The National Academies Press

Currently Skimming:

Pages 13-18

The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.

From page 13... ... Each cost escalation factor describes a reason behind changes in cost estimations. These factors can be managed throughout the project development process either through cost estimation practice or cost estimation management methods and tools. Read the entire page →
From page 14... ... Scope changes, which should be controllable by the state highway agency, but which still happen, can lead to project cost escalation. Such changes may include additions to or deletions from the project scope. Read the entire page →
From page 15... ... The size of the project affects competition for a project and the number of bids that a state highway agency receives for the work. Inaccurate assessment of the market conditions can lead to incorrect project cost estimation. Read the entire page →
From page 16... ... From the literature concerning project cost estimation and from interviews with people in the industry, it is clear that there exist eight overarching or global strategies that can affect the accuracy and consistency of project estimates and costs. As mentioned previously, a strategy is "a plan of action intended on accomplishing a specific goal." This definition is used as the basis for developing short statements about each strategy as follows: • Management strategy -- Manage the estimation process and costs through all stages of project development; • Scope and schedule strategy -- Formulate definitive processes for controlling project scope and schedule changes; • Off-prism strategy -- Use proactive methods for engaging external participants and assessing the macroenvironmental conditions that can influence project costs; • Risk strategy -- Identify risks, quantify their impact on cost, and take actions to mitigate the impact of risks as the project scope is developed; • Delivery and procurement strategy -- Apply appropriate delivery methods to better manage cost because project delivery influences both project risk and cost; • Document quality strategy -- Promote cost estimate accuracy and consistency through improved project documents; • Estimate quality strategy -- Use qualified personnel and uniform approaches to achieve improved estimate consistency and accuracy; and • Integrity strategy -- Ensure that checks and balances are in place to maintain estimate accuracy and to minimize the impact of outside pressures that can cause optimistic biases in estimates. Read the entire page →
From page 17... ... It appears that the estimation practices of many state highway agencies are based solely on the experience of the personnel in charge of estimation, usually the head of the estimation section or the chief of design. State highway agencies must approach estimation development in the same manner as design and construction -- with documented processes to guide cost estimation practice and cost estimation management throughout project development. Read the entire page →
From page 18... ... Global Strategies Cost Escalation Factors M an ag em en t Sc o pe an d Sc he du le O ffPr ism Is su es R isk D el iv er y an d Pr oc ur em en t D oc u m en t Q ua lit y Es tim at e Qu al ity In te gr ity Bias √ √ Delivery and Procurement Approach √ √ √ Project Schedule Changes √ √ √ Engineering and Construction Complexities √ √ √ Scope Changes √ √ √ √ Scope Creep √ √ √ Poor Estimation √ √ √ √ Inconsistent Application of Contingencies √ Faulty Execution √ √ √ Ambiguous Contract Provisions √ In te rn al Contract Document Conflicts √ Local Concerns and Requirements √ √ √ √ √ Effects of Inflation √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ Market Conditions √ √ √ √ Unforeseen Events √ Ex te rn al Unforeseen Conditions √ Read the entire page →

From page 13...

... Each cost escalation factor describes a reason behind changes in cost estimations. These factors can be managed throughout the project development process either through cost estimation practice or cost estimation management methods and tools.

Read the entire page →

From page 14...

... Scope changes, which should be controllable by the state highway agency, but which still happen, can lead to project cost escalation. Such changes may include additions to or deletions from the project scope.

Read the entire page →

From page 15...

... The size of the project affects competition for a project and the number of bids that a state highway agency receives for the work. Inaccurate assessment of the market conditions can lead to incorrect project cost estimation.

Read the entire page →

From page 16...

... From the literature concerning project cost estimation and from interviews with people in the industry, it is clear that there exist eight overarching or global strategies that can affect the accuracy and consistency of project estimates and costs. As mentioned previously, a strategy is "a plan of action intended on accomplishing a specific goal." This definition is used as the basis for developing short statements about each strategy as follows: • Management strategy -- Manage the estimation process and costs through all stages of project development; • Scope and schedule strategy -- Formulate definitive processes for controlling project scope and schedule changes; • Off-prism strategy -- Use proactive methods for engaging external participants and assessing the macroenvironmental conditions that can influence project costs; • Risk strategy -- Identify risks, quantify their impact on cost, and take actions to mitigate the impact of risks as the project scope is developed; • Delivery and procurement strategy -- Apply appropriate delivery methods to better manage cost because project delivery influences both project risk and cost; • Document quality strategy -- Promote cost estimate accuracy and consistency through improved project documents; • Estimate quality strategy -- Use qualified personnel and uniform approaches to achieve improved estimate consistency and accuracy; and • Integrity strategy -- Ensure that checks and balances are in place to maintain estimate accuracy and to minimize the impact of outside pressures that can cause optimistic biases in estimates.

Read the entire page →

From page 17...

... It appears that the estimation practices of many state highway agencies are based solely on the experience of the personnel in charge of estimation, usually the head of the estimation section or the chief of design. State highway agencies must approach estimation development in the same manner as design and construction -- with documented processes to guide cost estimation practice and cost estimation management throughout project development.

Read the entire page →

From page 18...

... Global Strategies Cost Escalation Factors M an ag em en t Sc o pe an d Sc he du le O ffPr ism Is su es R isk D el iv er y an d Pr oc ur em en t D oc u m en t Q ua lit y Es tim at e Qu al ity In te gr ity Bias √ √ Delivery and Procurement Approach √ √ √ Project Schedule Changes √ √ √ Engineering and Construction Complexities √ √ √ Scope Changes √ √ √ √ Scope Creep √ √ √ Poor Estimation √ √ √ √ Inconsistent Application of Contingencies √ Faulty Execution √ √ √ Ambiguous Contract Provisions √ In te rn al Contract Document Conflicts √ Local Concerns and Requirements √ √ √ √ √ Effects of Inflation √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ Market Conditions √ √ √ √ Unforeseen Events √ Ex te rn al Unforeseen Conditions √

Read the entire page →

← Previous Chapter Skim

Next Chapter Skim →

This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More information on Chapter Skim is available.