Final Report for NCHRP Report 574: Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction (2006) / Chapter Skim
Currently Skimming:
Pages 89-123
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 89... ...
81 CHAPTER 6 GUIDEBOOK DEVELOPMENT INTRODUCTION The Guidebook was developed in the second phase of the research under the combined effort applied to Task 6 – Develop and Evaluate Strategies, Methods and Tools, Task 7 – Present Strategies, Methods and Tools to Industry, and Task 8 – Develop Recommended Strategies, Methods, and Tools. The primary objective of Task 6 was to develop and evaluate in greater detail the proposed preliminary set of strategies, methods and tools projected from the Phase I research.
|
From page 90... ...
82 AGENCYWIDE APPROACH At the beginning of the second phase and as a result of the Interim Report Panel directive, the research team realized a need to incorporate an agencywide perspective for performing cost estimation practice and cost estimation management within a State Highway Agency (SHA)
|
From page 91... ...
83 Figure 6.2.: Agency Level Flowchart for Cost Estimation Practice and Cost Estimation Management
|
From page 92... ...
84 While the agencywide approach set a general context for cost estimation practice and cost estimation management, there was a consensus among research team members that a more detailed graphical illustration by means of a flowchart supporting each project development phase was needed. These flowcharts further described the steps required to effectively perform cost estimation practice and cost estimation management.
|
From page 93... ...
85 Figure 6.3(a) : Cost Estimation Practice and Cost Estimation Management during Planning
|
From page 94... ...
86 Fig 6.3(b) Cost Estimation Practice and Cost Estimation Management during Programming and Preliminary Design
|
From page 95... ...
87 Fig 6.3(c) : Flow Diagram for Cost Estimation Practice & Cost Estimation Management During Final Design.
|
From page 96... ...
88 GUIDEBOOK CONTENT AND STRUCTURE The content development, testing, and Guidebook structure is the primary focus of this section. Content development describes how the research members began with the strategy, method, and tool approach described in Chapter 4 and then details how cost escalation factors and strategies were developed based on interviews relevant to current issues plaguing the industry.
|
From page 97... ...
89 The factors that lead to project cost escalation were identified through a large number of studies and research projects. They were then classified as either internal or external.
|
From page 98... ...
90 Link between Strategies and Cost Escalation Factors The Guidebook development process involved the compilation of a considerable amount of information and hence necessitated a structured layout to direct the user to the appropriate information. The first step in achieving this goal was to link the strategies to the cost escalation factors.
|
From page 99... ...
91 Table 6.2: Link Between Strategies and Cost Escalation Factors M an ag em en t Sc op e/ Sc he du le O ffPr ism Is su es R isk D el iv er y/ Pr oc ru m en t M et ho ds D oc um en t Q ua lit y E st im at e Q ua lit y In te gr ity Bias √ √ Delivery/Procurement Approach √ √ √ √ Project Schedule Changes √ √ √ √ Engineering & Construction Complexities √ √ √ √ √ Scope Changes √ √ √ √ Scope Creep √ √ √ Poor Estimating √ √ √ √ √ Inconsistent Application of Contingencies √ √ Faulty Execution √ √ √ Ambiguous Contract Provisions √ Contract Document Conflicts √ Local Concerns & Requirements √ √ √ √ √ Effects of Inflation √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ Market Conditions √ √ √ √ √ Unforeseen Events √ Unforeseen Conditions √ Ex te rn al Cost Escalation Factors Global Strategies In te rn al Table6.3: Link between Strategies & Cost Escalation Factors in the Planning Phase M an ag em en t Sc op e/ Sc he du le O ffPr ism Is su es R isk D el iv er y/ Pr oc ur em en t M et ho ds D oc um en t Q ua lit y E st im at e Q ua lit y In te gr ity Section 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 Bias √ √ Delivery/Procurement Approach √ √ √ √ Project Schedule Changes √ √ √ √ Engineering & Construction Complexities √ √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ √ Poor Estimating √ √ √ Inconsistent Application of Contingecies √ √ √ Faulty Execution Ambiguous Contract Provisions Contract Document Conflicts Local Concerns & Requirements √ √ √ √ √ Effects of Inflation √ √ √ √ Scope Changes √ √ √ √ √ Scope Creep √ Market Conditions √ √ √ √ √ Unforeseen Events Unforeseen Conditions Ex te rn al Cost Escalation Factors Strategies In te rn al
|
From page 100... ...
