Final Report for NCHRP Report 574: Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction (2006)

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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. The goal of Task 7 was to obtain input and feedback from professional practitioners on the preliminary strategies, methods, and tools from Task 6. The primary objective of Task 8 was to refine the recommended strategies, methods, and tools based on Industry input The original Guidebook development framework proposed for Phase II required preview input from industry and sought recommendations based on which the research team could further refine the strategies, methods and tools (Task 7). However, this approach was revised in the second phase of the research to perform a simultaneous development and recommendation process. This revision was deemed necessary and beneficial by the research team to accomplish a better end product. Thus, Task 6 and 8 were performed simultaneously until a draft Guidebook was sufficiently available for critiquing under Task 7. The critique process was conducted with substantial SHA input. Once this process was completed, effort on Task 6 and 8 focused on the completion of a final draft Guidebook. The Panel agreed that this revised approach was acceptable and would likely yield better results. The revised research plan for Phase II was approved by the Panel. This chapter details processes and steps adopted by the research team in achieving the goals of these Tasks 6, 7, and 8. Figure 6.1 summarizes the inputs and outputs of these tasks and reflects the revised research plan for Phase II. Figure 6.1. Guidebook Development Inputs and Outputs

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). A graphical representation was proposed to best illustrate these processes. The primary idea behind this effort was to identify inputs and outputs for cost estimation practice and cost estimation management during the different phases of project development. The different types of estimates and their purposes were also demarcated alongside the project development timeline. Several iterations were required before the flow chart could be presented to the Panel and industry. Figure 6.2 shows the flowchart that was finalized for the Guidebook. At the beginning of the Guidebook a separate chapter was also developed to present an agencywide approach to cost estimation practice and cost estimation management by discussing several important aspects relevant to this approach. A brief discussion was provided covering the project development process including key project phases, typical activities involved in these phases, and the cyclical nature of these phases. Further, the cost estimation practice and cost estimation management processes were described in terms of typical steps performed under each of these processes. The intent of this chapter is to set a general context in which SHAs perform cost estimation practice and cost estimation management in relation to a generic project development process.

83 Figure 6.2.: Agency Level Flowchart for Cost Estimation Practice and Cost Estimation Management

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. The flowcharts also portrayed the inputs and supporting documents created through these two processes. Thus, while the agencywide approach was a condensed form covering all phases, the individual phases are then described in more detail in these flowcharts. With this objective in mind, the research team drafted several flowcharts, one for each project development phase. The flowcharts served as a basis for describing the project development phase in more detail and then introducing cost estimation practice and cost estimation management as these two processes are applied in the phase. As the research team members developed Guidebook content and critiqued the Guidebook, these flowcharts incorporated several changes to include greater detail of inputs, end products, and milestones. A graphical legend helped in identifying inputs, steps, documents produced, milestones, and phases. Figures 6.3 (a), (b), and (c) show the flowcharts for the planning, programming and preliminary design, and final design phases respectively. As the strategy, method, and tool content was developed the text referenced the step or steps in the cost estimation practice and cost estimation management processes where the strategies, methods, and tools would be most effectively applied.

85 Figure 6.3(a): Cost Estimation Practice and Cost Estimation Management during Planning

86 Fig 6.3(b) Cost Estimation Practice and Cost Estimation Management during Programming and Preliminary Design

87 Fig 6.3(c): Flow Diagram for Cost Estimation Practice & Cost Estimation Management During Final Design.

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. A link between these identified cost escalation factors and a strategic approach is also explained. The processes and steps the research team followed to compile the Guidebook are then discussed. The preliminary testing approach to critique the Guidebook structure and its contents along with the results of this effort are also covered in this section. Strategy, Method, and Tool Approach Phase I of the research helped identify cost escalation factors from the various interviews and intensive literature review (Chapter 2). The research team also identified unique practices and approaches and general deficiencies in current practices (Chapter 3). Further, based on the strategy, method and tool approach suggested by the NCHRP Panel through the Research Project Statement, the research team identified a preliminary set of strategies addressing cost escalation factors based on the interviews, literature survey and brainstorming sessions. Eight Strategies were finally identified to contain all cost escalation factors. While each strategy was evaluated under the two different processes of cost estimation practice and cost estimation management, several methods and tools were listed to address each practice under these two processes. This resulted in a significant overlap of methods and tools, which was resolved by a hierarchical decomposition. The hierarchical decomposition of strategies, methods, and tools is illustrated in Figure 6.4. Methods are used to implement the eight strategies. As shown, more than one method may be used to implement a particular strategy. One or more tools can be used to support the performance of a method. The use of specific strategies, methods, and tools changes with project development phases and different levels of project complexity. Figure 6.4: Schematic Illustration of Strategy, Method, and Tool Hierarchy Cost Escalation Factors and Strategies Before developing strategies, methods, and tools to address cost escalation problems the causal factors that influence and create changes in cost estimates were delineated and explained. Once the causal factors were identified, strategies were presented which address specific problem areas. Strategy 1 Method 1 Method 2 Tool 1 Tool 2 Tool 3 Strategy 2 Method 3 Tool 4

