Estimating Highway Preconstruction Services Costs - Volume 2: Research Report (2016)

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75 A P P E N D I X D Agency: Caltrans Location: Sacramento, California General information: Caltrans’ yearly construction bud- get is approximately $13 billion to $15 billion, and it awards approximately 364 construction projects per year. Approxi- mately 60% of all annual projects are federally funded, with the remaining 40% non-federally funded. Project mone- tary size ranges from $50,000 to $3.5 billion. The average monetary size of new construction projects ranges from $2 mil- lion to $5 million. In-house data collection: Caltrans does record in-house PCS hours on a per-project basis. It records these hours using the engineers’ timesheets. The data recorded on these timesheets are rated 3 out of 5 for accuracy. Caltrans does allocate in-house overhead cost to a specific project. These costs are allocated as an annual rate percentage, with a functional rate of 35% to 40% and an administrative rate of 20% to 30%. Caltrans uses data collected from past projects to estimate the PCS costs for future projects. However, the PIPE scan system is used as a starting point. Current meth- ods used to estimate PCS costs for projects include a direct estimate of hours and an average percentage support-to- cap ratio. Outsourcing data collection: Caltrans contracts out 10% of PCS work. It has a standing contract for a GEC. Each dis- trict has its own separate on-call staff. Caltrans can perform the entire preconstruction process in-house, and it also can outsource all PCS except advertisement for bids, evaluation of bids, and award of contract. It is rare for Caltrans to outsource PCS concerning cost estimates, ROW plans, and ROW utility acquisition and relocation. Caltrans performs 90% of PCS in-house, and 10% is out- sourced. The main reasons it outsources PCS are policies, staff availability, and special expertise. Caltrans does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for Caltrans are: • Complexity, • Project type, • Construction costs, • Number of plan sheets, • NEPA classification, and • Length of project. The minor influences on PCS cost for this agency are: • Number of lanes, • Number of bridges, and • Geographical. The characteristics that have no influence on the PCS cost for this agency are: • Number of sub-consultants, • Highway classification, and • Loss of design effort.* *If funding is not allocated. PCS estimate improvements: Caltrans is already estimat- ing PCS cost for all projects. To improve these estimates, the agency believes it needs a better model for historical data analy- sis, needs to do bottom-up estimates, and needs good scop- ing documents. Caltrans already has a system that captures PCS cost information. It is difficult to buy a new program off the shelf, and Caltrans believes that a new program needs to fit current systems and data. It believes that having more accurate PCS cost estimates would have some impact, mainly on the budget process. Researchers’ observations: The largest issue is that it will be difficult to convince people to use the system. Case Study Write-Ups

76 Agency: CDOT Location: Denver, Colorado General information: CDOT’s yearly construction budget is approximately $500 to $700 million, and it awards approx- imately 180 construction projects per year. From 85% to 90% of all annual projects are federally funded. Project monetary size ranges from $150,000 to $100 million. The average mon- etary size of new construction projects ranges from $1.5 to $1.6 million. In-house data collection: CDOT does not record in-house PCS hours on a per-project basis. Whether the cost is recorded depends on the type of project. For federally funded projects, it needs to submit an independent project cost estimate; in this case 10% is assumed. For bridge enterprises and larger proj- ects, it will collect all costs. It records these hours using the engineers’ timesheets. The data recorded on these timesheets are expected to be 60% accurate. CDOT does allocate in- house overhead costs to a specific project. Its current orga- nizational indirect rate of 20% is evaluated every year and distributed across the multiple phases of a project. CDOT does not use data collected from past projects to estimate the PCS cost for future projects. It uses standard percentages of estimated construction costs to estimate PCS hours. Outsourcing data collection: CDOT does contract out PCS. It has a standing contract for GECs. CDOT can perform the entire preconstruction process in-house or it can outsource all PCS except advertisement for bids, evaluation of bids, and award of contract. By number of projects, CDOT performs 45% of PCS in- house, and 55% is outsourced. The main reasons it outsources PCS are staff availability and special expertise. It does not have any regulations on how much it can or should outsource. It has to have justification to outsource projects. CDOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The decision to outsource or not is mainly based on the availability of staff and in-house capabilities. The major influences on PCS cost for CDOT are: • Complexity, • Construction costs,* • NEPA classification, • Political elements (e.g., high-visibility project), and • Schedule drivers. The minor influences on PCS cost for this agency are: • Project type, • Number of sub-consultants, • Construction costs,* • Number of plan sheets, • Number of bridges, • Highway classification, • Length of project, and • Geographical. The characteristics that have no influence on PCS cost for this agency are: • Number of lanes, and • Loss of design effort. * CDOT considers construction cost a major influence for in-house projects, but considers it as having only some influ- ence for consultant projects. PCS estimate improvements: CDOT is looking to adopt a system of estimating PCS costs for larger projects. To improve its PCS cost estimates, the agency believes it needs