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A structured approach is critical to achieving an accurate ROW cost estimate and to ROW cost management (CE/CM). A structured approach is, therefore, presented in this Guide. Such an approach provides the structure needed for improving the accuracy of ROW cost estimates and managing ROW cost during project development. This approach provides a systematic method- ology for describing the CE/CM process during all phases of project development. Introduction Using a structured approach ensures that the financial effects of both design and ROW deci- sions are always visible to the project team. To ensure this visibility, the cost estimating and cost management processes must be integrated. Often, these processes are performed separately and at distinctly different times during project development. This separation contributes to project cost growth. In many agencies, the importance of cost management in managing ROW costs is not recognized. Another issue is the lack of integration between cost estimating and cost man- agement during the project development process (PDP). SHA professionals who perform ROW planning and estimating must be closely aligned with those responsible for the project design functions. Estimate accuracy is compromised if the interface between the CE/CM processes and the PDP is not properly aligned. Finally, the process approach followed in this Guide permits the description of several critical steps in ROW CE/CM that are not usually given proper attention, such as risk analysis to support cost contingencies and detailed estimate reviews and approvals. This chapter provides an overview of an agency-level approach to ROW CE/CM. The approach discussed in this Guide is necessarily generic so that it can be adapted by SHAs while they retain their unique PDP procedures. The Guideâs approach reflects concepts presented in NCHRP Report 574, which describes a broader set of CE/CM strategies, methods, and tools. Detailed process flow diagrams and corresponding discussions are included in Chapters 4, 5, 6, and 7. Specific tools for ROW CE/CM are described in Appendix A and are referenced in the detailed discussions throughout the Guide. Agency-Level Process Flowchart Figure 3.1 shows an agency-level flowchart of the main ROW CE/CM processes. The plan- ning and project development phases were discussed in Chapter 1. The key concepts in this flow- chart are (1) setting a baseline ROW cost during the programming phase to support a priority 23 C H A P T E R 3 Agency-Level Process Overview
24 Procedures Guide for Right-of-Way Cost Estimation and Cost Management Pl an ni ng Transportation Need Conceptual ROW Cost Estimating ROW Cost Management Update ROW Cost Estimating Baseline ROW Cost Estimating Pr og ra m m ing Pr el im in ar y De sig n Conceptual ROW Requirements Conceptual ROW Cost Esimate ROW Requirements Baseline ROW Cost Estimate (for Authorization) ROW Requirements (Preliminary ROW Plans) Final ROW Plans Forecasted Total Cost Letting Fi na l D es ign * STIP Priority Program Long Range Plan * Represents the dynamic nature of the milestone dependent on the practices of the State highway agency. * Actual Parcel Cost Updated ROW Cost Estimate Figure 3.1. Agency-level flowchart for right-of-way cost estimating and cost management.
program; and (2) updating and managing the ROW cost estimate in relation to this baseline as the ROW scope is detailed during preliminary design. Estimating is cyclicâit must be performed repeatedly as project design proceeds so that there will be no periods of cost blackout. ROW appraisal and acquisition occurs during the final design phase of project development. The appraisal and acquisition processes are considered part of project development. All costs related to acquiring properties are input data supporting the ROW cost management step. The actual costs are compared with the ROW budget included in the STIP. Final ROW cost performance can then be measured against the baseline cost established during programming and the budget included in the STIP. Figure 3.1 presents the overall ROW CE/CM process from the identification of transportation need at the planning phase through the acquisition of right-of-way during the final design phase. Each of the major ROW cost estimates, corresponding to a project development phase, is shown in Figure 3.1. Developing the generic agency-level flowchart was complicated because there is not a clear distinction across SHAs relative to when a given project development phase starts, when it ends, and how ROW cost estimates are integrated with these phases. The most important event in terms of estimate preparation is the record of decision (ROD), which summarizes any mitiga- tion measures required; such measures can significantly affect land requirements. Final design activities and property acquisition [with the exception of hardship and protective buying, as defined in §771.117(d)], cannot proceed until the ROD is signed. Based on conversations with SHAs, this usually occurs toward the end of the programming phase of project development when the preferred alternative is known. Further, the number of