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. Also, a greater level of detail on defining the cost escalation factors that are common to the industry was performed. These factors were then distilled into eighteen fundamental Cost Escalation Factors, as depicted in Table 6.1. Each Cost Escalation Factor describes a reason behind changes in cost estimates. These factors can be managed throughout the project development process through cost estimation practice and cost estimation management methods and tools. The basis for selecting each method and supporting tools was essentially drawn from a strategic viewpoint. The interlinked nature of the strategy, method, and tool approach became the common theme that to addressing highway agency cost escalation problems. Table 6.1: Factors Causing Cost Escalation of Projects* 1. Bias 2. Delivery/Procurement Approach 3. Project Schedule Changes 4. Engineering and Construction Complexities 5. Scope Changes 6. Scope Creep 7. Poor Estimating 8. Inconsistent Application of Contingencies 9. Faulty Execution 10. Ambiguous Contract Provisions 11. Contract Document Conflicts 1. Local Concerns and Requirements 2. Effects of Inflation 3. Scope Changes 4. Scope Creep 5. Market Conditions 6. Unforeseen Events 7. Unforeseen Conditions Cost Escalation Factor In te rn al E xt er na l * Note: these factors are numbered for reference only. The numbering does not indicate a level of influence. The methodology used to develop the potential list of strategies, methods, and tools focused on the causes of cost escalation and potential strategies that would address these causes. The definition of a strategy is, “a plan of action intended on accomplishing a specific goal.” From the literature concerning project cost estimation and from interviews with industry, it is clear that the eight overarching or global strategies can affect the accuracy and consistency of project estimates and costs. The eight strategies, first identified in Chapter 4, remained unchanged as the Guidebook was critique by industry. Further, the 18 cost escalation factors also held up under the Guidebook critiquing process with some changes to the description of selected factors based on industry input.

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. The research team first defined both cost escalation factors and strategies separately to help the user understand terminology and concur with viewpoints as addressed by the research team. The next step was to link strategies that address the identified cost escalation factor. Several iterations ensued to finalize a matrix of cost escalation factors and the eight strategies based on brainstorming sessions among research team members, reference to existing literature, and the vast experience background of the research leaders. Considering the voluminous nature of the Guidebook, there was a concern that users may not recall the original meaning of the eighteen cost escalation factors as defined by the research team while they explore the vast compilation of methods and tools. This necessitated the formation of an exclusive chapter with definitions of cost escalation factors which could be readily referenced. Similar to the cost escalation factors, the eight global strategies are also discussed in this chapter with the cost escalation factors. A brief description of each strategy is provided beyond the one sentence definition that accompanies each strategy. Users can periodically refresh their understanding of the strategies by reviewing the strategy descriptions. The eight global strategies, which are supported by various methods and tools, that address cost escalation factors are considered in terms of how they are uniquely applied during the different project phases. The research team devised a matrix concept to demonstrate this variation of strategic approaches at different project phases and also would facilitate a consistent framework for users to aid in the implementation of the strategies. The overall final matrix is illustrated in Table 6.2. As it can be seen one or more strategies can be applicable to each cost escalation factor. The user is encouraged to explore all suggested strategies to identify the most suitable one as applicable. This table further became the basis for the three phases and the strategies suggested as applicable to address a specific cost escalation factor in each phase. Tables 6.3, 6.4 and 6.5 depict the cost escalation and strategy linkage for the planning, programming and preliminary engineering and design phases, respectively.

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 ff- Pr 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 ff- Pr 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

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 ff- Pr 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 ff- Pr 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

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. The team believed that industry input on the quality and content in the presentation of the Guidebook was more critical than the ranking input and, therefore, decided to realign the tasks. The research team realized that change in the sequence of tasks could result in a better quality end product and revised the original plan in the second phase. The research team then planned to produce a draft Guidebook which could be presented to the industry and seek current practitioners opinion on various aspects such as format, content, ease of navigation, concurrence on the tools proposed, and identification of any missing information. The research team also presented a preliminary outline of the Guidebook listing key content to the panel which reviewed and commented on the development approach of the Guidebook development before approving it. The research team then began the process of enlisting and delegating several tasks to complete the compilation of the Guidebook among the different research participants. The bulk of the Guidebook was placed in Chapters 5, 6, and 7 which comprised of addressing the cost escalation factors in the planning, programming and preliminary design, and final design project phases. Each phase was developed by a separate researcher. Several tools were found to be cross referenced and were being developed simultaneously. Guidebook Framework It was clear from the beginning that there would be a diverse audience for the Guidebook and it was necessary to structure the Guidebook in a manner to specifically cater to different groups. This was supported by the interviews from Phase I of the research, which revealed that personnel involved at the three project phases were often distinctly different groups of individuals working that based on the stage of project development had different amounts of definitive information . Thus, the research team agreed on framing the first four chapters, which were comprised of common information such as definitions and steps to use the Guidebook. These four chapters were deemed mandatory reading for all groups. Phase specific information was then placed in separate chapters. While the front end presented a roadmap to the Guidebook, the strategies, methods and tools for cost increase alleviation were compiled in Chapters 5, 6 and 7 addressing the planning, programming and preliminary design, and final design phases of project development, respectively. The research team recognized a large variation in the timeline of estimate development and the often mutually exclusive participants involved with different project phases. This translated into a highly diverse audience for the Guidebook, and the need to cater explicitly to the different agency groups. Therefore, the framework of addressing cost escalation by phases was justified. The initial approach was to present each strategy with the recommended methods to implement the strategy and also present the tools to execute each method within a given strategy. The research team realized the overlap and redundancy in this approach as many methods and tools were cross referenced and applied across different strategies. The immediate solution was to extract all tools and place them into an appendix. This step helped in listing and discussing methods alone within each strategy. While the user had the option of exercising one or more