good tools as well as good data. It currently relies on guesstimates. This is an artistic process and involves loss of experience with younger engineers. The agency needs a data-collection effort to figure out the number of hours. If there was a system available that would capture PCS cost information, it would consider adopt- ing such a program, depending on how the model aligned with other systems CDOT uses. CDOT believes that having more accurate PCS cost estimates could have a moderate impact on the planning process. It would really help with budget port- folio management. People involved in PCS cost estimating are not usually engineers. This position is usually left up to plan- ning or environmental people. Planning personnel rely on past information to develop a ratio between PCS cost and estimated construction cost for each project. Researchers’ observations: When you hire a consultant, you need to negotiate the number of hours. Agency: Iowa DOT Location: Ames, Iowa General information: Iowa DOT’s yearly construction budget is approximately $400 million, and it awards approxi- mately 500 to 600 construction projects per year. In-house data collection: Iowa DOT does record in-house PCS hours on a per-project basis. It records these hours using the engineers’ timesheets. The data recorded on these timesheets are rated 4 out of 5 for accuracy. Iowa DOT does not allocate in-house overhead cost to a specific project. Iowa DOT does not use data collected from past projects to estimate the PCS costs for future projects. It does not estimate PCS cost for a project. Outsourcing data collection: Iowa DOT does contract out PCS. Iowa DOT can use both in-house and on-call consul- tants; it also uses other consultants, but only for larger, less- common projects; it does not have overall GEC contracts. Iowa DOT can perform the entire preconstruction process in-house, and it also can outsource all PCS except advertise- ment for bids, evaluation of bids, and award of contract.

77 The main reasons it outsources PCS are staff availability, special expertise, and timeline for design. It does not have any regulations about how much it can or should outsource; however, it cannot exceed the annual budget for outside ser- vices. Iowa DOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for Iowa DOT are: • Complexity, • Project type, • Construction costs, • Number of plan sheets, • NEPA classification, and • Length of project. The minor influences on PCS cost for this agency are: • Number of lanes, • Number of sub-consultants, • Number of bridges, and • Geographical (soils on west side of state). The characteristic that has no influence on PCS cost for this agency is: • Highway classification. PCS estimate improvements: Iowa DOT is not currently estimating PCS cost for projects, but it is looking to adopt this in the future. To improve these estimates, the agency believes it needs to learn how to use the data it already has. Iowa DOT has been capturing PCS hours for a few years, and it needs a way to organize these data so that they are useful in PCS estimating. If there was a system available to help capture agencies’ PCS costs, Iowa DOT would consider adopting it. Iowa DOT thinks that having a more accurate estimate of PCS would have a large impact on the planning process and would allow the agency to budget staff time. It would be good to know the number of hours per task and to be able to com- pare these to consultant design hours. Researchers’ observations: Iowa DOT wants to capture costs that are meaningful in both planning and design and categorize them by function or office. The agency would like a model that is split up by function or by office. Agency: MSHA Location: Annapolis, Maryland General information: MSHA’s yearly construction budget is approximately $600 to 800 million, and it awards approximately 300 to 350 construction projects per year. Project monetary size ranges from $1 million to $150 million. Average monetary size of a new construction project is approximately $25 million. In-house data collection: MSHA does record in-house PCS hours on a per-project basis. It records these hours using time-tracking software. The data recorded are rated 4.5 out of 5 for accuracy. MSHA does allocate in-house over- head costs to a specific project. MSHA uses data collected from past projects along with standard percentages to esti- mate the PCS costs for future projects. The old system used 15% of the construction cost as preliminary engineering; it now uses a cost-based system on preliminary engineering. Outsourcing data collection: MSHA does contract out PCS. It has a standing contract for a GEC. MSHA can perform the entire preconstruction process in-house, and it can also out- source all PCS except ROW utility acquisition and relocation, advertisement for bids, evaluation of bids, and award of contract. The main reasons it outsources PCS are staff availability and special expertise. It does not have regulations on how much it can or should outsource. MSHA does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for MSHA are: • Complexity, • Project type, and • Construction costs. The minor influences on PCS cost for this agency are: • Number of sub-consultants, • Number of lanes, • Number of plan sheets, • NEPA classification, • Number of bridges, • Length of project, • Geographical, • Loss of design effort, • Innovation, • New technology, and • Project delivery method. The characteristic that has no influence on PCS cost for this agency is: • Highway classification. PCS estimate improvements: MSHA is already estimat- ing PCS costs for all projects. To improve these estimates, the agency believes it needs to develop a historical database of previous estimates. MSHA believes that having more accurate PCS cost estimates would have a large impact on the planning process as it believes that it would provide more efficiency in managing funds. Researchers’ observations: Historical projection is incor- porated into project factors.

