Airport Capital Improvements: Developing a Cost-Estimating Model and Database (2014)

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BIBLIOGRAPHY APPENDIX A: Cost Estimating Practices American Association of State Highway and Transportation Officials, A Practical Guide to Estimating, Washington, D.C., 2009 The AASHTO Technical Committee on Cost Estimating documents practical guidance on preparing final estimates, including recommended procedures and guidance on reviewing bids prior to award. The guide drew on the expertise of AASHTO members and the agencies they represent, to document the best practices in use by State Departments of Transportation. This guide provides practical guidance on preparing final estimates. Of particular interest to this project is the discussion on the differences between cost estimation utilizing historical bid pricing and cost-based estimating. The guide contains an analysis and discussion of the importance of proper bid tabulation methods, as well as critical factors that affect cost estimating. American Association of State Highway and Transportation Officials, Guidance for Major Project Cost Estimate Reviews, Washington, D.C., 2008 The major topics covered by this guide are the scope of the costs that must be included in the estimated cost of the project, and the role of the State Transportation Agency in FHWA independent cost estimate reviews. The focus areas are the steps titled: • Prior to the cost estimate review • Conducting the review • Closeout presentation • Cost review report American Society of Professional Estimators, Standard Estimating Practice, 8th Edition, Nashville, Tenn., 2011 The American Society for Professional Estimators (ASPE) is one of two industry organizations identified by the U.S. Bureau of Labor Statistics as providing industry certification for professional cost estimating. ASPE publishes and regularly updates this standard “how-to” manual for use as a guide for all professional estimators in the construction industry. A-1

Anderson, S., K. Molenaar, and C. Schexnayder, NCHRP Report 574: Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction, Transportation Research Board of the National Academies, Washington, D.C., 2007 This NCHRP report examines highway cost estimation practice and cost estimation management with the goal of helping achieve greater consistency and accuracy between planning, programming and preliminary design, and final design. The Guidebook explores strategies, methods, and tools to develop, track, and document realistic cost estimates during each phase of the process. This is pertinent to this project as highway cost estimating is very similar to horizontal airport cost estimating. Cullen, L., A. D’Amato, N. LaFarge, and H. Park, ACRP Report 49: Collaborative Airport Capital Planning Handbook, Transportation Research Board of the National Academies, Washington, D.C., 2011 This ACRP report provides guidance to those in the airport community who have responsibility for, and a stake in, developing, financing, managing, and overseeing an airport capital plan and the individual projects included in it. This will be pertinent to this study as it will help to establish what projects are deemed important in an airport capital plan and, more importantly perhaps, what project types should be modeled in this project. Executive Order 12893, Principles for Federal Infrastructure Investments, 1994 This Executive Order applies to the entire Federal Government and requires that each executive department and agency with infrastructure responsibilities develops and implements plans for investment management consistent with the following principles: 1. Systematic analysis of expected benefits and costs. (a) Benefits and cost should be quantified and monetized to the maximum extent practicable. (b) Benefits and costs should be measured and appropriately discounted over the full life-cycle of each project. (c) When the amount and timing of important benefits and costs are uncertain, analyses shall recognize the uncertainty. (d) Analyses shall compare a comprehensive set of options. (e) Analyses should consider not only quantifiable measures of benefits and costs, but also qualitative measures. 2. Efficient management. Infrastructure shall be managed efficiently in accordance with the following: (a) Agencies should conduct periodic reviews of the operation and maintenance of existing facilities. (b) Agencies should use these reviews to consider a variety of management practices. A-2

(c) Agencies also should use these reviews to identify the demand for different levels of infrastructure services. 3. Private sector participation. 4. Encouragement of more effective State and Local programs. As such, this Executive Order defines the underlying national policy on employing the BCA method for transportation infrastructure investments. Federal Aviation Administration, Airport Benefit-Cost Analysis Guidance, 1999 The purpose of this document is to provide clear and thorough guidance to airport sponsors on the conduct of project-level BCAs for capacity-related airport projects. It is intended to facilitate the production of consistent, thorough, and comparable analyses that can be used by the FAA in its consideration of airport projects for discretionary AIP funding. Airport sponsors are required to conform to the general requirements of this guidance for all BCAs submitted to FAA. However, airport sponsors are encouraged to make use of innovative methods for quantifying benefits and costs where these methods can be shown to yield superior measures of project merit. Federal Aviation Administration, Airport Improvement Program Handbook, FAA Order R5100.38C, 2005 This FAA Order provides guidance and sets forth policy and procedures to be used in the administration of AIP funding. Several subordinate FAA Orders and ACs are referred to in this directive and included by reference. Federal Aviation Administration, Planning Information Needed for FAA Headquarters Review of Benefit-Cost Analyses, 2006 This guidance identifies airport planning information required by FAA Headquarters for its review of BCA prepared for AIP discretionary grant and LOI purposes. Review offices include the FAA Office of Aviation Policy and Plans (APO-200 and APO-110) and the FAA Office of Planning and Programming (APP-500 and APP-400). General Accounting Office, Airport Development Needs: Estimating Future Costs, GAO/RCED-97-99, 1997 This report provides a range of aggregate cost estimates for capital improvement projects for U.S. airports. Estimates are obtained from the airport and airline industries are reported and are compared with the GAO’s own range of estimates. The report includes a regression analysis for associating aviation activity with capacity-related projects that will be reviewed when developing the framework for the cost estimating model. A-3