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. Another challenge faced by the research team was the ease of navigation through the Guidebook. The foremost thought to resolve this was by color coding pages. The use of tabs also was considered. However, due to potential publication constraints these two alternative formats were discarded. One research member proposed a tabular format discussing the three phases for each method. As previously mentioned, the audience for the three phases was to be addressed individually and this approach attempted to combine them. Hence, this approach was eliminated as well. Finally, after several iterations concerning the placement of information, the research team decided to continue with the development of the methods within each strategy, including a list of appropriate tools for each method and then describing the details of all tools in an appendix. This approach was deemed the most feasible option and the best layout for the Guidebook. Sources for Content Development This first phase of this research enabled the collection of a significant amount of information. The research team maintained a website where it indexed and stored the collected information for future retrieval. In addition to these documents, the interviews conducted served as a starting point in the development of this Guidebook. Online resources and search engines such as Google and Engineering Village were constantly used to locate further information on the methods and tools discussed in the Guidebook. The University Library also provided a large selection of publications and text books which were of considerable use to the research team members. SHA websites were also a significant source of information for developing the tool component of the Guidebook. The research leaders past experiences on some aspects were good leads in development of several sections of the Guidebook Method Development A method was defined as “a means or manner of procedure, especially a regular and systematic way of accomplishing something.” Methods are listed and discussed under each of the eight strategies for the three project phases. Methods are further classified in terms of a cost estimation management context or a cost estimation practice context. While similar methods may be listed under the same strategies an attempt to connect them progressively over the phases wherever possible was made. With these goals in mind, the research team formulated a template to provide common descriptions of each method. This template addressed the following set of questions: • In which step(s) in the cost estimation practice and/or cost estimation management process (flow chart) is the method used? • Why use the method? • How is the use of the method impacted by project complexity? • What makes the use of the method successful? • How is the method applied?

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. The user must refer to the Tool Appendix to find descriptive information about the tool. Excerpts from interviews, literature survey, online resources such as Google, Engineering Village, Agency Homepages, were the basis to develop the content of the answers to these method questions. Also, prior experiences of research leaders played an important role in organizing thoughts and presenting the material in a succinct form. Throughout the development of content of the Guidebook the primary concept of strategy, method and tool philosophy was peremptory. Thoughts were developed on the basis of how a particular strategy was the impetus for a method. The descriptive material for methods that were covered under multiple strategies was modified to fit the strategy of interest. Finally, the last question was answered in a listing of the appropriate tools, which were described in the Tool Appendix. Tool Appendix Tools were defined as “something used in the performance of an operation[method].” The research team intended them as a means to help the user identify the right method. Most of the tools were extracted from current practices which would portray a sense of familiarity among the users. The Tool Appendix soon grew into a large compilation in itself and required a roadmap to help users to locate a specific tool. A coding system was used to provide a systematic format for describing the methods and tools. The tools for each method were listed with the method. Tools often support multiple methods. The methods were sorted alphabetically and numbered with an alphanumeric numbering system for methods within the same alphabet heading. As a consequence, tools were referenced by an alphanumeric code, that is, B1.1, where B1 is the first method and .1 is the first tool related to that method. Tool Development After structuring an appendix for the tools, the research team shared the tools to be developed based on their knowledge about the individual tools and as applicable to their chapters (phases). Here again, like the methods, there was a need to have a consistent set of questions to describe the tools with sufficient depth. The set of questions were: • What is the tool? • What is the tool used for and why is the tool used? • What does the tool do or create? • When should the tool be used? • What are examples or applications of the tool? • What tips will lead to successful use of the tool? • Where can the user find more information to support development of a specific tool? Each of these questions was answered within the context of which method or methods the tool was supporting. There was a significant overlap in allocating tools to different methods. However, the usage of these tools varied for each method. Hence, the appropriateness of a tool under different circumstances and how the tool contributed to help implement a certain method