78 Agency: MDT Location: Helena, Montana General information: MDT’s yearly construction budget is approximately $385 million, and it awards approximately 80 to 100 construction projects per year. In-house data collection: MDT does record in-house PCS hours on a per-project basis. It records these hours using the engineers’ timesheets and has a time allocation system per job. The data recorded on these timesheets are rated 4 out of 5 for accuracy. MDT does allocate in-house overhead cost to a specific project; it allocates this using an indirect rate that it applies to all projects. This rate is approximately 9% to 11% but has been as high as 18%. MDT does not use data collected from past projects to estimate PCS cost for future projects. It has a system that records past hours and durations of activities of 3 to 5 years to reconcile with activities to aver- age activity hours. This system has no feedback loop, and it is therefore not used to look at past projects or to re-access the activity hours in OPX2 (a project management tool). Outsourcing data collection: MDT does contract out PCS. MDT can perform the entire preconstruction process in-house except feasibility studies, and it also can outsource all PCS except advertisement for bids, evaluation of bids, and award of contract; this is considered in the construction department. The main reasons MDT outsources PCS are staff availabil- ity, special expertise, and to transfer risk of design liability. The agency does not have any regulations about how much it can or should outsource; however, there is an unwritten rule that approximately 20% of the program should be out- sourced. MDT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for MDT are: • Complexity, • Project type, • Number of lanes, • Number of plan sheets, • NEPA classification, • Number of bridges, • Length of project, • Geographical, • Loss of design effort, and • ROW and utilities. The characteristics that have no influence on PCS cost for this agency are: • Number of sub-consultants, • Construction costs, and • Highway classification. PCS estimate improvements: MDT is already estimat- ing PCS cost for all projects. To improve these estimates, the agency believes it needs to get to function-based estimating and also needs to determine how to allocate funds in split- corridor projects. MDT also believes that it needs to improve how it captures the hours on timesheets. Agency: NYSDOT Location: Albany, New York General information: NYSDOT’s yearly construction budget is approximately $1 billion, and it awards approxi- mately 300 to 350 construction projects per year. In-house data collection: NYSDOT does record in-house PCS hours on a per-project basis. It records these hours using the engineers’ timesheets. The data recorded on these timesheets are rated 4.5 out of 5 for accuracy. NYSDOT does allocate in-house overhead cost to a specific project. NYSDOT uses data collected from past projects to estimate PCS costs for future projects. It uses an in-house system called DPR, which contains a selection of tools to estimate PCS hours. NYSDOT is looking to move to a Primavera P6 software resource alloca- tion model to help estimate PCS hours. Outsourcing data collection: NYSDOT does contract out PCS. When design for a project is performed in-house, it uses on-call contracts for the environmental sampling and testing and survey services, but it does not have overall GEC contracts. NYSDOT can perform the entire preconstruction process in-house except for these services, and it can also out- source all PCS except advertisement for bids, evaluation of bids, and award of contract. NYSDOT performs 50% of PCS in-house, and 50% is out- sourced by dollar value and 90% to 10% by project number. The main reasons it outsources PCS are staff availability and special expertise. It does not have any regulations about how much it can or should outsource; however, it has quarterly meetings with consultants to ensure that there is enough work in the industry. Design staff for NYSDOT are unionized. Most consultant work for NYSDOT happens in the southern region in and around New York City and Long Island. NYSDOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for NYSDOT are: • Complexity, • Project type, • Construction costs, • Number of lanes, • NEPA classification, • Number of bridges, • Length of project, • Geographical, and • Inflation.

