is not statistically significant. This slight decline was not evident for con- struction phase project administration costs. This pattern is consistent with the previous figures: since soft costs may tend to grow in relation to other project cost categories, cost overruns have LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL 60% 60% 60% Soft Costs (% of Construction) Soft Costs (% of Construction) Soft Costs (% of Construction) 2 2 2 R = 0.00 R = 0.00 R = 0.00 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% $- $1 $2 $3 $4 $0 $2 $4 $6 $0 $2 $4 $6 Thousands Thousands Thousands ROW Cost (2008$) per Linear Foot ROW Cost (2008$) per Linear Foot ROW Cost (2008$) per Linear Foot 2 2 2 R = 0.00 t-Stat = -0.18 R = 0.00 t-Stat = 0.25 R = 0.00 t-Stat: -0.45 Figure 66. Soft costs as a percentage of construction with right of way costs per linear foot.