HIGHWAY PROJECT COST ESTIMATI NG METHODS USED IN …

1 I R G I N I (ACooperativeOrganizationSponsoredJointl ybytheVirginiaDepartmentofTransportation andtheUniversityofVirginia)October2001 VTRC02-TAR3 DISCLAIMERT hecontentsofthisreportreflecttheviewsoft heauthors, ,theCommonwealthTransportationBoard, ,specification, significantconcernfortheVirginiaDepartme ntofTransportation(VDOT)becauseoftheimpa ctthattheseestimateshaveonthefinalcostof a ,metropolitanplanningorganizations(MPOs) ,localandfederalgovernmentagencies, ,increasesinhighwayproject ,costestimatesoftheSpringfieldInterchang eImprovementProject,thejunctionofInterst ates95,395,and495inFairfaxCounty,increas edbymorethan60% ,theSpringfieldinterchangeis , envisionedasa firststepinanexaminationofpracticesfores timatinghighwayprojectcosts;therefore,it sfocusis ontheinitialcostestimatemadefora PROJECT , ,onlygeneralinformationis knownabouttheultimateforma projectwilltakeandpreciseestimatesoftheq uantitiesofprojectbiditems( ,cubicyardsofexcavation) Thestudydidnotobtaindataabouttheaccuracy andefficacyoftheprocessesusedbystateDOTs butintendedsimplytoascertainandsynthesiz ethecurrentstateoftheartandstateofthepra cticeregardinghighwayproject reviewoftheliteraturepertainingtoestimat ingtransportationprojectcosts,a reviewofcurrentVDOT practiceandofpublicationspertainingtoVDO T'sprojectcostestimates,anda ,aftertheappropriaterespondentwasidentif ied,thequestionnaire,includedasAppendixB ,wasprovidedforreview.

2 (1)definitionofplanningstageasusedinthis report,(2)definitionofcostestimation,(3) basicelementsofhighwayprojectcosts,(4)co mmonproblemareasinhighwaycostestimation, (5)currentVDOT practice,(6)acasestudyofcostestimateincr eases,and(7)a projectis addedtothetransportationimprovementprogr am(VirginiaTransportationDevelopmentProg ram)throughtheprojectlocationandenvironm entalimpactprocesses, :(1)projectauthorizationandfunding,(2)lo cationstudyandenvironmentalimpactstateme nt,(3)preliminarydesign,(4)finaldesignan dright-of-wayacquisition,and(5) ,at whichpointa theprocessbywhich,basedoninformationavai lableata particularphaseofprojectdevelopment,theu ltimatecostofa projectis is alsooftenthoughtofasthefirstestimateused forbudgetingpurposesandallocationoffunds withina Transportation ,therearecertainelementsandvariablesthat arepresentinmost,ifnotall, highwayproject costestimatecanbebrokendownintothefollow inggroups: preliminaryengineering(PE) right-of-wayandutilities(ROW) constructioncosts(CN).

3 PreliminaryEngineeringPreliminaryenginee ringis thedevelopmentofa projectandtheexpensestobeincurredwhena projectadvancesfromplanningtodesigntowhe ntheprojectdesignis percentageappliedtotheestimatedconstruct ioncost,whichwillfurtherhelpinthesumming ofeachelement(PE,CN,ROW)toproducea definedasthepurchaseofland,froma landowner,whichprovidestheavailablespace neededtoproperlyandsafelybuildandconstru cta setandthelandplotinformationis at hand,thenextstageofappraisingandpurchasi ngtheland(ROW) ,these3expensesarefunctionsofprojectfeat uresrangingfrompavementwidthandlengthton umberoflanestolocation( ).Becausethesefeaturesvaryfromoneproject toanother, ' vitaltoobtainingthegoalofa , : costoverruns scheduledelays changesofscope contingencies defined,forthisreport,astheamountofmoney expendedona ,completedcostofa ultimatelyspentovertheinitialcostfigure, periodoftime,costoverrunscouldaffectnume rousprojects, , , problemsoccurat theconstructionphase,includingchangesins cope;unforeseencircumstances,suchasbadwe ather;defectiveproducts.

4 Andcomplicationsordisagreementswiththede signer,contractor/builder, ,eitherthroughpenaltyclauses,wastedtimea ndeffort, ,forthepurposeofthisreport,meansaddition sand/oramendmentstotheinitialplanorconce ptfora ' ,anintersection,a left-turnlane,or2 moremilesofroadwaymaybeaddedtoa ,ofcourse,adds moremoneyandtimeneededtocompleteeachproj ect, precautionforunforeseeninstances, is leftouttoprotectandminimizetheinitialest imate,creatinga financialpicturethatis smallerinscopethanwhatis , costestimate,typicallybetween5%and15%,to thefinalestimate, morerealisticcostestimate,alongwithreduc ingcostestimateerrors,a certaincontingencyfundshouldbeincludedin theinitialproject "cushion" definedasanincreaseofexpenditurelevelsre sultingfroma and6 yearstocomplete, ,it is notunheardoftohavea PROJECT "sittingonashelf' ,thevalueofthedollarchanges,eventhoughth eproject'sestimateremainsthesame,inturn, causingtheproject' 'sTransportationPlanningDivision,alongwi thstatecontractorsandconsultants,reliesh eavilyonprojectpricingwiththeuseofPlanni ngCostEstimatesTables, , 2-milesegmentofroad,twolanes,20feetofpav ement, trafficsignalis tobeaddedatanunsignalizedintersectionand a 5-footbikepathis ' (reconstructed)~20-footpavement2 lanesrural2-mile5-footbikepath1 milesofreconstructingpavement-20-footpav ement1 intersection(new) (CPM.)

