Improving Early Phase Cost Estimation and Risk Assessment: A Department of Transportation Case Study

Early cost estimation, especially cost escalation, has become a major challenge for State Highway Agencies (SHAs). Cost overruns reduce the accuracy level of the construction cost estimate and cause conflict between owners, project managers, and contractors. To address this problem, a case study department of transportation (DOT) was selected to evaluate and improve existing scoping, cost estimation and risk assessment processes. At first, this study identifies nationwide current best scoping, cost estimation and risk assessment practices during early stages of the project. Later, through a series of interviews with some of the case study DOT Districts, the current scoping, cost estimation and risk assessment practices implemented by this DOT staff were identified. The results were compared to those practices identified in national research documents and best practices at other DOTs. Further, a gap analysis comparing this SHA’s current practices to national ideal practices revealed the areas of possible further improvement as risk assessment, review and approval of estimates and estimate documentation. Through pilot studies on three projects from the case study Districts the effectiveness of the improvement recommendations were assessed. Based on the evaluation of the pilot studies many of the recommendations proved to have notable impact on the performance of the case study DOT’s project scope definition, cost estimates, and risk assessments. The final recommendations are in five areas of cost estimating, documentation, risk assessment and contingency calculation, executive policy and general issues. Depending on the area of concern, recommendations have three levels of policies/practices, processes/tools, and resources.

• Supplemental Notes:
  • This paper was sponsored by TRB committee AFH10 Standing Committee on Construction Management.
• Corporate Authors:

  Transportation Research Board

  500 Fifth Street, NW
  Washington, DC  United States  20001
• Authors:
  • Kermanshachi, Sharareh
  • Beaty, Curtis
  • Anderson, Stuart D
• Conference:
  • Transportation Research Board 95th Annual Meeting
  • Location: Washington DC, United States
  • Date: 2016-1-10 to 2016-1-14
• Date: 2016

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 19p
• Monograph Title: TRB 95th Annual Meeting Compendium of Papers

Subject/Index Terms

• TRT Terms: Best practices; Case studies; Construction projects; Cost estimating; Cost overruns; Recommendations; Risk assessment; State departments of transportation
• Subject Areas: Construction; Finance; Highways; I10: Economics and Administration; I50: Construction and Supervision of Construction;

Filing Info

• Accession Number: 01590674
• Record Type: Publication
• Report/Paper Numbers: 16-2202
• Files: TRIS, TRB, ATRI
• Created Date: Feb 19 2016 5:09PM