Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 14
CHAPTER 5
How Does the Construction
Industry Estimate Soft Costs?
Sponsors of major new transit projects approach estimating soft costs differently, depending
on how far along the project is in the planning process.
Early Phases
During the early phases of planning (alternatives analysis or preliminary engineering), a transit
project is only conceptually defined, as are the soft costs. At these early stages, transportation
planners usually identify a single corridor for construction but develop a range of options for more
specific details such as mode, alignment, station locations, and, as a result, construction costs.
Therefore, soft costs are usually treated as percentage add-ons to estimates of hard construction
costs, as shown in Exhibit 6. Cost estimators apply default unit costs to approximate construction
quantities, remediation, and other hard costs, and then simply add a percentage of hard costs for
an initial soft cost estimate.
How do cost estimators choose these percentages? They typically apply values for each soft
cost component from a range based on historical experience and project characteristics, or soft
cost "drivers." For example, most estimators will choose higher multipliers for heavy rail than
for bus rapid transit and lower multipliers if the sponsor plans to contract the project with an
alternative delivery mechanism such as designbuild. Exhibit 7 provides a more complete list,
and Chapter 6 demonstrates a technique to tailor a soft cost estimate to a project.
How large are the soft cost percentages? Based on a survey of cost estimators at transit agen-
cies and consultants across the country, most cost estimators start with a midpoint for these
add-ons representing around 2535% of construction costs, as Exhibit 8 indicates. However,
cost estimators almost always adjust up or down from these midpoints, so the ranges from which
estimators choose the percentages extend higher or lower than these midpoints.
Later Phases
During the final design phase and as construction begins, estimates of soft costs based on a
percentage of construction cost are replaced with more closely tailored, bottom-up estimates
that are based on a more detailed understanding of the project than was available in earlier stages.
Rather than simply multiplying a construction cost estimate by a percentage, project managers
usually develop their own soft cost estimates based on project characteristics that are known with
better certainty at this stage, such as the project's work breakdown structure, staffing plans, design
contract(s), and even the number and complexity of design drawings. For instance, administra-
tion costs may be estimated based on an estimated headcount and project duration, which are
in turn based on the construction schedule and number of contracts.
16
OCR for page 15
How Does the Construction Industry Estimate Soft Costs? 17
Construction Cost
Guideway $
Stations $
Maintenance Yard $
Etc. $
TOTAL $
Soft Costs
x Percentage = $
Vehicle Cost
Vehicles $
Vehicle Soft Costs $
TOTAL $
Real Estate Cost
Acquisitions $
RE Soft Costs $
TOTAL $
TOTAL PROJECT COST $
Exhibit 6. Cost estimation in early
project phases.
Since the project's specific characteristics are more well-defined in these later stages, sponsors also
have a better idea of soft costs that are highly dependent on the specific project sponsor, such as:
· Whether a third party will be managing construction;
· How the sponsor will account for agency staff salaries and wages;
· Who will bear insurance costs (sponsor agency or contractors); and
· If the project will require significant effort for environmental work, permits, or public
involvement.
LOWER % MIXED/MID-RANGE HIGHER %
SOFT COSTS % SOFT COSTS SOFT COSTS
MODE Bus Rapid Transit Commuter Rail Heavy Rail
Light Rail
PROJECT DELIVERY DesignBuild DesignBidBuild
DesignBuildOperateMaintain
Full Turnkey
ALIGNMENT Elevated Alignment Tunnel Alignment
OTHER CONDITIONS New Right-of-Way Differing Subsurface
Conditions
Exhibit 7. Project characteristics guiding soft cost percentage estimates within a range.
