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As-Built Soft Cost Analysis 35 when comparing projects across agencies. For example, staff and contractor soft cost charges can be funded through separate grants and are not always reported into the project budget. The salaries of some agency staff who support engineering, design, and/or construction may be treated as an operating expense rather than charged to the capital project. Early planning and preliminary engineering costs may be charged to a general planning grant rather than attributed directly to the capital project. Insurance may be carried by the construction contractor or the sponsor agency, and/or it may be embedded into individual cost elements as an overhead cost. Project delivery mechanism The varying methods of project development and procurement present unique challenges to the breakdown and classification of project costs because cost classification can depend on institutional perspective. Sections 3.5 and 4.5.3 discuss this issue more thoroughly. 4.4. Historical Soft Costs This first portion of the soft cost analysis presents the general breakdown of project soft cost attributes within the as-built project cost database. Total project costs are described using the follow- ing categories: Soft, Vehicle, and Construction costs. Soft costs are then examined as a proportion of the Construction Costs category and then further examined by individual soft cost components. 4.4.1. Describing the Data As shown in Figure 13, construction costs made up the largest share of expenses for most proj- ects, vehicle costs range from 0 to 25% of total project cost, ROW costs 0 to 20%, and soft costs 10 to 35%. While all projects incurred construction and soft costs, some projects had no ROW or vehicle procurement costs. For example, the extension of Bay Area Rapid Transit (BART) to San Francisco International Airport (SFO) required the purchase of no additional vehicles, while the extension of the CTA's Blue Line to O'Hare Airport did not entail right-of-way costs. Pro- fessional services for the many varied rail transit capital projects in this database usually accounted for around 1035% of total project costs. This pattern forms the focus of the more detailed segmentation of these costs, presented briefly here and in more detail in Appendix C. Figure 13 illustrates soft costs, with light bars at the top, expressed as a percentage of total costs. To measure soft costs in a more commonly used format, Figure 14 shows soft costs as a percentage 100% 90% % of Total Project Costs 80% 70% 60% 50% 40% 30% 20% 10% 0% Hud-Berg II Hiawatha Salt Lake Sacram. I Hud-Berg I Portland So Sacram. Fol Portland Int Charlotte LA Gold East LA Gold Pasa Sacram. So St. Louis Portland W South NJ Pittsburgh N Portland Seg1 Pittsburgh I LA Blue San Diego VTA Tas E Pittsburgh II Denver SW VTA Capitol Phoenix CTA O'Hare DC U St. DC Anacost DC Addison DC L'Enfant DC New Ca DC Shady G DC Huntgtn DC Glenmt 1 CTA Douglas NYCT 63rd CTA Orange Baltimore DC Vienna MBTA Orang CTA Brown MARTA N-S Miami San Juan DC Anacost O DC Springfld DC Glenmt 2 DC Greenblt BART SFO Phil Frankf. NYCT Stillw Construction Costs ROW Costs Vehicle Costs Soft Costs Figure 13. Project costs by category.