92 Table 6.4: Link between Strategies and Cost Escalation Factors during a Project Programming and Preliminary Design Phase Table 6.5: Link between Strategies and Cost Escalation Factors in the Final Design Phase M an ag em en t Sc op e/ Sc he du le O ffPr ism Is su es R isk D el iv er y/ Pr oc ur em en t M et ho ds D oc um en t Q ua lit y E st im at e Q ua lit y In te gr ity Section 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 Bias √ √ Delivery/Procurement Approach √ √ √ Project Schedule Changes √ √ Engineering & Construction Complexities √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ Poor Estimating √ √ √ √ Inconsistent Application of Contingencies √ √ Faulty Execution √ √ Ambiguous Contract Provisions √ Contract Document Conflicts √ Local Concerns & Requirements √ √ √ √ √ Effects of Inflation √ √ Scope Changes √ √ √ Scope Creep √ √ Market Conditions √ √ √ √ √ Unforeseen Events √ Unforeseen Conditions √ Ex te rn al Cost Escalation Factors Strategies In te rn al M an ag em en t Sc op e/ Sc he du le O ffPr ism Is su es R isk D el iv er y/ Pr oc ur em en t M et ho ds D oc um en t Q ua lit y E st im at e Q ua lit y In te gr ity Section 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 Bias √ √ Delivery/Procurement Approach √ √ √ √ Project Schedule Changes √ √ √ √ Engineering & Construction Complexities √ √ √ √ √ Scope Changes √ √ √ √ Scope Creep √ √ √ Poor Estimating √ √ √ √ √ Inconsistent Application of Contingecies √ √ Faulty Execution √ √ √ Ambiguous Contract Provisions √ Contract Document Conflicts Local Concerns & Requirements √ √ √ √ √ Effects of Inflation √ √ √ √ Scope Changes √ √ √ Scope Creep √ √ √ Market Conditions √ √ √ √ √ Unforeseen Events √ Unforeseen Conditions √ Ex te rn al Cost Escalation Factors Strategies In te rn al
|
From page 101... ...
93 Simultaneous Development and Recommendation of the Strategies, Methods, and Tools The research plan originally was proposed to present the strategies, methods, and tools to the industry immediately upon development and evaluation to rank order these strategies, methods and tools. A subsequent development of the higher ranked strategies, methods, and tools based on the feedback was intended as a part of the original plan.
|
From page 102... ...
94 methods to address the cause of cost escalation, it was advised to consider all suggested options. To justify each method as an effective method, a common template was necessary to evaluate methods using similar parameters.
|
From page 103... ...
95 Two important points to discuss in terms of method content development were the use of the consistent set of questions to guide the discussion of each method and the use of an appendix to provide detailed descriptions of the respective tools and how to use these tools. Tools that are proposed with a method are simply listed under each method.
|
From page 104... ...
96 was considered on a case by case basis while developing the content for tools which had an overlap. Tool development followed different paths for different tools.
|
From page 105... ...
97 Table 6.6 List of Planning Phase Methods and Tools Method/ Tool Budget Control B1.1 Budget by Corridor B1.2 Constrained Budget B1.4 Summary of Key Scope Items B1.5 Variance Reports on Cost and Schedule Buffers B2.1 Board Approvals B2.2 Constrained Budget B2.3 Management Approvals Communication C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.4 Definitive Management Plan C1.5 Proactive Conveyance of Information to Public C1.6 Simple Spreadsheet C1.7 Year-of-Construction Costs Computer Software C2.1 Agency Estimation Software C2.3 In-House Conceptual/Parametric Estimation Software C2.4 Simple Spreadsheet Conceptual Estimation C3.3 Cost Parameter Using Similar Projects C3.4 Cost Parameter Using Typical Sections C3.5 TRNS* port Document Estimate Basis & Assumptions D4.1 Project Estimate File Delivery and Procurement Method D1.1 Contract Packaging D1.2 Delivery Decision Support Estimate Review - External E2.1 Independent or Expert Team Estimate Review - Internal E3.3 In-house/Peer Identification of Risk I2.1 Red Flag Items Identifying Off-Prism Issues I2.1 Environmental Assessment I2.2 Percentage of Total Project Cost Project Scoping P3.1 Estimation Checklist P3.2 Scoping Document Recognition of Project Complexity R1.1 Complexity Definitions Right-of-way R2.1 Acres for Interchange R2.2 Advanced Purchase (Right-of-Way Preservation)
|
From page 106... ...
98 Table 6.7 List of Programming and Preliminary Design Methods and Tools Method/ Tool Budget Control B1.2 Constrained Budget B1.3 Standardized Estimation and Cost Management Procedures B1.4 Summary of Key Scope Items B1.5 Variance Reports of Cost and Schedule Buffers B2.1 Board Approvals B2.2 Constrained Budget B2.3 Management Approvals Communication C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.3 Communication with DOT C1.4 Definitive Management Plan C1.5 Proactive Conveyance of Information to Public C1.7 Year of Construction Costs Computer Software C2.1 Agency Estimation Software C2.2 Commercial Estimation Software C2.3 In-house Conceptual/Parametric estimation software C2.4 Simple Spreadsheet Consistency C4.1 Cradle to Grave Estimators C4.2 Estimation Checklist C4.3 Estimation Manual (Guidelines) C4.4 Estimator Training C4.5 Major Project Estimation Guidance C4.6 Standardized Estimation and Cost Management Procedures C4.7 State Estimation Section Constructability C5.1 Constructability Reviews Creation of Project Baseline C6.1 Cost containment Table C6.2 Estimation Scorecard C6.3 Scope Change Form C6.4 Scoping Documents
|
From page 107... ...