years that compose a priority program varies across SHAs. Some SHAs have priority programs that include projects 10 years from the projected letting date. Alterna- tively, the priority program in other SHAs is composed of projects only 5 years from the pro- jected letting date. The number of years that a project included in the priority program precedes its letting date affects the timing when the baseline estimate is prepared, as well as the number of estimate updates required before including a project in the STIP (usually at year four). Additionally, the signing of the ROD affects the project development activities. If major activities to advance the project (i.e., final design, acquisition of right-of-way, approval of PS&E) have not occurred within 3 years after approval of the final environmental impact state- ment (EIS) or last Administration approval, a written reevaluation is required of a final EIS, per 23 CFR 771.129(b), before further approvals may be granted (Ms. Caryn Brookman, Envi- ronmental Specialist, FHWA). Project time line variations are represented on the flowcharts with an asterisked wavy line to denote that the timing of when projects are included in plans and programs is dynamic and varies among SHAs. As shown in Figure 3.1, when an SHAâs priority program begins and when the esti- mate is input into the STIP may vary. The point at which the baseline ROW estimate is devel- oped will also vary. These milestones and differences in project phase definition and timing can also vary from project to project, depending on the project characteristics (e.g., project size and the complexity and amount of ROW required). The intent of displaying the ROW cost estimating and cost estimate management activities linked to project development phases is to communicate the critical relationship between ROW activities and the project development process. Moreover, this illustration stresses the relation- ship that should exist between personnel who estimate and procure right-of-way and personnel who plan and design the project. ROW requirements, defined by the project scope, are the major input into ROW cost estimation and cost estimate management. Design personnel, for example, refine the project scope, and hence the ROW requirements, as project development progresses. Agency-Level Process Overview 25
Following the completion of a ROW cost estimate and its review and approval, a total ROW cost is communicated to the project manager and the project development team. The ROW cost estimates completed during planning, programming, and preliminary design have been defined as the Conceptual ROW Cost Estimate, the Baseline ROW Cost Estimate, and the Updated ROW Cost Estimate, respectively. These estimates are outputs of the first three esti- mating processes shown on the agency-level flowchart. The fourth process in the flowchart, ROW Cost Management, occurs primarily during final design. Further, cost estimates are not usually completed during final design because the emphasis is on ROW appraisals and acquisition with ROW Cost Management tracking expenditures and then forecasting funds needed to complete ROW acquisition based on trends from actual purchases and other effects (e.g., damages). ROW Cost Estimating and Cost Estimation Management As SHAs prepare project cost estimates to support financial decisions, these estimates should include all cost elements. The major project cost elements are preliminary engineering, construc- tion, and right-of-way. The construction component can include environmental mitigation costs, utility relocation costs, and costs related to railroad areas. These three areas are often iden- tified as unique cost components separate from construction costs. Right-of-way may also include costs related to utility relocation and railroad adjustments when property is affected. This Guide specifically focuses on ROW cost elements. The ROW cost estimate is the first step in building a credible budget for securing the neces- sary real estate for a project. The estimate allows ROW management to forecast capital outlay support personnel requirements, capital outlay expenditures, and future programming needs. This estimate also provides the ROW cost amount a project manager must include in the total project cost estimate. Direct communication between the ROW and project development staffs is essential during all phases of project development. This communication starts with the initi- ation of planning studies and carries through to completion of the final design. Process Steps Three cost estimating processes are shown in Figure 3.1 and are further described in terms of process steps. Four cost estimating steps from Table 2.1 are tailored to fit ROW cost estimating specifically and, at the same time, follow the basic concepts under the description of each step in Table 2.1. Similarly, cost estimate management is required for the first three cost estimate processes in the form of estimate approvals and communication of estimate results. These two steps are adapted from Table 2.2 and modified to reflect their use in ROW cost estimating. Thus, five steps are used to describe the ROW cost estimate process