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. Some tools are currently being used in some agencies that had provided adequate information in forms of training manuals, presentations, and other literature. The research team reviewed this information and extracted the key features to educate the audience of the tools impact on cost alleviation. While this Guidebook was not intended to be a “how to” manual, it certainly showcased the benefits of these tools to the user. Leads to further information were provided for users to better understand the tool, if they wished to use it. There were instances where new and upcoming techniques were identified by the research team and included in the tool appendix. Building Draft Guidebook for Industry Review The draft Guidebook used for industry review contained seven chapters and the tool appendix. The first three chapters “set the stage” for the detailed description of the recommended strategies, methods, and tools used during planning, programming and preliminary engineering, and final design project phase. These chapters provide the context and intent of the Guidebook. Chapter 4 outlined the Guidebook layout and provides a roadmap for how to use the materials presented in subsequent chapters. Chapter’s 5 through 7 describe methods and tools corresponding to Long-range Planning, Programming and Preliminary Design, and Final Design respectively. Chapters 5 through 7 also discuss the impact of project complexity in relation to cost estimation practice and cost estimation management. The draft Guidebook was still a work in progress with several incomplete sections when the critique process commenced. However, since the three core chapters were being developed by different research team members, the decision to test which chapter was prioritized based on the level of progress. Efforts were made to identify key components of each chapter and complete them before presenting them to the industry. The division of several chapters of the Guidebook among research team members enabled an efficient environment to accomplish several tasks simultaneously. The delegation of the chapters was based on the experience of the research leaders in the chapter subject area and a subsequent internal rotation of the developed material for review. This process ensured that the knowledge base was widened and the quality of the content was maximized. This process was followed for development of the tools as well. Tools that were relevant to the chapters being tested were prioritized for completion then developed to enable a complete pass of the entire strategy, method and tool process. The research team also found a few sections lacked adequate information and made good use of the opportunity to request any possible input from the testing participants on these aspects. The draft Guidebook was assembled each time with a separate core chapter until there was adequate progress to compile a comprehensive Guidebook. The reviews soon confirmed that the front end four chapters were adequate and well suited for the Guidebook. Reviews also indicated that a listing of all methods and tools at the end of the chapter would be beneficial for a user. This suggestion was incorporated into the Guidebook and the final versions of the methods and tools are listed in Tables 6.6, 6.7 and 6.8 for the planning, programming and preliminary design and final phase respectively.

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) R2.4 Relocation Cost R2.5 ROW Estimator Training Risk Analysis R3.1 Analysis of Risk and Uncertainty R3.2 Contingency R3.4 Estimate Ranges R3.5 Programmatic Cost Risk Analysis

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

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

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

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

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

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. The research team began developing a protocol to conduct reviews. While the research team realigned the tasks to accomplish preliminary testing at a draft Guidebook phase, the researchers began to identify potential testing agencies willing to participate in the review process. The goal of Task 7 was to obtain feedback from professional practitioners on the preliminary strategies, methods, and tools as described in each of the chapters. The research team developed a draft protocol concept for testing the Guidebook. The protocol contained two parts: 1) a structured methodology for critiquing the results of the Guidebook test; and 2) a typical agenda for a one-day test. The draft protocol concept is shown in Appendix D. The protocol was proposed to be used in a number of ways. One approach was to follow the full day testing process, as represented in the typical agenda. This approach would require a SHA to provide different personnel for the review and critique of the Guidebook. An alternate approach was to test parts of the Guidebook such as those chapters related to specific phases of the project development process. In this case, the agenda would be modified but would always include an overview of Chapter’s 1, 2, 3 and 4. For example, if planning is the primary focus of the review then Chapter 5 would be the focus of the critique with the appropriate personnel. The team contacted several SHAs to enlist their help in testing the Guidebook. Material was sent to each SHA in advance to allow for sufficient preview from participating SHA before the review date. The research team expected to obtain a critique of the Guidebook content, the structure and layout of the Guidebook, its user friendliness, and suggestions on areas of the Guidebook that need improvement. A survey instrument was developed with questions that address all of these issues. This instrument was used to guide the discussion during each review. Input received from each review site was aggregated as the reviews were conducted. A comprehensive analysis of the information received from the site interviews and interpretation of the results of this analysis was reported. The research team expected that the testing process would ultimately lead to improvements in the Guidebook that might include changes, enhancements, additions, and/or deletions. Critique Approach The protocol for critiquing the draft Guidebook was continuously developed based on past models used by the research team members. A preliminary list of review questions were brainstormed by research members. This list comprised of questions concentrating on areas that the research members perceived as challenges. Modifications and additions were continuously made as the review process progressed. A brief summary of the proposed protocol is described as follows:

