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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116 CHAPTER 7 IMPLEMENTATION The main goal of Task 9, Develop Implementation Plan, was to develop a practical implementation plan to help accelerate the use of the Guidebook in industry. The implementation plan proposed has two main focuses. The first focus is to aid the immediate user of the Guidebook with implementation within a state highway agency (SHA). This implementation approach is described in the Guidebook under Chapter 8 and briefly summarized in this chapter. The second focus is a broader plan that will lead to implementation across the highway industry. This plan is briefly described in this chapter but described in more detail in a white paper, titled “Proposed Implementation Plan for the NCHRP Guidebook on Cost Estimating and Cost Estimating Management of Highway Projects.” The white paper also briefly discusses the implementation plan for an individual state highway agency as proposed in the Guidebook. Figure 7.1 summarizes the inputs and outputs of this task. Figure 7.1 Development of Implementation Plan INTRODUCTION The implementation plans were developed with input from an advisory team member who is actively involved in accelerating innovation in the highway industry. The SHA plan was proposed initially by the research team based on the concept of strategies, methods and tools. Each of these components is purposely linked to a level of operation within an agency, specifically at the organizational, programmatic, and project levels, respectively. A draft chapter on implementation was written and then critically reviewed by the advisory team member. Based on comments received the final draft was developed for use in the Guidebook. The same advisory team member provided a basic outline of ideas on how to promote implementation on an industrywide basis. This outline formed the context for drafting a white paper on a proposed approach to facilitate implementation of the Guidebook throughout the

117 highway industry. This plan is structured around three steps namely show or inform, evaluate, and apply. Other suggestions are provided for industrywide implementation. STATE HIGHWAY AGENCY IMPLEMENTATION PLAN The Guidebook is intended to assist in creating a strategic change in agency estimation and cost management approaches. It aligns strategies with identified problem areas and can be used to create organizational structures for achieving consistent and accurate project estimates. Additionally, it presents detailed methods and tools to support the strategic approaches. While implementation of individual strategies, methods, and tools is essential, they should not be used in an “al la Carte” fashion. Implementation must occur within the context of a greater vision for integrating cost estimation practice and cost estimation management processes across all agency programs and with agency consultants. Although the estimation approach transformation can begin at any organizational level, ultimately all levels must participate to create a cultural change in addressing the challenges of cost estimation practice and cost estimation management throughout project development. Table 7.1 summarizes the implementation goals at the organizational, programmatic, and project levels. Achieving some of the goals may require organizational change and all will require a commitment of resources. Table 7.1 Implementation Goals Implementation Thrusts Implementation Focus Implementation Goals Organizational Level Strategies Implement Strategies Across the Agency • Assess current status of strategy implementation • Plan for long term implementation • Assign responsibility for implementation • Measure results of implementation Program Level Methods Implement Methods Across Programs • Assess current status of method implementation • Develop policies and procedural manuals • Develop training and education Project Level Tools Implement Tools Across Projects • Assess current status of tool implementation • Determine subject matter experts • Conduct pilot studies for new implementation • Develop/revise agency specific tools .

118 A four step process is proposed as follows: • Step 1. Implementation of Strategies – Organizational Change • Step 2. Implementation of Methods – Programmatic Change • Step 3. Implementation of Tools – Project Change • Step 4. Integrating the System – A Strategic Plan Implementation of Strategies – Organizational Change Successful control of project cost escalation may require a strategic change in the organizational approach that many SHAs have towards cost estimation practice and cost estimation management. Project cost estimation practice and project cost management should be viewed as an interdependent system that spans the entire project development process. Eight strategies are proposed to improve cost estimation practice and cost estimation management. These strategies were developed by observing and synthesizing practices from highway agencies around the country. The implementation of the eight strategies will require a long-term commitment to change. Implementation should be approached as a continuous process of 1) assessment, 2) planning, 3) assigning responsibility, and 4) measuring performance. Tools that might be useful in ensuring successful implementation at the organizational level include forming a cross cutting steering committee similar to the Georgia Department of Transportation approach and conducting an agencywide workshop such as the Minnesota Department of Transportation “Peer Exchange.” Implementation of Methods – Programmatic Change The second implementation step involves change at the program level with the institution of methods. Over thirty methods that support the strategies for producing consistent and accurate estimates were described in the Guidebook. In this step, an agency should first examine its current practices, then develop policies and manuals, and finally develop training and education modules to promote improved cost estimation and cost management. Implementation of Tools – Project Change The third level of implementation involves the application of tools at the project level. Tools should be developed and evaluated on a trial basis before they become agency practice or are incorporated into agency policy. Over 90 different tool applications are described in the Tool Appendix of the Guidebook. These tools support the execution of the methods. Integrating the System – A Strategic Plan The previous sections described the implementation of strategies, methods, and tools at the organizational, program, and project levels. While each of these elements is individually important, success will only be completely realized when the agency integrates these elements as a long-term strategic initiative. An integrated approach is proposed based on these elements: • Cost Management or Cost Estimation Strategy