that occurs during planning, pro- gramming, and preliminary design. The cost estimate management process shown in Figure 3.1 is also described in terms of process steps. The last three steps in Table 2.2 are considered but tailored to fit ROW cost management based on where ROW appraisal and acquisition is occurring in the project development process. General ROW Cost Estimating Concepts Unlike the estimates for the construction and engineering/design components of a project, the ROW estimate typically has few elements. The basic ROW estimate elements are ⢠Land only. Value based on highest and best use of land (e.g., residential, agricultural, indus- trial, etc). ⢠Land and structures. Value based on highest and best use of property as improved or as vacant, which ever produces the highest value based on types of structures (e.g., house or busi- ness building), and the effect of take on land and structures (whole or partial take). 26 Procedures Guide for Right-of-Way Cost Estimation and Cost Management
⢠Other property improvements. Assessment of the cost or contributing value of an improve- ment when taken (e.g., partial removal of a fence). ⢠Damages. Assessment of the reduction in value of the remaining property by virtue of the property acquired or the cost to cure a physical effect to a property in the case of a partial take (e.g., replace fence at a different location on the property). ⢠Utility relocation. Reimbursement for relocation of existing utility. ⢠Relocation assistance program (RAP) costs. Relocation payments for residential occupants, businesses, farms, and non-profit organizations [as specified in Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs (49 CFR 24)]. ⢠Administrative settlements. Cost differential to avoid condemnation [as specified in 49 CFR 24.102(c)(2)(ii) and 49 CFR 24.102(i)]. ⢠Settlements or trials. Cost differential for properties that proceed to condemnation. ⢠Other costs. Demolition of existing facilities and property management when necessary. ⢠Support cost. Cost of labor for title, appraisal, appraisal review, negotiations, and so on. ⢠Inflation. Cost element that reflects the difference between the current dollar estimate and the estimated cost when the property is acquired (appreciation). Although there are fewer ROW elements to estimate than for construction items, these ele- ments are frequently estimated repetitively, depending on the specific ROW project requirements (number of parcels affected). Additionally, there are differences between parcels. For example, land may not have any structures (e.g., buildings) or other improvements, so a ROW estimate for that parcel would only include the land element and relevant administration costs. The type of land use is a key determinant in the difficulty of preparing the estimate. Key inputs used to prepare ROW estimates include ⢠Requirements. Total acreage with no parcels identified to specific parcels to be acquired with complete description of what is on the parcel and will be affected by the take. ⢠Land market values. Tax assessor data, comparable sales through real estate agents, detailed market surveys, and verified market data. ⢠Historical data. Percentages or cost data on relocation assistance program, factors to cover costs due to improvements or account for costs due to damages. ⢠Real estate inflation rate. Reflects the appreciation rate from the current day estimate to the time when the right-of-way is acquired. ⢠Condemnation rate. Percentages of parcels that will go to Eminent Domain. ⢠Future development. Projection of highest and best use of property at the time when the property is likely to be acquired. A major estimating challenge is determining values for these inputs, especially when prepar- ing planning and programming estimates, because the actual purchase of the right-of-way will occur in the future. ROW requirements evolve as design concepts are developed. Conceptual ROW Cost Estimate Conceptual ROW Cost Estimates are program study estimates used for comparing project alternatives. The estimator usually has good-quality aerials or map sheets with an overlay of pro- posed ROW alternatives. There may be one overlay with all alternatives or separate overlays for each alternative. In many SHAs, these ROW estimates are prepared in the planning division, rather than by ROW staff. Because it is so early in project development, there is usually only lim- ited scope information: ⢠Hypothetical project length and width; ⢠Line drawings on aerials; ⢠Statistical costs factors; and ⢠Length, width, and percent residential, commercial, agricultural, and industrial information for the project. Agency-Level Process Overview 27
