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Web-Only Document 132 Right of Way Methods and Tools to Control Project Cost Escalation National Cooperative Highway Research Program Stuart Anderson Texas Transportation Institute College Station, TX Keith Molenaar University of Colorado Boulder, CO And Cliff Schexnayder Del E. Web School of Construction Arizona State University Temple, AZ Final Report for NCHRP Project 8-49(2) Submitted April 2008 NCHRP
ACKNOWLEDGMENT This work was sponsored by the American Association of State Highway and Transportation Officials (AASHTO), in cooperation with the Federal Highway Administration, and was conducted in the National Cooperative Highway Research Program (NCHRP), which is administered by the Transportation Research Board (TRB) of the National Academies. COPYRIGHT PERMISSION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, Transit Development Corporation, or AOC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. DISCLAIMER The opinion and conclusions expressed or implied in the report are those of the research agency. They are not necessarily those of the TRB, the National Research Council, AASHTO, or the U.S. Government. This report has not been edited by TRB.
Summary The ability of state highway agency management to control project cost escalation is dependent on strategic and structured project development processes. Right-of-way costs are among the most difficult to control and, therefore, necessitate disciplined estimating and management procedures. Yet in many agencies there exist âstove pipeâ divisional structures that lead to failures in communicating important project information affecting scope, design, and cost. NCHRP Project 8-49 âGuidance on Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction,â and other estimating studies identified right-of-way cost estimating and management of right-of-way estimates and actual costs as critical to achieving estimate consistency and accuracy. The original NCHRP Project 8-49 addressed right-of-way cost estimating to a limited extent but the projectâs scope did not allow for an in-depth treatment of this specialized area. This report describes the research process for additional NCHRP 8-49 work addressing right- of-way cost estimating and cost management. It provides an overview of the data gathering and analysis processes used to create a Procedures Guide specifically for right- of-way cost estimating. Due to many factors, the actual expenditures for project right of way are frequently greater than the right-of-way cost estimate produced during the initial phase of project development. An agencyâs use of a structured estimating process together with management of factors that are related to cost increases has the potential to significantly improve cost estimate accuracy and consistency throughout the project development process. The research team found the following problems inherent to right-of-way cost estimation in the state highway agencies interviewed: ⢠The right-of-way cost estimation and cost estimate management processes generally lack structure and definition as compared to the other areas of cost estimation; ⢠There is a lack of integration and communication between those responsible for the right-of-way cost estimate and those responsible for development of the overall project cost estimate. ⢠There is a lack of integration and communication between those responsible for estimating and managing right-of-way cost and the project development team. These problems are mainly process related. All of the state highway agencies interviewed were competent in assembling a right-of-way estimate but failed to complete one or more of the process steps that are necessary to achieving estimate accuracy. To address this problem the research produced as a separate document, Procedures Guide for Right-of-Way Cost Estimation and Management. The Procedures Guide introduces specific approaches to support the right-of-way cost estimating and management processes. The framework for the recommended procedures is a set of process flowcharts that graphically explain process steps, inputs, and outputs. There are five flowcharts: 1) an agency-level flowchart that shows the interaction of right-of-way cost estimating with
the project development process; 2) a conceptual right-of-way cost estimating flowchart that describes the required right-of-way estimate preparation steps during the planning stage of project development; 3) a baseline right-of-way cost estimating flowchart that depicts the required steps during programming; 4) an update right-of-way cost estimating flowchart that describes the required right-of-way estimate preparation steps during preliminary design to include a cost estimate management loop; and 5) a right-of-way cost management flowchart that describes the required management actions to control costs during the right-of-way appraisal and acquisition process. These flowcharts were developed based on a literature review and extensive conversations with SHA right-of- way staff. The charts show current practices integrated with what should be occurring. This report documents development of these right-of-way flowcharts and the flowcharts form the basis of the right-of-way Procedures Guide. The findings of this research support the recommendation that a right-of-way cost estimate be completed during each of the first three project development phases â planning, programming, and preliminary design. The research confirmed the importance of a structured right-of-way Cost Management process during final design. The cost management process must track appraisal amounts and cost of acquisitions, and analyze expenditure trends against the right-of-way budget. General conclusions are: ⢠Systematic and structured processes for right-of-way estimating and cost management are lacking in many state highway agencies. The lack of defined processes impacts the agencyâs ability to consistently produce accurate right-of-way cost estimates. This lack of structure is compounded when a state highway agency is decentralized and each region/district completes estimates using different processes. ⢠Communication and coordination between right-of-way sections and development teams is generally lacking throughout the project development process. ⢠There are a small number of tools available to aid agencies estimate right-of-way cost. There are right-of-way database programs and programs for capturing right-of- way information that can support right-of-way estimate development. ⢠Typically, right-of-way estimating personnel are not involved in preparing planning right-of-way cost estimates. It was found that planning right-of-way cost estimates are often prepared by the planning section and the right-of-way section is not contacted for guidance. ⢠There is only limited or no connection between the right-of-way planning estimate and later estimates. The basis and documentation supporting the planning estimate is often not forwarded to those responsible for later right-of-way estimates. ⢠Cost estimation management is minimal throughout the cost estimation process and especially during the Preliminary Design project development phase. ⢠State highway agency right-of-way manuals tend to concentrate on the appraisal and acquisition process with little information documenting right-of-way cost estimation and cost management activities. ii
⢠Utilization of systematic risk analysis techniques are lacking and contingency, when assigned, is based in most cases on gross percentages. ⢠Clear and effective scope definition and communication of right-of-way requirements is critical to preparing an accurate right-of-way estimate. ⢠Right-of-way estimator experience and knowledge play a significant role in producing accurate right-of-way cost estimates. ⢠Right-of-way Cost Management (cost control) is used only to a minimum extent during the appraisal and acquisition process. The Procedures Guide is a stand alone document that addresses each of these issues. iii
TABLE OF CONTENTS Page Summaryâ¦â¦â¦â¦..â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦... i Table of Contentsâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦ iv List of Figuresâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦. vi List of Tablesâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦.. vii CHAPTER 1: INTRODUCTION.............................................................................. 1 Background....................................................................................................... 1 Problem ......................................................................................................... 1 Research Objective ........................................................................................... 3 Research Framework ........................................................................................ 3 Scope of Work .................................................................................................. 5 Limitations ........................................................................................................ 6 Report Outline................................................................................................... 7 CHAPTER 2: STATE OF PRACTICE ..................................................................... 8 Literature Review.............................................................................................. 8 Research Methodology ..................................................................................... 12 State of Practice Characteristics........................................................................ 17 Overview of Current Practice ........................................................................... 19 Chapter Summary ............................................................................................. 23 CHAPTER 3: CRITICAL REVIEW OF THE STATE OF PRACTICE .................. 25 Contents ..................................................................................................... 25 General Right-of-Way Cost Estimating Procedure........................................... 26 Right-of-Way Cost Estimation ......................................................................... 26 Right-of-Way Estimate Management ............................................................... 41 Summary of Notable Practices.......................................................................... 43 Chapter Summary ............................................................................................. 45 CHAPTER 4: RIGHT-OF-WAY PROCEDURE DEVELOPMENT ....................... 46 Development of the Flowcharts ........................................................................ 46 Right-of-Way Process at the Agency Level...................................................... 48 Right-of-Way Process at the Organizational Level .......................................... 50 Procedures Guide: Structure, Layout, and Content .......................................... 68 Chapter Summary ............................................................................................. 69 CHAPTER 5: CONCLUSIONS ................................................................................ 70 iv