Final Report for NCHRP Report 574: Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction (2006) / Chapter Skim
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Pages 18-39
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10 CHAPTER 2 STATE OF PRACTICE The objective of Task 1 is to confirm the research team's understanding of the problem, including key factors influencing project cost escalation, and to characterize the current state of Departments of Transportation (DOT) practice as related to cost estimation practice and cost estimation management.
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11 Societies for journal and conference publications, consisting of the American Society of Civil Engineers (ASCE) and the Association for the Advancement of Cost Engineering International (AACEI)
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12 The literature was analyzed with attention to cost estimation practice and cost estimation management. Additionally, it was analyzed in relation to the three-element framework and the DOT project development phases presented earlier.
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13 highway industry, the research team conducted a series of interviews with state DOTs to determine current DOT cost estimation procedures and estimation management practices. The surveys enabled the research team to acquire insightful data directly from the DOTs.
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14 list of individuals who would have appropriate knowledge for the interview was sent to the contacts identified from these three sources (see Appendix B)
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15 documentation, most DOTs have procedural manuals. These manuals mostly cover estimation during final design.
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16 along with the date it was conducted is listed in Table 2.1. Agencies that responded to the initial contact letter and were not interviewed have been notified that they might be contacted at a later date.
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17 Utah Park City Peer Exchange In addition to the structured interviews a source of estimation information was the Park City Peer Exchange in Utah. The research team participated in a TRB sponsored "Peer Exchange" with the TRB Statewide Multimodal Planning Management Committee.
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18 Metropolitan Planning Organizations Texas Transportation Institute (TTI) , Associate Director, Katie Turnbull, assisted the research team in identifying MPO contacts.
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19 Data Analysis The data collected from all of sources enabled the research team to identify the core estimation assumptions that are the root causes behind cost escalation and lack of project estimate consistency and accuracy. The team was also able to identify specific estimation practices and cost estimation management approaches currently used or maybe more importantly not being used during each project phase.
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20 problems with estimation of labor and material cost, but most of the factors point to "forces" that impact project scope and timing. Table 2.2.
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21 cost will likely increase. The decision regarding which project delivery approach, design-bidbuild, design-build, or build-operate-transfer, and procurement methodology, low bid, best value, or qualifications based selection effects the transfer of project risks.
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22 1995, Carr 1989, Chang 2002, Harbuck 2004, Hufschmidt 1970, Merrow 1981, Merrow 1986, Merrow 1988, Pickrell 1990, Pickrell 1992)
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23 Scope Creep is similar to changes in scope; however, these changes are usually the accumulation of minor scope changes. Projects seem to often grow naturally as the project progresses from inception through development to construction.
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24 Execution -- External External factors that lead to the underestimation of project costs during the execution of a project stem from those items that are primarily out of the control of the highway agencies. External factors in the project execution stage include local government concerns and requirements, unforeseen events, unforeseen conditions, and market conditions.
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25 estimates must be prepared to support long-range plans, authorized programs, and funds for State Transportation Improvement Programs (STIP)
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26 Table 2.3. Summary of Cost Estimation Practice and Cost Estimation Management Characteristics Project Development Phase Cost Estimation Practice Cost Estimation Management Estimate Purpose Estimate Preparation Estimate Reviews Estimate Communication Cost Management Planning (Conceptual Estimate)
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27 estimate undergoes very little review within the Department. If the estimate is reviewed, the review is conducted by another person on the estimation team or by an engineer in a district office.
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28 will review the estimate if it has increased beyond specified limits. The cost growth limits that trigger additional reviews or approvals are established by internal DOT policies.
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29 projects, DOTs do not have a consistent estimation procedure. DOTs consider project characteristics such as the project's location, but additional costs included to reflect project complexity are dependent on the estimator's judgment and experience.
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30 Release of the DOT's Engineer's Estimate In many States, the engineer's estimate is not released to the public before the letting. What is allowable concerning release of the DOT's estimates is usually defined by State statute and, in many cases, out of the DOT's control.
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31 then they apply a large percentage to the conceptual estimate and decrease the percentage as the project scope is defined. For example, 50% is added to the long rang planning estimate, and then 25% is added to the programming estimate.
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