5 2 miles*$580,000(22-lane,rural20-footpavem ent)==$1,160,0002 miles*$170,000(5-footpavementbikeway)==$ 340,0001 newtrafficsignal*$180,000==$180, ~ConstructioncostestimateConstructioncos testimate==$1,160,000+$340,000+$180,000= =$1,680, ,ifnecessary,toreflectlocalconditionsoro therknownfactorsuniquetotheproject(noadj ustmentsmade) :Planningcostestimatetables(showninAppen dixA).ROWcostestimate==$1,680,000*25%(ru ralroad)==$420,0006 Theestimatedconstructioncostis $1,680,000,andtheestimatedright-of-wayco stis $420, ,a percentageofconstructioncostis projectofthissize,10%oftheconstructionco stis ,preliminaryengineeringis estimatedat$168,000andthetotalcost(sumof PE,ROW,andCN)is $2,268, ,VDOT doesnotmakeadjustmentstoa :SpringfieldInterchangeImprovementProjec tOneofthelargestprojectswithcostestimati onproblemspresentlybeingencounteredinthe CommonwealthofVirginiais Washington, , ,financialgrowth, locatedinFairfaxCounty,at theintersectionofInterstates95,395, ,whencompleted,willinclude24travellanesa titswidestpoint,50bridges, and3 showbeforeandprojectedafterpictures,resp ectively, ,2000.

6 (ForFigures2 and3.) ",t511"'395/1~95rr.'PROVE' thelargesthighwayconstructionprojectever undertakenbyVirginiaandis,therefore,nota notamenabletosimplecost-per-mileapproach estoestimatingcosts,it ,includingchangeofscope,inflation,contin gencies,unforeseencircumstances,increasi ngcongestionmanagement,increasedright-of -waycosts,andrefineddesignestimates,theS pringfieldProject'stotalestimatedcosthas increasedfromtheinitialestimateof$350mil lion,ata pointwhenthedesignwas30%complete, toitscurrentestimateof$584million,asofMa y3, $234millionincrease, ,byitsowndefinition,is :a parametric,regression-basedcostestimatio nmodelanda a is amathematicalfunctionthatemploysa ,numberoflanes,earthworkvolume,numberofi ntersections,numberofgrade-separatedinte rchanges, ,location,worktype, ,therearethreeconditionsthatmustbemettoc reatea , , ,however, , :(1)encouragedstorageandutilizationofdat aand(2) 'informationis criticaltothesuccessofanyproject' ,theeaseofthismethodis , ; (1)themathematicalfunctionsarenotreadily availablewhenneeded;(2)poorinstructionsa regivenwhenfunctionsareavailable;and(3)t hereis a , , ,515+246VI- 334V2+ +162V4+576Vs+ ,246V7-2,217Vg-4,342Vg-1,118 VIO+104 VII+1,044VI2 Thecostfunctionis , , , ,withinthatstate, a computer/mathematicalfunction-basedtool, ,7 Thismethodis , ,hiddennodes, , "brain-like"structureoftheneuralnetwork, thesemodelshavethecapabilitytoactivatea functionbasedon"onlythestrongsurvive.

7 "Thesehigh- ,trainingallowsthecomputertorecognizecer tainpatternsandtothenadjustvaluesandfact orsaccordingly,producinga (1)easieraccessanduniformity;(2)storageo fdata;and(3) theuniformityofthemodel, spreadsheetformat,a fill-in-the-blankapplicationis ,theprojectinformationdatabasecontinuest ogrow,inturn,strengtheningtheoutputresul ts(eliminatingthenegativeproblems).Atthi sstageofthemodel,a usedtodeterminetherelativesignificanceof eachinputparameterwithinthemodel,givingt heengineergreatercapabilitytoseehoweachi nputvariableaffectstheoverallstatusandfe asibilityofa secondbenefitis ,producingbetterresults, ,theabilitytousetheknowledgethroughmathe maticaltoolsmayproducea inplace, (1)inputtingpastdataintothedatabaseandob tainingcurrentdatatostoreanduse,and(2) computerdatabaseandsimplyusingtheneuraln etworksystemtobecomefamiliarwiththetechn ology, a complexandlengthy, theprocessbywhichtheultimatecostofa projectis ,carelessspendingis notanoptionforthegovernmentor,morespecif ically, result,costestimationmustbecomea ,inturn,forcethetransportationagencytobe ttermanageitsbudget, :(1)thestatefinancialplan;(2)thecreation ofpublicsatisfactionanda positiveresponse;(3)projectcontrol.