Government Accountability Office, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs, GAO-09-3SP, 2009 The U.S. Government Accountability Office (GAO) has released a guide designed to help federal, state, and local government agencies develop more reliable cost estimates for government projects of all sizes. The focus of the report is on federal acquisition projects. The guide is intended to help agencies produce well-documented, comprehensive, accurate, and credible estimates. The report constitutes an exhaustive primer on the art and science of cost estimating, identifying the processes, key stakeholders, and best practices. The report includes a large number of case studies. One of the case studies is from the field of aviation, but it is related to an FAA air traffic management system, not airport construction. The report includes a thorough discussion of the identification and application of data sources, but does not identify any specific data sources applicable to airport construction projects. The report generally does not identify specific cost estimating models or software packages. Hatch Mott MacDonald Group, Inc., Managing and Controlling Complex Airport Construction Projects, Millburn, N.J., n.d. The purpose of this publication is to share experience and insight in the hope that players in the industry may take advantage of some of the unique characteristics of airport work and utilize these for their construction project. The remarks are structured, not so much on the tools, new technology, or on project management ways, but rather on the techniques that are used in the execution of airport projects; strategies and principles used to effectively manage the assignment and to deliver satisfying results to the airport owner. This presentation refers to past airport projects undertaken by the author and, more specifically, to the new terminal project at L. B. Pearson International Airport. This terminal project was, at the time of writing, the largest building project ongoing in North America, with estimated costs of approximately $1.7 billion. Kim, K. J. and K. Kim, Preliminary Cost Estimation Model Using Case-Based Reasoning and Genetic Algorithms. In Journal of Computing in Civil Engineering, Vol. 24, No. 6, American Society of Civil Engineers, Reston, Va., November/December 2010 This study proposes a preliminary cost estimation model using case-based reasoning (CBR) and genetic algorithm. In measuring similarity and retrieving similar cases from a case base for minimum prediction error, CBR is a key process in determining the factors with the greatest weight among the attributes of cases in the case base. Previous approaches using experience, gradient search, fuzzy numbers, and analytic hierarchy process are limited in their provision of optimal solutions. This study therefore investigates a genetic algorithm for weight generation and applies it to real project data. When compared to a conventional construction cost estimation model, the accuracy of the CBR- and genetic algorithm-based construction cost estimation model was verified. It is expected that a more reliable construction cost estimation model could be designed in the early stages by using a weight estimation technique in the development of a construction cost estimation model. A-4