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) overview of the key concepts behind the Guidebook (Chapters 1 through 4); 2) discussions and reviews of the main project development phases (i.e., planning, programming and preliminary design, and final design – Chapter’s 5, 6, and 7 respectively); and 3) general critique of the Guidebook. The research team anticipates that the interview process would take a full day. A number of different personnel would be requested to participate. However, these personnel would not necessarily be required the entire day. The proposed protocol discussed above was modified somewhat for two reasons. First, critiquing of the first seven chapters in one day was not deemed feasible in terms of the time commitment required of the SHA and the extent of the material covered. Second, the development of the Guidebook proceeded slower than anticipated, so those chapters related to project phases were not sufficiently complete to critique them all at one time. All discussions focused on Guidebook content, the structure and layout of the Guidebook, its user friendliness, and suggestions on areas of the Guidebook that need improvement. Notes were taken during all discussions to capture specific comments. Also, in some cases, copies of comments written in the draft Guidebook were provided. After the interviews the draft Guidebook was revised to reflect comments from the SHAs. A revised version of the draft Guidebook was used in subsequent critiques. Each iteration of revising the Guidebook further refined the content of the Guidebook. In some cases, not every comment was included. However, sections of the Guidebook were growing in detail filling in any missing information. The research team was also tracking key comments to see if a comment was stated more than one time. Final inclusion of comments was made when the critique process was complete. Agenda As agencies began confirming participation, the research team organized the review process based on different approaches. Most tests followed a one-day approach with any one of the phases being targeted based on the background and experience of the participants. This approach of targeting reviews by project phases was feasible in terms of time constraints and the review duration. The participants were walked through the first four chapters of the Guidebook by a research team member to give them an overview of the structure and concepts of the Guidebook. Discussion and comments on these initial chapters were provided by the participants. Subsequently, participants were encouraged to explore the Guidebook for any specific cost escalation issue they deemed as a current problem in their SHA. Research team members would assist in navigation and seek feedback as the participant used the Guidebook. A complete agenda is listed in Appendix E. State Highway Agency Reviews When sufficient progress was made to commence the critiquing process with industry practitioners, the research team began presenting the draft Guidebook to the industry. The first interview was with the Georgia Department of Transportation (DOT). Since the first interview, a total of ten SHAs were involved, either directly or through a peer exchange held at Minnesota, in

105 critiquing the draft Guidebook. The other SHAs involved were from California, Florida, Kentucky, Louisiana, Massachusetts, Minnesota, North Carolina, Virginia, and Washington . The draft Guidebook was continuously revised as comments were received throughout the critique process. Georgia Department of Transportation The first one day workshop was held at Georgia Department of Transportation (GDOT) offices in Atlanta. Attendees included five representatives of GDOT, one member of the NCHRP 8-49 Review and Implementation team, and four members of the NCHRP 8-49 research team. The GADOT members represented planning, scheduling, design, and construction functional groups. The scope of the workshop included a critique of Chapters 1 through 4, Chapter 5, and the Tool Appendix portions of the draft Guidebook. Attendees were sent the material ahead of time and asked to critique it and ask questions ahead of time. No questions were received by the project team prior to the meeting. The meeting began with a statement that the material has not been reviewed or approved yet by the NCHRP oversight panel. Attendees were requested to keep the material confidential and not to distribute the material outside of the workshop evaluation team. The workshop in Atlanta, Georgia was with representatives from the GADOT who are part of a committee who is charged with reviewing the estimation practice and estimation management process from the earliest concept phase through bid. The committee has been meeting for approximately one year and has mapped out the GADOT process and has modified the process to fill in some holes or gaps. The meeting was very positive and commented that they wished this research project had been completed about a year earlier, as this would have made their work in reviewing and modifying the GADOT estimation and estimation management processes much easier and much more efficient. This committee is currently developing a report which identifies policy changes very similar to the strategies proposed in the NCHRP 8-49 Guidebook. The attendees were very receptive of the strategy, method, tool concept. Virginia Department of Transportation A one day workshop was held with the Virginia Department of Transportation (VDOT) at Richmond, Virginia to review and to obtain a critique of the working draft of the Guidebook. Attendees included four representatives of GDOT, and three members of the NCHRP 8-49 research team. The VDOT was represented by an Estimation Process Engineer, a Principal Transportation Engineer; a Senior Transportation Engineer; and a District Planning Engineer. The participants from VDOT had professional experience ranging from 12 to 44 years performing various aspects of estimation over the time with VDOT. They were well versed with policies and procedures. The Guidebook was presented in parts covering Chapters 1 through 4 and a more detailed review of Chapter 5, the planning phase. The participants were in agreement with the general intent and content of the Guidebook.

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. Attendees were sent the material ahead of time and asked to critique it. Attendees included six representatives of Florida Department of Transportation, and two members of the NCHRP 8-49 research team. The FDOT was represented by a District Utility Estimator, a District Final Plan Engineer, a Turnpike Estimate Coordinator, a Roadway Design Engineer, a State Estimates Engineer, and a State Structures Design Engineer. The meeting began with a statement that the material has not been reviewed or approved yet by the NCHRP oversight panel. Attendees were requested to keep the material confidential and not to distribute the material outside of the workshop evaluation team. The presented materials were well received with the primary comment being that they would like there to be several approaches for selecting tools. Louisiana Department of Transportation The meeting was planned as a one-day workshop in Baton Rouge, Louisiana, but due to hurricane Katrina, the meeting was held via an internet conference. The length of the meeting was also shortened due to the internet conference format. The Louisiana Department of Transportation and Development (LA DOTD) members all attended from one meeting room in Baton Rouge, Louisiana and the NCHRP research team joined from Boulder, Colorado and Phoenix, Arizona. Attendees included eleven representatives of LA DOTD, and three members of the NCHRP 8-49 research team. The LA DOTD team was led by the Director of Project Development and accompanied by ten other LA DOTD members from planning, design and construction functional groups. Two members from outside of the LA DOTD were also present both representing the Dye Management. Dye Management is a consultant to DOTD that is assisting them with project management improvement. The workshop critiqued Chapters 1 to 4, 7 and the Tool Appendix of the Guidebook. The LA DOTD attendees were sent the material ahead of time and asked to critique it. The meeting began with a statement that the material has not been reviewed or approved yet by the NCHRP oversight panel. Attendees were requested to keep the material confidential and not to distribute the material outside of the workshop evaluation team. The internet format made the exchange of ideas somewhat difficult given the large size of attendance, but the meeting was still beneficial to both the NCHRP research team and the LA DOTD.