99 Table 6.7 List of Programming and Preliminary Design Methods and Tools (contd.) Delivery and Procurement Method D1.1 Bundling D1.2 Delivery Decision Support Design Estimation D2.1 Analogous or Similar Project D2.2 Agency Estimation Software D2.3 Cost based bottoms up D2.4 Historical Bid Based D2.5 Historical Percentages D2.6 Major Cost Items using Standardized Sections D2.7 Parametric Estimation D2.8 Spreadsheet Template D2.9 Trns•port® Design to Mandated Budget D3.1 Design to Cost Document Estimate Basis & Assumptions D4.1 Project Estimation File Estimate/Document Review E1.1 Estimate/Document Review – External E1.2 Estimate/Document Review– Internal Estimate Review- External E2.1 Expert Team Estimate Review- Internal E3.1 Formal Committee E3.2 Off Prism Evaluation E3.3 In house/Peer E3.4 Round Table E3.5 Year-of-Construction Costs Gated Process G1.1 Checklists G1.2 Cost Containment Table Identification of Changes I1.1 Cost Containment Table I1.2 Estimation Scorecard I1.3 Project Baseline I1.4 Scope Change Form Identification of Risk I2.1 Red Flag Items I2.2 Risk Charter Identifying Off-Prism Issues I3.1 Environmental Assessment I3.2 Percentage of Total Project Cost Public P3.1 Meetings Project Scoping P2.1 Estimation Checklist P2.2 Scoping Document P2.3 Work Breakdown Structure Recognition of Project Complexity R1.1 Complexity Definition
|
From page 108... ...
100 Table 6.7 List of Programming and Preliminary Design Methods and Tools (contd.) Right-of-way R2.1 Acres for Interchange R2.2 Advance Purchase R2.3 Condemnation R2.4 Relocation Cost R2.5 ROW Estimator Training R2.6 Separate ROW Estimators Risk Analysis R3.1 Analysis of Risk and Uncertainty R3.2 Contingency – Identified R3.3 Contingency – Percentage R3.4 Estimate Ranges R3.5 Programmatic Cost Risk Analysis Validate Costs V1.1 Estimation Software Value Engineering V2.1 Value Engineering Verify Scope Completeness V3.1 Estimation Checklist
|
From page 109... ...
101 Table 6.8 List of Final Design Phase Methods and Tools Method/ Tool Budget Control B1.2 Constrained Budget B1.4 Summary of Key Scope Items B1.5 Variance Reports of Cost & Schedule Buffers B2.1 B2.2 B2.3 Communication C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.3 Communication with SHA C1.4 Definitive Management Plan C1.5 Proactive Conveyance of Information to the Public C1.7 Year-of-Construction Costs Computer Software C2.1 Agency Estimation Software C2.2 Commercial Estimation Software Consistency C4.1 Cradle to Grave Estimators C4.2 Estimation Checklist C4.3 Estimation Manual (Guidelines) C4.4 Estimator Training C4.5 Major Project Estimation Guidance C4.6 Standardized Estimation and Cost Management Procedures C4.7 State Estimation Section
|
From page 110... ...
102 Table 6.8 List of Final Design Phase Methods and Tools (continued) Method/ Tool Constructability C5.1 Constructability Reviews Document Estimate Basis & Assumptions D4.1 Project Estimation File Estimate/Document Review E1.1 Estimate/Document Review – External E1.2 Estimate/Document Review – Internal Estimate Review- External E2.1 Independent or Expert Team Estimate Review- Internal E3.1 Formal Committee E3.2 Off-Prism Evaluation E3.3 In house/Peer E3.4 Round Table Gated Process G1.1 Checklists G1.2 Cost Containment Table Identification of Changes I1.1 Cost Containment Table I1.2 Estimation Scorecard I1.3 Project Baseline I1.4 Scope Change Form Identification of Risk I2.1 Red Flag Items I2.2 Risk Charter Identifying Off Prism Issues I3.3 Market Conditions PS&E Estimates P1.1 Agency Estimation Software P1.2 Commercial Estimation Software P1.3 Cost Based P1.4 Historical Bid Based P1.5 Trns•port® Right-of-way R2.5 ROW Estimator Training R2.6 Separate ROW Estimators Risk Analysis R3.2 Contingency−Identified R3.3 Contingency−Percentage R3.4 Estimate Ranges Value Engineering V2.1 Value Engineering
|
From page 111... ...