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36 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects Soft Costs (% of Construction) 60% 50% 40% 30% 20% 10% 0% Hud-Berg II Hiawatha Salt Lake Sacram. I Hud-Berg I Portland So Sacram. Fol Portland Int Charlotte LA Gold East LA Gold Pasa Sacram. So St. Louis Portland W South NJ Pittsburgh N Portland Seg1 Pittsburgh I LA Blue San Diego VTA Tas E Pittsburgh II Denver SW VTA Capitol Phoenix CTA O'Hare DC U St. DC Anacost DC Addison DC L'Enfant DC New Ca DC Shady G DC Huntgtn DC Glenmt 1 CTA Douglas NYCT 63rd CTA Orange Baltimore DC Vienna MBTA Orang CTA Brown MARTA N-S Miami San Juan DC Anacost O DC Springfld DC Glenmt 2 DC Greenblt BART SFO Phil Frankf. NYCT Stillw Light Rail Heavy Rail Figure 14. Soft costs percent of construction costs by project and mode. of construction costs for these same projects. Construction costs include all of the guideway, trackwork, facility, station, systems, sitework, and special conditions costs (refer to Table 14). When expressed as a percentage of construction costs, soft costs vary considerably more across these same projects than when expressed as a percentage of the total cost--from 11% to a high of 54% of construction costs. Expressing soft costs as a percentage of construction costs is pertinent to this analysis since soft costs associated with the vehicle and right-of-way costs are expressly defined as a separate cost element in each of those associated cost categories. This relatively wide range in soft costs as a percentage of construction costs merits further examination. Note that in Figures 14 through 18, 20, and 22, the historical projects are ordered in terms of increasing soft costs as a percentage of construction costs, with separate ordering for light rail and heavy rail projects. To explore the wide range in this soft cost measure, the individual cost components that com- pose total soft costs were analyzed. Total soft costs can be segmented into six major components, as defined in the FTA SCC structure: Preliminary Engineering, Final Design, Project Management for Design and Construction, Construction Administration and Management, Insurance, and All Other Soft Costs in SCC 80. These six soft cost components are shown as a percentage of construction costs in the bar chart in Figure 15. The total percentages are consistent with those presented above in Figure 14. The six components are expressed as a percentage of overall soft costs in Figure 16, where the bar chart for each project totals 100%. The components of soft costs appear to vary considerably across projects, especially as a pro- portion of overall soft costs. For example, preliminary engineering costs (bottom measure and dark aqua in Figure 15 and Figure 16) are a very small or near-zero proportion of soft costs for some projects, while for others (e.g., Hudson-Bergen Phase 1, Phoenix) these costs are signifi- cant expenditures. In projects with little or no reported preliminary engineering costs, there was likely either a missing expenditure or it was rolled into a combined grant with another soft cost component. Insurance can account for almost 10% of construction costs (e.g., CTA Douglas Branch) for some projects, or none at all for others. This may be due to different agencies'

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As-Built Soft Cost Analysis 37 60% Soft Costs (% of Construction Costs) 50% 40% 30% 20% 10% 0% Hud-Berg II Hiawatha Salt Lake Sacram. I Hud-Berg I Portland So Sacram. Fol Portland Int Charlotte LA Gold East LA Gold Pasa Sacram. So St. Louis Portland W South NJ Pittsburgh N Portland Seg1 Pittsburgh I LA Blue San Diego VTA Tas E Pittsburgh II Denver SW VTA Capitol Phoenix CTA O'Hare DC U St. DC Anacost DC Addison DC L'Enfant DC New Ca DC Shady G DC Huntgtn DC Glenmt 1 CTA Douglas NYCT 63rd CTA Orange Baltimore DC Vienna MBTA Orang CTA Brown MARTA N-S Miami San Juan DC Anacost O DC Springfld DC Glenmt 2 DC Greenblt BART SFO Phil Frankf. NYCT Stillw PE FD Project Mgmt. for D&C Construction Admin. & Mgmt. Insurance All Other Soft Costs Figure 15. Soft cost components as a percentage of construction costs. approaches to project development, where one agency may provide project-wide wrap-up insur- ance and others may require each contractor to provide their own insurance, or some combination of these. In general, individual variances may be due to real differences in expenses incurred as a result of project characteristics, while some variation is probably due to the way in which costs are reported or categorized. The more consistent soft cost components were final design, project management, and construction management. Some projects appear to have inconsistencies in the reported soft cost experience