Landau, S. and G. Weisbrod, ACRP Synthesis 13: Effective Practices for Preparing Airport Improvement Program Benefit-Cost Analysis, Transportation Research Board of the National Academies, Washington, D.C., 2009 This document describes successful assessment techniques that can be used by airports in performing BCAs to quantify benefits for projects needing more than $5 million in AIP discretionary funding. The synthesis includes a literature review, a review of BCAs submitted to the FAA for AIP funding, and evaluation and summary of successful practices. Landau, S., G. Weisbrod, and B. Alstadt, Applying Benefit-Cost Analysis for Airport Improvements: Challenges in a Multi-Modal World, Economic Development Research Group, Inc., Boston, Mass., 2009 This document addresses BCAs in light of the fact that aviation travel also requires ground access travel, making it intrinsically multi-modal. The report states that when benefit-cost analysis is applied for airport project proposals, it can raise issues of how to handle competing modes, inter-modal interactions, and definitions of who are the real users and beneficiaries of airport improvements. The authors compared benefit-cost guidance for airports with counterpart guidance for other travel modes, and also include a review of the current state-of-practice of benefit-cost studies for airport improvements. The findings point to challenges for improving future analysis methods of airport benefit-cost analysis. Martín, J. C. and A. Voltes-Dorta, The Econometric Estimation of Airports’ Cost Function. In Transportation Research Part B: Methodological, Vol. 45, No. 1, Transportation Research Board of the National Academies, Washington, D.C., January 2011 This article documents the efforts made to analyze the econometric estimation of cost functions that has been proposed in the literature as a suitable approach in order to obtain estimations of marginal costs, efficiency levels, and scale elasticities for transport industries. However, for airport construction projects, no significant attention has been paid in developing an airport-specific estimation methodology as opposed to adapting the procedures applied to other industries. The lack of comparable airport data is one of the causes which could explain the scarcity of this literature in the past, as well as the use of very limited approaches to explain airport technology. This paper tries to overcome these limitations by developing an airport- specific methodology to estimate a multi-output long-run cost function using an unbalanced pooled database on 161 airports worldwide. The specification of hedonically-adjusted aircraft operations, domestic and international passengers, cargo and commercial revenues in the output vector, as well as the calculation of input prices are discussed. Both technical and allocative inefficiencies are specified in the model using a Stochastic Frontier method that has been estimated through Bayesian Inference and Markov Chain Monte Carlo methods. Massachusetts Certified Public Purchasing Official Program, Public Contracting Overview, Seminar Publication No. 17878-200-2C-1/97-IGO, Boston, Mass., 2001 This publication provides practical guidance and training on public purchasing procedures in the State of Massachusetts. Of particular interest is the definition and discussion on terms such as horizontal construction, vertical construction, Design-Bid-Build (DBB), Design- Build (DB), and Construction Manager at Risk (CRM). A-5

Molenaar, K., S. Anderson, and C. Schexnayder, NCHRP Report 658: Guidebook on Risk Analysis Tools and Management Practices to Control Transportation Project Costs, Transportation Research Board of the National Academies, Washington, D.C., 2010 This guidebook provides guidance to State DOTs for using specific, practical, and risk- related management practices and analysis tools for managing and controlling transportation project costs. Containing a toolbox for agencies to use in selecting the appropriate strategies, methods and tools to apply in meeting their cost estimation and cost-control objectives, this guidebook provides guidance to practitioners that are accountable for the accuracy and reliability of cost estimates during planning, priority programming and preconstruction. Niedzwecki, K. E. and L. Bell, Best Practices for Developing the Engineer’s Estimate, Department of Civil Engineering Research Project 661, Clemson University, Clemson, S.C., 2007 The primary objective of this research project was to investigate the strengths and weaknesses of two types of estimating methods being utilized today by State DOTs nationwide. These two types of estimating methods are the unit cost line item approach, which the South Carolina State DOT utilizes, and the cost-based approach. The unit cost line item approach uses a formulated line item estimate price, based on historical data, multiplied by the anticipated quantity to reach a final unit price. The cost-based estimating approach takes into account production rates, crew compositions, fuel cost adjustments, haul distances, and other factors before applying a cost value to a line item estimate. The project is published in two volumes. Reed Construction Cost, Inc., RSMeans Square Foot Costs 2011 Book, Norwell, Mass., 2011 This manual provides descriptions of residential, commercial, industrial, and institutional buildings. It is updated each year and serves as a primary reference source for cost data categorized in accordance with the CSI format. Costs are categorized according to material and system type as a unit cost, and include associated unit labor costs for installation of each item. Also included are equipment rates required for special installation, as well as crew costs. Factors are provided to address regional differences in prices throughout the United States. Touran, A., D. D. Gransberg, K. R. Molenaar, P. Bakhshi, and K. Ghavamifar, ACRP Report 21: A Guidebook for Selecting Airport Capital Project Delivery Methods, Transportation Research Board of the National Academies, Washington, D.C., 2009 This ACRP report provides guidance on three different types of project delivery methods for airport projects: DBB, DB, and CRM. The report provides a two-tiered approach to decision process on when to use what method. The report describes the advantages and disadvantages, as well as the cost efficiencies of each of the three methods. The guidebook offers a two-tiered project delivery selection framework that may be used by owners of airport projects to evaluate the pros and cons of each delivery method and select the most appropriate method for their project. Tier 1 is an analytical delivery decision approach that is designed to help the user understand the attributes of each project delivery method and whether the delivery method is appropriate for their specific circumstance. Tier 2 uses a weighted-matrix delivery decision approach that allows users to prioritize their objectives and, based on the prioritized objectives, select the delivery method that is best suited for their project. A-6