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. They are working to identify high risk projects that would be assigned to a specific project manager for different risk management. The LA DOTD was very interested in what the researchers have found to be “bottom line” areas that need to be addressed. The LA DOTD would like to see guidelines for risk and contingency. They understand that the Guidebook will need to provide a general framework for creating agency specific guidance, and that they need to develop their own for their specific practices. They also wanted to know what the level of effort was that they need to expend (i.e. money, labor, development and organizational change). Minnesota Department of Transportation Peer Exchange The Minnesota DOT sponsored the Peer Exchange and paid travel for the invited DOTs from California (Caltrans), Kentucky, North Carolina, and Washington. The Peer Exchange was held over two days at St. Paul, Minneapolis. About 55 MnDOT employees attended representing all levels within the DOT. As the agenda in Appendix F shows, the first half a day was used by all the DOTs, including Minnesota, to present materials related to how the DOT is addressing cost estimation practice and cost estimation management. These presentations were based on questions sent to each participating DOT. The questions focused on issues related to the subject and required some thought on the part of the DOTs (see Appendix F). These data were captured electronically both in terms of PowerPoint Presentations and MS Word files with specific answers to each question. The presentations were excellent and the DOTs were all dealing with common problems with respect to cost estimation. The presentations did support the Guidebook cost escalation factors as issues the DOTs are trying to improve upon in their current practice. The second day initially revolved around the draft Guidebook. The approach to this discussion was similar to the critique process. The introduction time focused on an overview of the research and the research concept as presented in Chapter’s 1 through 4. The presentation of this material created some excellent discussion. Next, breakout groups were formed around Chapter 5, 6, and 7, that is, Planning, Programming and Preliminary Design, and Final Design. The Minnesota DOT participants could chose which project phase that was of interest to them. These chapter discussions were conducted in much the same manner as the Guidebook critiques. Thorough discussions of the process flowchart and cost escalation-strategy table were held. The groups then work through examples identifying cost escalation problems and working through the strategies, methods, and tools to address those problems. Prior to completing these breakout sessions, a critique of each chapter was conducted and notes taken. The remaining part of the day focused on how MnDOT might use the Guidebook to help focus changes in their cost estimation practice and cost estimation management. This discussion started with a strengths, weaknesses, opportunities, and threats (SWOT) analysis of their current practices. Next, gaps between current practice and what the Guidebook is proposing were discussed. The SWOT and gap analyses were conducted within the three breakout groups. This information was documented. Each group reported their results of this effort to the entire group. The day was concluded with summary comments by the NCHRP research team and the other DOT personnel that participated.

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. The Guidebook still needed work and some areas needed more work than others such as the treatment of right-of-way, environmental issues, and utilities in terms how these areas are estimated. Massachusetts Department of Transportation A one day workshop was held at the Massachusetts Highway Department (MHD) offices in Boston, Massachusetts. Attendees included 22 representatives of MHD and Cliff Schexnayder of the NCHRP 8-49 research team. The members of MHD represented planning, project development, highway design, bridge development, information technology, liaisons, pavement and rehabilitation. The scope of the workshop included a critique of Chapters 1 through 7 and the Tool Appendix portions of the draft Guidebook. This was therefore a review of all three of the project phase chapters. Attendees were sent the material ahead of time and asked to critique it and present questions during the workshop. The project team received no questions prior to the meeting. The meeting began with a statement that the material has not yet been reviewed or approved by the NCHRP oversight panel. Attendees were requested to keep the material confidential and not to distribute the material outside of the workshop evaluation team. The participants at the MHD workshop in Boston were represented by a cross section of Department. MHD was currently working on an effort to improve their cost estimation and project management practices and the workshop included individuals who are part of a committee charged with that effort. The meeting was very positive and MHD wanted a copy of the Guidebook as soon as possible. Their review committee was currently exploring within MHD the causes of estimation problems; this was very similar to the early NCHRP 8-49 work. The attendees were very receptive of the strategy, method, tools concept. Guidebook Review Findings The Research Team recorded key comments from each testing interview at various DOT’s. Georgia Department of Transportation Through the workshop a range of suggestions were made to the NCHRP 8-49 research team. Some of these were seen as viable changes that would be made immediately while the research team decided to wait and consider other changes based on input from other workshops. Some suggestions that were included in later revisions of the Guidebook include: • Modifying the tone of the Guidebook from “problem” to “challenge” • Revising Figure 2.1 to show the overlap and iteration between the planning, programming/preliminary design, and final design phases of project development