that may indicate questionable data. For example, some projects show zero engineering or design costs, which is unlikely given the complexity of constructing major transit capital projects. In these cases, expenditures may have been classified elsewhere in the SCC structure or charged to a sep- arate, off-project funding source and not reported into the project budget. In subsequent analysis in this report, certain outliers were omitted from the more detailed analyses to eliminate the effect of these uncertain data. The decision to remove an outlier was based on analyzing the distribution of projects' soft costs, and is more fully described in Section C.4 in Appendix C. Figure 17 shows the average soft cost percentages by component for all projects in the dataset (outliers excluded) and the range of percentages encountered. The bars represent average soft-cost 100% Soft Costs (% of Total Soft Costs) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Hud-Berg II Hiawatha Salt Lake Sacram. I Hud-Berg I Portland So Sacram. Fol Portland Int Charlotte LA Gold East LA Gold Pasa Sacram. So St. Louis Portland W South NJ Pittsburgh N Portland Seg1 Pittsburgh I LA Blue San Diego VTA Tas E Pittsburgh II Denver SW VTA Capitol Phoenix CTA O'Hare DC U St. DC Anacost DC Addison DC L'Enfant DC New Ca DC Shady G DC Huntgtn DC Glenmt 1 CTA Douglas NYCT 63rd CTA Orange Baltimore DC Vienna MBTA Orang CTA Brown MARTA N-S Miami San Juan DC Anacost O DC Springfld DC Glenmt 2 DC Greenblt BART SFO Phil Frankf. NYCT Stillw PE FD Project Mgmt. for D&C Construction Admin. & Mgmt. Insurance All Other Soft Costs Figure 16. Soft cost components as percentage of total soft costs.

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38 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects 35% 60% Soft Costs (% of Construction) Soft Costs (% of Construction) 30% 50% 25% Maximum 40% Minimum 20% 30% 15% 10% 20% 5% 10% 0% Proj. Construction 0% All Other PE FD Mgmt. for Admin. Insurance All Components Soft Costs D&C & Mgmt. Soft Costs as % of Construction Average 2.7% 9.7% 8.8% 6.3% 1.6% 2.2% 31.3% Minimum 0.0% 2.6% 0.0% 0.0% 0.0% 0.0% 11.4% Maximum 8.3% 31.0% 23.2% 19.4% 9.4% 10.5% 53.6% Figure 17. Average and range of soft cost components as percent of construction. component expenditures, and the lines indicate the maximum and minimum values in the dataset. For instance, the average project incurred final design expenses of 9.7% of construction costs, but this percentage ranged as low as 2.6% for one project and as high as 31.0% for another. Most cat- egories contained projects with zero expenditures for that category, resulting in the minimum of the range being zero. Figure 17 also shows that when all components are combined, projects show average soft costs of around 31% of construction costs. However, the range of total soft costs has been as low as 11.4% for one project and as high as 53.6% for another project, after excluding outliers. To test the hypothesis that soft-cost component costs may have been inadvertently assigned and reported to a related soft cost component, the analysis grouped some related soft cost com- ponents and subtotaled them into the following three soft-cost component categories: Pre-construction costs (design and engineering), Construction expenditures (construction management, administration, etc.), and Other costs (insurance, others). Although an approximation of these project development phases, this broad categorization produces the results displayed in Figure 18 (as a percentage of construction costs) and Figure 20 (as a percentage of total soft costs). A more consistent soft cost basis appears to emerge from the analysis when soft cost compo- nents are grouped by these categories, which approximates the project development phase in which the expenditures were incurred. Figure 19 shows the averages and ranges of these three groups of soft cost components, expressed as a percentage of construction costs. This figure indicates that a typical project incurs preliminary engineering and final design costs of 12.4% of construction, and construction management and project administration soft costs of 15.1% of construction, but that these percentages can range from around 3% to 33% for some projects. When expressed as a percentage of total soft costs as shown in Figure 20, the resulting cost proportions are more consistent. About 4050% of soft costs are generally related to engineer- ing and final design, another 4050% of soft costs are related to construction management and administration, and about 10% are other costs. The first two of these three categories (engineer- ing and final design, and construction management and administration) are sometimes used in subsequent analysis in this report.