119 • Performance Improvement Opportunity/Action • Implementation Steps • Responsible Party and Performance Measurement Using a structure based on the four elements provides a framework for implementing the strategies, methods, and tools described in this Guidebook. But agencies can develop alternate approaches or frameworks as dictated by their needs and resources. A more complete description of the agency implementation plan can be found in Chapter 8 of the Guidebook. INDUSTRYWIDE IMPLEMENTATION PLAN Much of this plan is based on the experiences of TRB Task Force AFH35T, Accelerating Innovation in the Highway Industry. For example, workshops similar to the Cost Estimation workshop that was sponsored by the AFH35T Task Force in February 2004 can be used to expose DOT management to the Guidebook. Collaboration with other groups has proven to be successful in exposing new products. Such groups might be the ASSHTO Technical Committee on Cost Estimation and the AASHTO Technology Implementation Group (TIG). Implementation takes on several modes. It can be broken down into three step: 1. Show or Inform; 2. Evaluate; and 3. Apply. Show Product The first step is to SHOW or INFORM the industry the results of the NCHRP 8-49 work. The goal of this category is to expose the Guidebook as a comprehensive work and let industry professionals know that the Guidebook exists. The case has to be made convincingly how very important it is for them to learn what is contained in the Guidebook. Several tools are needed to encourage and facilitate this learning process. Some potential tools discussed include: A news release that tells people the Guidebook is available. This news release is for everyone in the industry. A short brochure (flyer) that succinctly describes the product−the Guidebook−and tells potential users why they should pick it up, read it, and learn about the potential benefits. This flyer should tell them why these Guidebook will improve estimate CONSISTENCY and ACCURACY, as stated in the definition. This flyer is specifically for DOT professionals responsible for cost estimation practice and cost estimation management. A PowerPoint presentation that can inform the broader community. AASHTO gives this official recognition as an interim Guideline, using either the Technology Implementation Group or the Technical Committee on Cost Estimating.

120 A performance measure that might be appropriate for assessing the success of this category is that every pertinent DOT official is informed of the work and understands the potential benefits if the Guidebook is applied in their organization. Evaluate Product The second step is to EVALUATE the product. This is the most difficult but obviously the most important step. Identify those agency professionals from Step 1, SHOW or INFORM, that are highly interested in the Guidebook. Several education products would be available to them, in addition to the Guidebook. These extra products could be: A comprehensive HOW TO IMPLEMENT step-by-step guide. A template should be developed that would then be adapted by a specific SHA to its unique organizational culture and work processes. Regional workshops with several SHAs participating. This could also be segmented by SHAs with similar types of Cost Estimation and Cost Management Systems. Formation of a technical working group of six to eight SHAs that are actually evaluating the product inside their SHA. This could also be a networking mechanism and a working group. Conduct periodic reviews and try to capture the benefits from each SHA project. Develop case studies and share with others in the working group and the broader industry community. Attempt to determine improvements in consistency and accuracy. There is a need to develop metrics to measure consistent and accuracy improvements in cost estimates and the management of estimates over time. Update the Guidebook as lessons are learned. Towards the end of this effort, FHWA and AASHTO could consider the Guidebook as an approved Guideline. A performance measure that would be appropriate for this step is to have the six to eight SHAs seriously evaluate the Guidebook and report on its benefits and/or shortcomings. This evaluation would lead to an approved Guideline, perhaps with recommended changes incorporated. Apply Product The final step is to APPLY the product permanently. This is the final step in the process. Achieving this step would mean that the SHA has fully incorporated the Guidebook into its cost estimation practice and cost estimation management work processes, has established internal policies and protocols, and no longer considers the Guidebook experimental or in the evaluation stage.

121 A performance measure that would be appropriate for this step is to have identified three SHAs that have successfully applied the Guidebook and that are actually accruing long-term benefits from its application. Other Implementation Suggestions The following other suggestions regarding implementation can complement the three step process: An executive session might work under Step 2, Evaluation, if the SHA cost estimation managers considers it to be beneficial. They may want help in convincing the local SHA executives that this is important to them. An NHI course later down the road is important. But it comes after Step 2 has shown the Guidelines are actually a winner. If SHAs cannot agree to an evaluation and trial implementation approach as suggested under Step 2, downplay this to a cost estimation peer review process using the Guidebook as a resource. Develop from the Guidebook the 10 Commandments of Cost Estimation Practice and Cost Estimation Management that pulls people to the major principles that must be inherent in a successful cost estimation practice and cost estimation management system. Ten key principles to successful implementation have already been incorporated into the Guidebook. These ten principles could be aligned with a 10 Commandments list. Try to keep the Guidebook a system product, not a series of individual practices or tools. One caution is that a SHA could treat this as an “al la Carte” Guidebook. If so, professionals will usually implement the easiest or the quickest methods and tools first, not necessarily the methods and tools that, perhaps, have the bigger payback in terms of benefits. A more comprehensive discussion of the industrywide implementation plan is covered under a white paper prepared under Task 9 titled, “Proposed Implementation Plan for the NCHRP Guidebook on Cost Estimating and Cost Estimating Management of Highway Projects.”