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. At the Minnesota Peer Exchange Workshop this received high reviews. Virginia Department of Transportation The following comments were observed: • The participants suggested that Influence/Perception by Legislature as an additional challenge to cost estimation be included somewhere in the Guidebook (note this will be considered). • A difference of opinion was expressed regarding the flowchart for the Planning Phase. VDOT moves projects into the STIP irrespective of the development stage as soon as it enters the three year time frame from conception. • There was a suggestion to differentiate between funding approval and actual cost of projects. • The participants also expressed concern about the personnel allocating funds not being aware of actual project costs and, hence, resulting in cost escalation. • Limited resources in terms of both time and funds are forcing the agency to move projects into the “authorize” phase for billing purposes. • VDOT practices a system wherein designers are primarily involved in estimation and use standards as a basis. Hence, incorporating a strategy was perceived as a challenge. • Table 3.2, the link between cost escalation factors and strategies was not clear by itself and maybe more narrative would help better understand the intent. Also, maybe moving this table to end of chapter and indicating that more information is available in Chapter 4 regarding its used was also suggested (note – this change has been made). • Due to the exhaustive literature nature of the Guidebook, one participant suggested highlighting key points and repeating them would help the user register the information (note – recent drafts have attempted to do this). • Fig 2.2, agency overall flowchart (note – still considering this change): • Additional details were suggested in relation to “Estimate Type-Purpose” column like characteristics of the estimate, information available, ideal requirements (suggested for standardizing procedures), and accuracy levels. • VDOT has a practice of physically constraining projects at the planning phase.

110 • Input from MPOs and external sources should be incorporated on the flow charts. • Maybe use another term for “Authorize”. The participants urged that environmental requirements be included as a separate cost escalation factor. There was concern over some methods, such as gated processes, not being followed by their agency. Another finding of the workshop was an approach being adopted by VDOT to mitigate cost escalation. Their approach was to evaluate and send districts a list of projects the agency deems feasible instead of districts turning in wish lists. Florida Department of Transportation A primary comment was that the FDOT personnel would like to see several approaches for selecting tools. As currently structured the Guidebook directs users through a strategy, method, tool process. They suggested that a direct problem – tool process be presented. The researchers explored this issue and one technique was added for the MNDOT Peer Exchange. After testing alternate presentations of methods for selecting Tools at the MNDOT Peer Exchange additional modifications was made to the Phase Chapters (5, 6, and 7). One participant at the Workshop had given Chapter 7 a very hard read and provided a marked up copy to the researchers. Almost all of those suggestions have been incorporated in Chapter 7, as they gave the presentation a much more positive statement of how to successfully implement the Methods and Tools. A revised Chapter 7 was used at the MnDOT Peer Review. All of the comments received about the approach being recommended were positive. It was obvious that the FLDOT has been studying these issues for a long time and have come to basically the same conclusions that are set forth in the Guidebook, so no major structural changes were recommended. Louisiana Department of Transportation The LA DOTD was very pleased with the layout and usability of the Guidebook. They thought that the discussion would be very beneficial as they moved forward implementing their changes to address cost escalation. As the Guidebook was discussed, the LA DOTD provided specific comments. In Chapter 1, Industry problem, they noted that their biggest issues are on complex projects. They defined complexity in terms of cost, technical complexity and management of traffic issues. In Chapter 2, Project Development Stages, they noted that the LA DOTD, uses different names but they understand and can relate to ideas and definitions that the team uses. They did not request any changes. They found the flow chart and tables in Chapter 2 to be very beneficial for discussing issues. It provided a clear idea about what the estimate is going to be used for and how it is produced and managed. They had no substantive comments for Chapters 3, 4 and 7, but again, found the workshop to be very helpful in promoting discussions. North Carolina Department of Transportation A detailed review by one of the Minnesota Peer Exchange participants from the North Carolina DOT was received and provided some useful comments related to different portions of the draft

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. However, one of the challenges will be keeping the material current and up-to-date. This DOT reviewer hoped that a structure would be put in place to accomplish this. This reviewer’s major comment related to the extent that peer reviews are frequently referenced as a method. In the NCDOT the experts are the ones preparing the estimates for the most part, so there are not many “peers” available. On the private side, if contractors act as external reviewers this might be perceived as given them the advantage. Bringing contractors from out of state would be one answer on larger projects but the cost would have to be evaluated. This reviewer thought that even at the planning stage some thought should be given to project delivery methods. This would set a flag as the project goes through the development process. Massachusetts Department of Transportation Through the workshop a range of suggestions were made to the NCHRP 8-49 research team. Some of these were seen as viable changes that would be made immediately while the research team decided to wait and consider others upon further input from other reviews. Some suggestions that were included in later revisions of the Guidebook include: • Revising Figure 4.1 as it did not clearly present the idea • On the Phase flow charts add input from Traffic Management and Construction disciplines. • Table 5.0, in the external section first line (Local Concerns & Requirements) add Reviewing Agencies • The idea that SHAs should be sharing bidding and cost information was not receive well during our previous workshops, however, in the Northeast where the same contractors work in the bordering states MHD thought this was a good ideas and would like more data from other SHAs. • MHD utilizes consultants to a great extent in design and the consultant is responsible for developing the estimate. Therefore, MHD thought the Guidebook should include information about achieving estimate consistence from consultants. • Need to discuss in the Guidebook quality control of consultant estimates. • MHD has investigated using Trns•port but there are both cost and technical issues that have caused them to not purchase the software. The technical issue has to do with file names being linked to the set bid opening date and if that date slips there are problems with the files. Two years ago MHD introduced two new Transportation Evaluation Criteria forms related to the project development planning process. They are still evolving, both in content (still working on definitions for quantifying some of the criteria) and in process (i.e., how and when they are included in the process). A copy of one form is shown here. The other form is a spreadsheet for calculating the scores.