FDOT considers that these estimates are for internal use only in developing the long-range plan. Caltrans guidance directs the estimator to mark the face of the ROW Data Sheet for this type of estimate: âNOT VALID FOR BUDGETING OR PROGRAMMING PURPOSESâ and the reasons for this notation are to be indicated in the estimateâs transmittal memorandum. Table 3.1 shows specific steps associated with Conceptual ROW Cost Estimating (adapted from Tables 2.2 and 2.3). Baseline ROW Cost Estimate The estimate completed at the end of the programming phase establishes the Baseline ROW Cost Estimate that management should use to evaluate future ROW cost estimates and align- ment changes during preliminary design and during ROW acquisition. During programming, several alternative solutions may be evaluated based on project complexity; each requires a ROW cost estimate. The Baseline ROW Cost Estimate is prepared at a point in project development that is typically within 10 years or less from the projected construction letting and the ROW cost is included in the priority program. Some SHAs include ROW cost in their priority program funding for each project that has a ROW requirement. Other SHAs use a ROW âset asideâ fund or âpot of moneyâ approach to pro- vide funds for ROW cost. Regardless, there is still a need for establishing a baseline ROW cost for management to use in controlling project cost and managing overall program performance. The baseline cost is used to measure the effect of ROW/design tradeoffs throughout preliminary design. ROW design tradeoffs can reduce project cost. Table 3.2 summarizes the steps in prepar- ing a Baseline ROW Cost Estimate (adapted from Tables 2.2 and 2.3). Update ROW Cost Estimate Estimates must be updated whenever project scope, scheduling, or cost change substantially. Updating a ROW estimate may involve little more than substituting an amended page to an 28 Procedures Guide for Right-of-Way Cost Estimation and Cost Management Cost Estimating Step Actions Determine conceptual ROW estimate basis Review ROW requirement as documented per project type and scope Create ROW project estimate file Prepare conceptual ROW base estimate Review estimate basis Document observations from field visit Calculate total area by land type Develop cost basis for each ROW element Convert cost basis to estimate for each element Document estimate assumptions including uncertain items Summarize all estimate elements for total ROW cost Determine conceptual ROW risk and set contingency Identify, document, and evaluate major risks Assign a percentage contingency to account for risks Compile total cost estimate (base plus contingency) Review conceptual ROW cost estimate Review estimate basis and assumptions Verify completeness and cost data Review contingency amount based on identified risks Approve and communicate conceptual ROW cost estimate Obtain management approval Authorize communication of the estimate Table 3.1. Conceptual ROW cost estimating.
otherwise current estimate or could involve preparing a completely new estimate based on bet- ter information concerning real estate requirements or costs. Once a project is part of the STIP, updating the baseline estimate may occur periodically (typically annually) or whenever it is determined that the latest estimate is no longer valid. Table 3.3 depicts the steps for creating the Updated ROW Cost Estimate (adapted from Tables 2.1 and 2.2). Project Complexity and Effect on Cost Estimation The level of effort for planning and developing projects depends on project complexity. Tables 3.4, 3.5, and 3.6 describe three different project complexity scenarios. These tables are based on the Recognition of Project Complexity Tool (NCHRP Report 574, Tool Appendix R1.1). The ROW complexity scenario that describes a project will affect the need for and degree of the ROW CE/CM effort. For instance, projects in the most complex category (major projects) will require several estimates because of the need to evaluate several alternatives for a major project, including consideration of significant environmental impacts. In this category, ROW require- ments may indicate that numerous people will have to be relocated from their residences or that commercial and/or industrial properties will be displaced. With a potential for several alterna- tive solutions and significant environmental analysis, several ROW estimates probably will be required before a preferred alternative and alignment are selected. Agency-Level Process Overview 29 Cost Estimating Step Actions Determine baseline ROW estimate basis Review ROW required as documented per project type and scope Request clarification of uncertain ROW requirements Document requirements in project estimate file Prepare baseline ROW base estimate Review estimate basis Document observations from field visit Calculate total area by land type based on potential parcel area Develop cost basis for each ROW element Convert cost basis to estimate for each element Document estimate assumptions including uncertain items Summarize all estimate elements for total ROW cost Determine baseline ROW risk and set contingency Identify risks Assess and analyze risks Assign contingency Document risk analysis and basis for contingency Compile total ROW cost estimate (base plus contingency) Review baseline ROW cost estimate Determine level of review Review estimate basis and assumptions Verify completeness and cost data Review contingency amount based on identified risks Prepare estimate package for approval Approve and communicate baseline ROW cost estimate Obtain management approval Authorize communication internally and externally Table 3.2. Baseline ROW cost estimating.