8 And(4) , , divisionbeginstoshowandtoprovetothegener alpublicthatitisefficientlyandeffectivel ydoingitsjob, , "checkandbalance"format,theexistenceofth eoriginalestimatewill,it is hoped, ,asprojectsandtheircostestimatesare"unde rfire"duetonumerousproblemsandobstaclesw ithintheirmethodsandresults,theneedtosol vethesefactorswillbecomemoreevidentandcr iticaltotheprojects' :(1)datastorage;(2)changesinscope;(3)unf oreseenfieldconditions;(4)scheduledelays ;and(5)lackofa costdatafrompaperformattoa inputintothecomputer, , ,ifa unifiedsystemis created,notonlystatewidebuteventuallynat ionwide,greaterknowledgeandinformationwo uldbecomeavailable,creatinga ,eitherseparatelyorinconjunctionwithonea nother, ,reductionoferrorscanonlybenefittheproje ct' , :(1)parametriccostestimationmodel;(2)the neuralnetworkmodel;and(3)a hypothetical , ,furtherresearchwillprovebeneficialandth esuggestionsdiscussedwill ,duringtheplanningstageofprojectdevelopm ent,a ;thesurveyrespondentswerethensenta instrumentis ,planningstagewasdefinedasbeginningwitht hepointat whicha costestimateisfirstmade(typicallyforbudg etingpurposesina transportationimprovementprogramorworkpr ogram)throughthepointat , ( ,20-yearhorizons)butonproject-specific estimatesmadeasprojectsmovefromlong-rang eplansintoworkprograms(typicallythesepro gramscovera spanof3to6 years).

9 ,sizeofstate-maintainedhighwaysystems,an da ,Florida,Kentucky,Minnesota,Pennsylvania ,Tennessee,Texas,Washington, typicallyperformedeitherbya centralizedtransportationplanningofficeo rina decentralizedmanner,ata ,threestates(Delaware,Tennessee,andWestV irginia)performthisactivityintheircentra lofficesorheadquarters,andtwostates(Minn esotaandTexas)performthisactivityina sharedbetweenthecentralanddistrictorregi onaloffices;inthreeofthesestates(Florida , Pennsylvania,andWashington),theleadrespo nsibilityisdecentralized;intheotherstate (Kentucky), 's(DeIDOT)PlanningDivision,inDover, ,theestimateis "hand-off," ,theresponsibilityforcostestimatesis dispersedthroughtheFloridaDOT(FDOT),with theeightdistrictsassuminga leadrolewhena projectis ,theOfficeofPolicyPlanninginFDOT headquarters, inTallahassee,is responsiblefordeveloping (aprojectmanagerandanestimatesengineer) 's(KYTC)DivisionofPlanning,locatedinFran kfort,calculatescostestimatesforbothwork programdevelopmentandlong-rangeplanningi nconjunctionwithinputfromeachoftheagency ' highlydecentralizedintheMinnesotaDOT(MnD OT),witheachoftheeightdistricts(sevendis trictsandtheMetroDivision) movingtowardhavinga (PennDOT),thePlanningandProgrammingSecti onineachofthe11districtofficesarerespons iblefordeveloping 's(TDOT)

10 PlanningDirectorate,theFunctionalDesignO fficeis ,oneofthreeinterdisciplinaryprojectteams producesanAdvancedPlanningReport,ona PROJECT -specificbasis, highlydecentralizedintheTexasDOT(TxDOT), (TIPs) (WSDOT)hasa ProgramManagementOffice,locatedinOlympia ,whichis responsibleforcoordinatingdevelopmentoft he6-yearprogram;however,thesixregionalof ficesareresponsiblefordevelopingcostesti matesforprojectsentering theworkprogramandwithintheprogramdevelop mentphase, , inthePlanningandResearchDivisionofWestVi rginia'sDivisionofHighways(WVDOH)is a subsetofa ,oratthedistrict/regionallevel, (inPlanningDiv.);Pre-ConstructionGroup(i nDesignDiv.)FloridaDistrictOffices;Offic eofPolicyPlanningKentuckyDivisionofPlann ing;DistrictOfficesMinnesotaDistrictOffi cesDistrictOffices(PlanningandProgrammin gSections);CenterforProgramDevelopmentan dPennsylvaniaManagementTennesseeFunction alDesignOffice(inDivisionofPlanning)Texa sDistrictOfficesWestVirginiaPreliminaryE ngineeringSection(inDivisionofPlanningan dResearch)WashingtonRegionalOffices; ,priortocommencementofpreliminaryenginee ringordesignactivities, :simplemethodsthatemploytablesofgeneric" cost -per-mile"valuesbytypicalhighwaysect ion( ,ruralfour-lanedivided),moreinvolvedmeth odsthatentailestimating"rough"quantities ofallmajoritemsandincidentalsona PROJECT -specificbasis, basedoncostestimatingmethodsemployedupon a PROJECT 'sinsertionintoa.