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Soft Costs (% of Total Soft Costs) Soft Costs (% of Construction) 10% 20% 30% 40% 50% 60% 0% 100% 20% 40% 60% 80% 0% Hud-Berg II Hud-Berg II Figure 18. Hiawatha Figure 20. Hiawatha Salt Lake Salt Lake Sacram. I Sacram. I Hud-Berg I Hud-Berg I Portland So Portland So Sacram. Fol Sacram. Fol Portland Int Portland Int Soft Costs (% of Construction) Charlotte Charlotte LA Gold East Average LA Gold East Minimum Maximum LA Gold Pasa 0% 5% 10% 15% 20% 25% 30% 35% LA Gold Pasa Sacram. So Sacram. So St. Louis St. Louis Portland W Portland W South NJ South NJ Pittsburgh N Design Pittsburgh N Portland Seg1 Preliminary Engineering & Final Design Portland Seg1 Pittsburgh I Pittsburgh I Preliminary Engineering + Final Design LA Blue LA Blue 31.0% 3.6% 12.4% San Diego San Diego Soft Costs as % of Construction VTA Tas E VTA Tas E Pittsburgh II Admin. & Pittsburgh II Denver SW (PE + FD) Management Denver SW VTA Capitol 33.2% 3.2% 15.1% VTA Capitol Phoenix Phoenix CTA O'Hare Minimum Maximum CTA O'Hare DC U St. DC U St. Costs DC Anacost DC Anacost Other Soft DC Addison 16.0% 0.0% 3.8% DC Addison DC L'Enfant DC L'Enfant components as a percentage of construction. Soft Costs (% of Construction) DC New Ca DC New Ca DC Shady G DC Shady G DC Huntgtn DC Huntgtn 0% 10% 20% 30% 40% 50% 60% DC Glenmt 1 DC Glenmt 1 CTA Douglas CTA Douglas NYCT 63rd Project and Construction Management Figure 19. Average and range of subtotaled soft cost NYCT 63rd CTA Orange Project and Construction Management CTA Orange All Baltimore Baltimore DC Vienna DC Vienna MBTA Orang MBTA Orang Components CTA Brown Subtotaled soft cost components as a percentage of total soft costs. CTA Brown 53.6% 11.4% 31.3% MARTA N-S MARTA N-S Subtotaled soft cost components as a percentage of construction costs. Miami Miami San Juan San Juan DC Anacost O DC Anacost O DC Springfld DC Springfld DC Glenmt 2 DC Glenmt 2 All Other Soft Costs DC Greenblt All Other Soft Costs DC Greenblt BART SFO BART SFO Phil Frankf. Phil Frankf. NYCT Stillw NYCT Stillw As-Built Soft Cost Analysis 39

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40 Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects 4.4.2. Measuring Soft Costs Developing a guidebook on the estimation of soft costs requires the identification of specific measures. This section tests a number of different ways to measure soft costs and explores how each may be used in a guidebook context. Soft costs of as-built projects can be measured in the following ways: As a percentage of total project cost; As a percentage of all other costs, excluding only soft costs; As a percentage of construction costs; In constant dollar value terms; or In constant dollars per linear foot of constructed guideway. This analysis does not rely on the first and fourth measurements on this list. Figure 13 above showed soft costs as a percentage of total project cost, and this measurement is sometimes used to describe soft costs. However, measuring soft costs as a percentage of total project cost is not an appropriate metric for a cost estimator since the estimator does not know total project cost until the soft cost estimate is complete. Soft costs may also be expressed in dollar value terms, but this measure would fail to account for differences in project size across the dataset. Therefore this analysis focuses on measuring soft costs as a percentage of all other costs, as a percentage of construction costs, and in dollars per linear foot of guideway. Figure 21 compares measuring soft costs as a percentage of all other total costs (i.e., all other costs besides soft costs themselves) and as a percentage of construction costs (i.e., excluding vehicle and right-of-way costs) and shows that these two percentage-based methods of measure- ment