Washington State Department of Transportation, Cost Estimating Manual for WSDOT Projects, Olympia, Wash., 2009 This document provides cost estimating policies and procedures for estimate quantification, estimating pricing, estimate review, estimate documentation, estimate communication, and management of estimate data. It also provides guidance on treating a number of recurring challenges encountered in the estimating process. It does not include airport- specific guidance, however. Databases and Web Sites Economics, ENR: Engineering News-Record Full access requires a membership fee. Data is provided on various construction and labor cost indices, which aggregate cost trends across a basket of products, as well as historical prices for 75 different materials. The data is updated with each issue of ENR: Engineering News- Record. Source information for which ENR retrieves data includes organizations such as the Department of Justice, Department of Labor, and the Bureau of Labor Statistics. Estimating Information, Washington State Department of Transportation This Washington State DOT site provides a comprehensive cost estimating manual (Washington State DOT, 2009), forms, templates, and software tools. These resources are not specific to aviation projects, however. MasterFormat, The Construction Specifications Institute MasterFormat is a master list of numbers and titles classified by work results or construction practices, used throughout the North American construction industry to organize project manuals, detailed cost information, and relate drawing notations to specifications. This format forms the basis for allocation of work items and associated costs for labor and materials. This is a cost item classification system: It does not include cost data. National Highway Construction Cost Index (NHCCI), Federal Highway Administration This web site provides a price index that can be used both to track price changes associated with highway construction costs and to convert current highway construction costs to real or constant dollars. The NHCCI is intended to replace the FHWA Bid-Price Index (BPI) in the future, but also to be compared with BPI for historical purposes. This information appears to be public information, non-proprietary, and will be a good source for the project to refer to for normalizing unit cost data to a constant dollar basis. RSMeans Reed Construction Cost Data, Reed Construction Cost, Inc. Reed Construction Cost Data is offered under the name “RSMeans” and is typically referred to by this term. However, the term refers to a number of different printed and electronic sources, targeted for different industries and project types, such as building construction or site work. The cost information is available through purchases of single, printed volumes or through subscription pricing that provides online access to electronic data for one year. A-7

Technical Committee on Cost Estimating, AASHTO The AASHTO Technical Committee on Cost Estimating web site provides current information on the progress of creating new guidelines for recommended industry practices. In addition to information on the committee and its progress, the site provides links to related documents and research, most of which are from the FHWA and NCHRP. Transportation Costs Report: Airport Costs, Florida Department of Transportation This report provides basic unit costs as of April 2011 for the most common types of airport construction projects. Most costs are provided in the FAA categories of general aviation, reliever, or commercial service airport facilities. Note that the Research Team plans to contact the Florida DOT to discuss how these “rules of thumb” were established. This is anticipated to occur during Task 3, Define and develop a framework for the model. Transportation Estimators Association The web site for this organization contains a free, downloadable “Bid Comparison Graph” spreadsheet which provides a tool to analyze bid tab data. It is dated 2000 and is therefore at risk of containing outdated information. However, this represents an approach to normalizing historical bid tab data which will be evaluated for incorporation into the model. This is anticipated to occur during Task 3, Define and develop a framework for the model. Cost Modeling Software AASHTO Client/Server Trns•port, AASHTO: This system consists of the following 14 modules designed to meet most transportation agency preconstruction and construction management needs. The modules pertinent to this ACRP study include: CES: Cost Estimation System Trns•port Estimator: Cost Estimation Workstation Trns•port FieldNet: Electronic Data Transfer System for FieldManager Trns•port TRACER: TRAnsportation Cost EstimatoR Trns•port Preconstruction: Proposal, Estimates, Letting and Award System AASHTO Software Cost Estimation System, AASHTO: This system pulls information from a State DOT’s project cost database, which typically consists of construction bid tab data from the last three years of public construction projects in the state. Every three months, the database is updated and refreshed with the construction item cost from the projects. This ensures the planning level estimates remain reliable and reflect any significant changes in construction cost. A-8