Moderately complex projects will typically require fewer relocations and displacements, so fewer ROW estimates will be needed. Less complex projects may require only a few ROW acqui- sitions and therefore a minimal effort will probably be required to estimate ROW costs. Finally, some projects do not require right-of-way. Thus, complexity is a consideration when prepar- ing ROW cost estimates and when managing ROW estimates. Complexity levels, with respect to projects with right-of-way, are considered in the specific guidance described in Chapters 4 through 6. ROW Cost Management Cost management during the final design phase of project development keeps the project development team current on how actual ROW acquisition costs compare with estimated cost. During this phase, the completed ROW plans are used as a basis for the appraisal and acquisi- tion process given that all parcels are known, including whether there will be a whole take or par- tial take and the effect of the take on existing conditions. Cost management consists of three steps as shown in Table 3.7 (adapted from Table 2.2). The first step focuses on a final budget check based on completed ROW plans. The second and third steps in Table 3.7 occur after the appraisal and acquisition process commences. These two steps focus on the resulting effect to the budget caused by considering actual acquisition costs of the right-of-way. 30 Procedures Guide for Right-of-Way Cost Estimation and Cost Management Cost Estimating Step Actions Update ROW estimate basis Review current ROW plans and compare with previous requirements Identify changes and potential magnitude of changes Request clarification of uncertain ROW requirements Update estimate basis in project estimate file Update ROW base estimate Review updated estimate basis to understand changes Document observations from field visit to confirm modifications Review changes to existing estimate assumptions/limitations Calculate total area for by land type for each parcel Revise cost basis for each ROW element Convert cost basis to update estimate for each element Update estimate documentation include uncertain items Summarize all estimate elements for total ROW cost Update ROW risk and set contingency Review risks Update risks as necessary Update contingency value Document updates to risk and contingency Update total cost estimate (base plus contingency) Review update ROW cost estimate Review estimate changes (basis and assumptions) Verify completeness and cost data for changes Review effect of changes on contingency amount Approve and communicate updated ROW cost estimate Review impact of changes Obtain management approval Authorize communication internally and externally Table 3.3. Update ROW cost estimating.
Agency-Level Process Overview 31 Most Complex (MAJOR) Projects Roadway New highways; major relocations New interchanges Capacity adding/major widening Major reconstruction (4R; 3R with multi-phase traffic control) Congestion Management Studies are required Traffic Control Multi-phased traffic control for highway or bridge construction that would mandate CPM during construction Major ITS (Electronic surveillance, linkages) corridor project Structures Replacement, new or rehabilitation of: - Unusual (non conventional like segmental, cable stayed, major arches or trusses, steel box girders, movable bridges, etc.) - Complex (sharp skewed (less than 70 degree) superstructure, non-conventional piers or abutments, horizontally curved girders, three dimensional structural analysis, non-conventional piles or caisson foundations, complex seismic analysis, etc.) - Major (bridge cost of $5 million or moreâFederal definition) - Unusual formations (caissons, uncommon piles, mines, Karst situation) Right-of-Way ROW plans are needed and numerous relocations of residences or displacement of commercial and/or industrial properties are required. A few to over 20 property owners are involved. Major involvement of environmental clean-up. Before and after analysis Utilities Major utility (transmission lines, substations) relocations or heavy multi-utility coordination is involved Environmental Environmental Impact Studies are required or complex Environmental Assessment without mitigated finding of no significant impact Studies of multiple alternatives Continued public and elected officials involvement in analyzing and selecting alternates Other agencies (such as FHWA, COE, PHMC, Game Commission, Fish & Boat Commission, DEP, DCNR, EPA, Agricultural Board, etc.) are heavily involved to protect air; water; games; fish, threatened and endangered species; cultural resources (historical, archaeological, parks, wetlands, etc), etc. Stakeholders Controversial (lack of consensus) and high profile projects. (Fast track design/construction, high public impact, high interaction of elected officials, etc.) Major coordination among numerous stakeholders is required. - Table 3.4. Most complex (Major) project attributes (NCHRP Report 574 and PennDOT).