103 DRAFT GUIDEBOOK REVIEW PROCESS Protocol An industry review was considered a key to success in developing the Guidebook content and structure, as this review would validate content and provide feedback from potential industry users. Task 7 revolved around the presentation of strategies, methods, and tools to the industry.
|
From page 112... ...
104 The most efficient critique approach is to conduct on-site and structured interviews. The focus of the interviews would include three main components: 1)
|
From page 113... ...
105 critiquing the draft Guidebook. The other SHAs involved were from California, Florida, Kentucky, Louisiana, Massachusetts, Minnesota, North Carolina, Virginia, and Washington .
|
From page 114... ...
106 Florida Department of Transportation The NCHRP Project 8-49 Research Team conducted a workshop with the Florida Department of Transportation, to critique the following portions of the draft Guidebook. • Chapters 1 to 4 – Introductory materials that describe Guidebook concepts and framework • Chapter 7 – Guide for Final Design Phase • Tool Appendix Greg Davis a member of the NCHRP Panel organized this workshop.
|
From page 115... ...
107 The LA DOTD assisted the research team by explaining their current state of estimation and estimation management and their desires for what should be included in the book. The LA DOTD is currently working on an effort to improve their cost estimation and project management practices.
|
From page 116... ...
108 Overall, the Peer Exchange was successful both for MnDOT and the research. A general assessment is that the Guidebook adequately covers the topic areas and can be used by different levels of practitioners as a basis for improving DOT cost estimation practice and cost estimation management processes.
|
From page 117... ...
109 • Removal of the term "government" from the cost escalation factor which originally read "Local Government Concerns and Requirements" to address not only government concerns and requirements but those of non-governmental agencies as well to finally read "Local Concerns and Requirements" • Revision of the Off-Prism strategy one sentence description to be more in line with the lengthier discussion Suggestions that the research team decided needed further input from other workshops include: • Dividing the "Bias" cost escalation factor into two factors • Including "Market Conditions" as an internal cost escalation factor One item that was suggested by GDOT which was placed on the list for further input from other workshops which has since been implemented regarded a checklist at the end of each of the project development phase chapters that lists the methods and tools mentioned in the chapter. This sentiment was echoed at other workshops and has been implemented in Chapter 5 through 7.
|
From page 118... ...
110 • Input from MPOs and external sources should be incorporated on the flow charts. • Maybe use another term for "Authorize".
|
From page 119... ...
111 Guidebook, although the Guidebook was incomplete at the time. Generally, this person believes the Guidebook will be a great resource for states to use.
|
From page 120... ...
112 Summary of Review Process Based on the critiques obtained, the general concept of the Guidebook was acceptable and appeared to be useful to DOTs as a mechanism to promote change in DOT cost estimation practice and cost estimation management. The format and layout of the Guidebook evolved and was improved based on comments from the DOTs.
|
From page 121... ...
113 The key chapters of the Guidebook are 5, 6, and 7. A strategic layout to encompass all elements of each phase was required.
|
From page 122... ...
114 PROCEDURES FOR ESTIMATION PRACTICE AND MANAGEMENT FOR HIGHWAY PROJECT DURING PLANNING, PROGRAMMING, AND PRECONSTRUCTION Figure 6.5 Guidebook Table of Contents Table of Contents Structure Executive Summary Chapter 1 – Introduction Background Guidebook Development Guidebook Layout Use of Guidebook Chapter 2 – Agency Cost Estimation Practice & Cost Estimation Management Project Development Phases Cost Estimation Practice and Cost Estimation Management Overview Cost Estimation Practice and Cost Estimation Management Steps Chapter 3 – Factors and Strategies Cost Escalation Factors Internal Cost Escalation Factors External Cost Escalation Factors Strategies Chapter 4 – Guidebook Framework Background Strategy, Method, and Tool Integration Structure and Layout of Content Tool Appendix Chapter 5 – Guide for Planning Introduction Methodology Strategies Methods Chapter 6 – Guide for Programming and Preliminary Design Introduction Methodology Strategies Methods Chapter 7 – Guide for Programming and Preliminary Design Introduction Methodology Strategies Methods Chapter 8 – Implementation Introduction Steps Chapter 9 – Path Forward Industry Problem Guidebook Development Path Forward Keys to Success Challenges
|
From page 123... ...
115 CONCLUSIONS This chapter has described the different steps that were involved in the development of the Guidebook. The research team performed several iterations before an efficient version of the Guidebook was crafted.
|
Key Terms
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.