AEsti, Duke Associates: This Microsoft Excel-based cost model provides the user to define cost items, unit costs, and cost per unit. The model can also apply profit to the direct cost subtotal. The tool includes links to the RSMeans and Craftsman cost libraries, if the user has purchased the right to access those libraries. There is no pre-defined Work Breakdown Structure (WBS) and is simply an Excel tool to multiply cost items and to sum them up. AspenONE for Engineering & Construction, aspentech: This system uses a comprehensive cost database and rules based software to scope projects, predict expenses, and generate detailed cost breakdowns. Automated Cost Estimating Integrated Tools (ACEIT), Tecolote Research, Inc.: This is a family of applications that support program managers and cost/financial analysts during all phases of a program's life-cycle. ACEIT allows for analyzing, developing, sharing, and reporting cost estimates, and provides a framework for automating key tasks in the cost estimating process. Bid2win: This is a Windows-based client/server application designed to standardize the entire estimating and bidding process. Bid4Build, Bid4Build Enterprises: Bid4Build construction estimating software is designed for all types of residential construction, insurance estimating, home remodeling projects and many areas of commercial construction. Bid4Build's comprehensive database covers basic construction categories and materials and allows users to generate accurate estimates for a broad range of projects. It also includes an Estimate Advisor Wizard which presents a five-step process for building an estimate. The program comes with a cost database that can be customized by adding, deleting or changing line item entries as well as line item costs. CostX Estimating Software: This hierarchical spreadsheet based cost estimating program provides automatic quantities generation from 3D models and a simple interface for the extraction of dimensions and geometry from 2D CAD files. It can be tied to a cost database to provide instant cost information and recalculation when changes are made. D4Cost: This system comes loaded with a database of 1,100 construction projects broken down using CSI MasterFormat. All data in D4COST is based on real cost data from projects. The software also includes integral cost escalators and local/regional adjustment factors FAA Pavement Design Model, FAA Advisory Circular 150/5320-6E, FAA: This model utilizes engineering inputs such as the number of sublayers and generates a summary of the resulting engineering design requirements for flexible and rigid pavements. It does not provide cost outputs. GeneralCOST, CPR, Inc.: This is a low-cost Excel-based cost model. GeneralCOST Estimator for Excel is a spreadsheet based, easy-to-use construction cost estimating system. It contains built-in functionality including one-click reporting. GeneralCOST Estimator also contains several cost data worksheets, identified by tabs at the bottom of the Excel screen. The model includes 16 tabs containing extensive unit cost data. Examples of tab names are “Concrete”, “Metals”, and “Sitework”. The model provides the user with the ability to generate the cost for an item based only on the number of units needed, such as the number of paving stones required. The model also includes locality rate adjustments for 210 cities. There is no pre-established A-9

WBS, the user needs to define each type of task and then use the tabs to estimate the direct cost for each task. Price H, Price Systems, LLC: Price H is a stand-alone desktop application which uses parametric modeling to estimate costs, resources, and schedules for hardware projects. The model is available via annual licensing with the type of license such as a site license or a general license for a specific number of users. The model is primarily aimed at the development of items such as a custom process control facility and is not directly intended for use on construction projects. Project Risk Management Plan Spreadsheet (RMP) Cost Model, Washington State Department of Transportation: This Excel model was developed to track project risks. The Washington DOT developed this spreadsheet and an associated template for the Montana DOT’s Risk Management Guidelines. Montana DOT has adopted this process for managing its projects related roads and bridges in the state. The model includes a description on how risk management is structured and performed. SEER for Hardware, Electronics & Systems (SEER-H), Galorath Associates. This stand-alone model is available via annual licensing with the type of license such as a site license or a general license for a specific number of users. The model is primarily aimed at the development of items such as a custom process control facility and is not directly intended for use on construction projects. Standard WBSs are pre-programmed for a variety of project types. The model is comprised of four major functions: Interface: An intuitive interface for defining and describing projects. Users can generate a new project from an existing project “template” or by adding and defining individual work elements. A series of pop-up windows and annotations guides users through the process of defining project scope, complexity, and technologies. Simulation/Modeling Engine: Sophisticated sector-specific mathematical models derived from extensive project histories, behavioral models, and metrics. Knowledge Bases: SEER Knowledge Bases provide default project definitions, values, ranges, and calibrations based on comparable project histories. They enable users to develop first-look estimates when very little information is known, and to refine those estimates as details become available. Outputs: A variety of charts, graphs, and reports for quickly summarizing and presenting project outcomes and alternatives as well as work-in-progress. SwiftEstimator Commercial Estimator: This system contains costs for more than 200 commercial, retail, institutional, industrial, and agricultural building types, including a number of building classes, sizes, shapes and quality levels. US Cost Success Estimator: This is a desktop estimating software application based on parametric cost models and detailed bottom-up estimates. It can use a combination of data sources, including RSMeans, Richardson, and historical cost data. A-10