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. The content of Chapter’s 1 through 4 had become clear and concise through changes based on the critiques. The content of Chapter 5 and 7 was good and improving. Chapter 6 needed work as this chapter had had fewer reviews. All process flowcharts in Chapter’s 5, 6, and 7 provided a good representation of the key steps in cost estimation practice and cost estimation management. The tool appendix was perceived reasonable but extensive. Some tool descriptions required further information to be helpful and it was suggested that, perhaps, a little more “how to” type discussions would be helpful. Panel Review The iterative testing process culminated in the final draft of the Guidebook being presented to the NCHRP Panel for review and approval. Members of the panel carefully reviewed and commented on the final draft of the Guidebook. While there was a general agreement that the Guidebook served its purpose, there were several specific comments. The researchers responded to the panel members comments clarifying the context and improving the book. Some panel members suggested inclusion of additional information, such as references to certain legal statutes, which would improve the quality of the content. These suggestions were also incorporated to further validate any references made in the Guidebook. GUIDEBOOK LAYOUT The Guidebook contains nine chapters. The first three chapters “set the stage” for a detailed description of the recommended strategies, methods, and tools to be used in practice. These first three chapters provide an overview of the guide and present the strategies, methods, and tools that will be detailed in the later chapters. Chapter 4 outlines the Guidebook layout and directs the proper usage as intended by the authors. Chapter’s 5 through 7 describe strategies and their methods and tools corresponding to Long-range Planning, Programming and Preliminary Design, and Final Design respectively. Chapters 5 through 7 also discuss the impact of project complexity in relation to cost estimation practice and cost estimation management. Chapter 8 discusses implementation issues and how a DOT might integrate the Guidebook content into current and future DOT practices. A four step process suggesting changes at the organizational, programmatic, project, and strategic levels is incorporate into this chapter. The final chapter, Chapter 9, provides a path forward. Appendices have been used as appropriate to provide additional information to users. The first Appendix, which is the bulk of the document, discusses all tools compiled and has been indexed by methods for ease of navigation within the document. An overview of the Guidebook table of contents is shown in Figure 6.5. The content of each chapter is a combination of running text, bullet items, graphic schematics to illustrate key concepts and/or points, and specific documents to better illustrate a tool. In an effort to make the Guidebook user friendly, the level of running text is kept to a minimum. The research team has found that the best Guidebooks are ones that have minimal running text and more concise content in bullet form supported by figures and tables. While this approach is ideal, some running text is always necessary to explain content that is more complex.

113 The key chapters of the Guidebook are 5, 6, and 7. A strategic layout to encompass all elements of each phase was required. Considering the varying audience of the Guidebook a consistent layout was believed to eliminate any discrepancies in the presentation of information. Hence, each of these chapters was develop on the following framework: an overview of each phase with a graphical representation of generic processes involved in a particular phase was discussed at the front end of the chapter. The aim of the overview was to help readers identify with the different processes in accordance to their own SHA practices. Also, references to possible locations along the flow of these processes are made while addressing each method. The next sub section within each of these chapters suggests strategies that are applicable to the different cost escalation factors in agreement with the concerned phase. This serves as a precursor to determining which methods could be utilized to alleviate cost escalation. Methods are hence classified by eight strategies and discussed accordingly in the next subsection of the chapter. With the discussion of methods a lead to different tools to implement the method is indicated. This layout was found most suitable to educate the audience on a strategy, method, and tool concept for addressing cost escalation factors as originally suggested by the NCHRP panel. The Tool Appendix supports all core chapters of the Guidebook. The compilation of the Tool Appendix, which was a major effort for the research team, included the classification and listing of a vast collection of information. The research team recognized the critical nature of the tools for the success of the Guidebook and hence listed them in an appendix to enable easy navigation for users.

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

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. The process of simultaneous development and recommendation of strategies, methods, and tools was found to be a successful process. The continual evaluation process of the Guidebook proved beneficial to mould the final product for the audience and to validate the contents. There was a general consensus on the intent and content of the Guidebook during the testing period with continuous improvements as each test was conducted. This chapter also includes a summary of the test procedures at different sites and the key findings of each test location. An analysis of these findings finally helped in improving the final product. Chapter 6 will provide an overview of an implementation plan for this Guidebook and the challenges involved with implementation.