32 Procedures Guide for Right-of-Way Cost Estimation and Cost Management Moderately Complex Projects Roadway 3R and 4R projects which do not add capacity. Minor roadway relocations. Certain complex (non-trail enhancements) projects. Slides, subsidence. Traffic Control Non-ITS but major safety improvements. Interconnected traffic control/management projects. Structures Non-complex (straight geometry with minimal skew; designs using AASHTO description factors; minimal seismic analysis; footings on rock or conventional piles and abutments) bridge replacements with minor (<610m [2,000 ft]) roadway approach work. Bridge rehabilitation which requires re-analysis of bridge capacity. Bridge mounted signs. Tie back walls. Noise walls. Proprietary/non-proprietary walls. Right-of-Way ROW plans needed with less than 20 moderate to significant claims and very few relocations or displacements. Utilities Some utility relocations, most of it prior to construction, but no major utility relocations. Environmental Categorical Exclusion Level 2 or mitigated Environmental Assessment projects. Cultural resources (historical, archeological, etc.). Coordination with Museum Commission, FHWA, and/or Advisory Council Wetland mitigation Parkland involvement Water and air pollution mitigation Major coordination with Game or Fish and Boat commissions Endangered species Stakeholders Involvement of public and public officials is moderate due to non-controversial project type General communication about project progress is required Table 3.5. Moderately complex project attributes (NCHRP Report 574 and PennDOT).
Agency-Level Process Overview 33 Non-Complex (MINOR) Projects Roadway Maintenance betterment projects Overlay projects, simple widening without right-of-way (or very minimum ROW take) little or no utility coordination Non-complex enhancement projects without new bridges (e.g. bike trails) Traffic Control Single traffic control/management projects Non-ITS but minor safety improvements Structures Bridge resurfacing or repairs which do not require re-analysis of bridge capacity Pipes, box culverts or minor culvert replacements where design can be picked directly from design manual or standards or using simple software where detailed interpretation is not necessary Sign structures for which the design can be picked up directly from either the standards or using design computer software Noise walls or retaining walls for which the design can be picked up directly from either the standards or using design computer software Right-of-Way Involve minor ROW acquisitions with no displacements, maintain existing access control Utilities Minimal, if any Environmental Categorical Exclusion (Level 1A or 1B) Minimum interaction with environmental and permitting agencies Minor environmental impacts as appropriate have a Statewide Wetland Finding Do not involve cultural resources, hazardous waste, Section 4(f) evaluations or substantial flood plain encroachments Stakeholders No public controversy Table 3.6. Non-complex (Minor) project attributes (NCHRP Report 574 and PennDOT). Cost Estimating Step Description Assess right-of way scope, conditions, and cost Compare final right-of way plan requirements with previous requirements Identify specific changes in right-of way requirements by parcel Estimate cost impact on each affected parcel Compare with current budget for impacted parcel Evaluate potential cost impact Compare actual right-of way cost against current STIP budget by parcel Determine cost impact on total right-of-way Adjust right-of way budget Document changes including changes to estimate basis and assumptions Notify project development team of modified budget Table 3.7. Cost management steps.
Chapter Summary This chapter provided an agency overview of a process approach to cost estimating and cost estimate management covering project right-of-way. Four distinct processes were briefly described, including steps and actions to implement these processes. General estimating con- cepts were presented, including ten common ROW estimate elements and key inputs required to prepare estimated costs for the ten elements. Project complexity scenarios were presented because project complexity affects ROW cost estimating and cost management requirements. Chapters 4 through 6 provide specific guidance on ROW cost estimating and cost estimating management during planning, programming, and preliminary design. Chapter 7 focuses on ROW cost management during final design. 34 Procedures Guide for Right-of-Way Cost Estimation and Cost Management