are highly correlated. This applies to both light and heavy rail modes and the combined analysis of projects of both modes. These results suggest that ROW and Vehicle category costs (those that are excluded when measuring construction costs only) have a relatively small effect on soft costs. This may indicate that their related soft costs (ROW and Vehicle category costs) have been accurately accounted for within each of these categories. Measuring soft costs per linear foot is another way to measure soft costs. To test the quality of this measure, all project costs were normalized by applying the national average metropolitan area Means Construction Cost Index (Murphy, 2008) and then inflating to 2008 dollars. Signifi- cant project outliers were excluded from this analysis to focus on the more consistent results. Figure 22 shows this measurement for all included projects. LIGHT RAIL HEAVY RAIL LIGHT + HEAVY RAIL 70% 70% 70% Soft Costs (% of Construction) Soft Costs (% of Construction) Soft Costs (% of Construction) 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% R2 = 0.79 R2 = 0.84 20% 20% 20% 10% 10% 10% 0% 0% 0% 0% 20% 40% 60% 0% 20% 40% 60% 0% 20% 40% 60% Soft Costs as % of All Other Costs Soft Costs as % of All Other Costs Soft Costs as % of All Other Costs R2 = 0.79 t-Stat = 9.4 R2 = 0.836 t-Stat = 11.07 R2 = 0.781 t-Stat = 13.2 Figure 21. Soft cost percentage of construction costs versus soft cost percentage of total other costs.

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As-Built Soft Cost Analysis 41 Soft Costs per Linear Foot of Guideway $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $- Sacram. I Salt Lake Sacram. Fol St. Louis Denver SW South NJ Sacram. So Hiawatha Portland Seg1 Charlotte Portland So LA Gold Pasa Portland Int VTA Capitol VTA Tas E Phoenix LA Blue Pittsburgh I Portland W Hud-Berg I Pittsburgh II San Diego Hud-Berg II LA Gold East CTA O'Hare DC Anacost O CTA Orange DC Glenmt 2 CTA Douglas DC Springfld DC Greenblt Miami DC Anacost DC Vienna Baltimore DC Glenmt 1 MARTA N-S DC U St. DC Addison DC Huntgtn DC Shady G DC New Ca DC L'Enfant BART SFO Phil Frankf. Light Rail Heavy Rail Figure 22. Soft costs per linear foot of constructed guideway by project and mode. Soft costs on a per-linear-foot basis vary considerably, even with the removal of outliers, from less than $1,000 to nearly $10,000 per linear foot (all costs in 2008 dollars). Specifically, light rail projects averaged $2,572 per linear foot, heavy rail $5,726, and all projects combined $4,044 per linear foot, as shown in Figure 23. The range for soft costs in light rail is somewhat less than for heavy rail projects. In general, soft costs tend to be higher for heavy rail, consistent with the generally higher cost of heavy rail overall. The soft cost per linear foot measure appeared to offer some consistency with the range estimates noted above. The next step in the analysis was to see if there was any relationship with the soft cost percentage of construction. Figure 24 compares the measurement of soft costs as a percentage of construction cost and as a dollar value cost per linear foot. As Figure 24 indicates, measuring soft costs as a dollar-value cost per linear foot versus a per- centage of construction cost would not yield similar results. The heavy rail projects have a some- what better relationship that may indicate a greater relationship of increasing complexity of the heavy rail projects with greater soft cost requirements. $12,000 Soft Costs per Linear Foot $10,000 $8,000 $6,000 $4,000 $2,000 $- Light Rail Heavy Rail Light & Heavy Rail Soft Costs per Linear Foot Average $ 2,572 $ 5,726 $ 4,044 Minimum $ 335 $ 1,191 $ 335 Maximum $ 6,201 $ 9,728 $ 9,728 Figure 23. Average and range of soft costs per linear foot of constructed guideway.