79 The minor influence on PCS cost for this agency is: • Highway classification. The characteristics that have no influence on PCS cost for this agency are: • Number of sub-consultants, and • Number of plan sheets.* * Electronic plan sheets mean that more can be produced, but the level of work put into the design is no longer directly reflected as before when CAD and other modeling software were not used. NYSDOT also noted that loss of design effort is considered rare; the agency had problems when it shifted to a preser- vation mode 3 years previous. A lot of reconstruction was shifted later in the program (~10 years), and preservation was adopted. PCS estimate improvements: NYSDOT is currently estimat- ing PCS costs for all projects. To improve these estimates, the agency believes it needs to get to task estimating; however, it is skeptical about whether the time, effort, and cost of this would add any real value to the agency. NYSDOT believes that having more accurate PCS cost estimates could have some impact on the planning process. The agency believes that it may be able to have more projects, but the current number is already within ~10%, and having a more accurate estimate will not make the process cheaper so is not likely to affect the agency. Agency: ODOT Location: Oklahoma City, Oklahoma General information: ODOT’s yearly construction budget is approximately $632 to $790 million, and it awards approxi- mately 364 construction projects per year. Approximately 60% of all annual projects are federally funded, with the remaining 40% non-federally funded. Project monetary size ranges from $50,000 to $25 million. The average monetary size of a new construction project is $1.7 million. In-house data collection: ODOT does not record in-house PCS hours on a per-project basis. Approximately 50% of the time, PCS hours are billed to overhead. Outsourcing data collection: ODOT does contract out PCS. ODOT can perform the entire preconstruction process in-house except for ROW, and it can also outsource all PCS except preferred alternative, NEPA and permit approval, final plan package (RFP and RFQ), advertisement for bids, evalua- tion of bids, and award of contract. The main reasons the agency outsources PCS are staff avail- ability and special expertise. It does not have any regulations on how much it can or should outsource. ODOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for ODOT are: • Complexity, • Project type, • Construction costs, • Number of bridges, and • Length of project. The minor influences on PCS cost for this agency are: • Number of sub-consultants, • Number of plan sheets, • NEPA classification, and • Highway classification. The characteristic that has no influence on PCS cost for this agency is: • Number of lanes PCS estimate improvements: ODOT believes estimating PCS cost would be valuable, but it has yet to do so. To improve PCS cost estimates, the agency believes it needs to make direct changes to its projects. If a system that would capture PCS cost information was available, ODOT might choose to adopt it. ODOT believes that having more accurate PCS cost estimates would have minimal impact on the planning process within its programs. Researchers’ observations: Will be hard to convince people to use the system. Agency: RIDOT Location: Providence, Rhode Island General information: RIDOT’s yearly construction budget is approximately $300 million. In-house data collection: RIDOT does record in-house PCS hours on a per-project basis. It records these hours using the engineers’ timesheets. The data recorded on these timesheets are rated 4 out of 5 for accuracy. RIDOT does not allocate in- house overhead cost to a specific project. RIDOT does not use data collected from past projects to estimate the PCS costs for future projects. Design costs are estimated by using 15% of total construction cost. However, this is not uniform; smaller projects tend to be a higher percentage, and larger projects tend to be a lower percentage. This process is just an educated guess. Outsourcing data collection: RIDOT does contract out PCS. It has several on-call consultants as almost all its design work is outsourced. It uses two consultants for highway work, two for bridges, and four for traffic engineering. No single firm is the dominant GEC. The agency has only two persons

80 in the area of historical and heritage issues and four in envi- ronmental groups. This workforce level is not adequate for performing the required studies in an appropriate timeframe. RIDOT can advertise for bids, evaluate bids, award contracts, and perform some ROW utilities acquisition and relocation. All PCS processes are outsourced except those just stipulated. The main reasons the agency outsources PCS are staff avail- ability, having better control over consulting engineers, and that it is easier to terminate/not extend consultant contracts. The agency relies heavily on federal funds (roughly two-thirds of the transportation budget), which are subject to approval. The agency does not have any regulations on how much it can or should outsource. Engineering staff for RIDOT are union- ized. RIDOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process. The major influences on PCS cost for RIDOT are: • Complexity, • Project type, and • Number of plan sheets. The minor influences on PCS cost for this agency are: • Construction cost, • Number of lanes, • NEPA classification, • Number of bridges, • Highway classification, • Length of project, • Geographical,* and • Loss of design effort. The characteristic that has no influence on PCS cost for this agency is: • Number of sub-consultants. *One clarification regarding the characterization of “geo- graphical”—coastal projects need extra permits compared to non-coastal projects and are hence more difficult. During the last 26 years at RIDOT, there has been just one new road project and one relocation of a major road (I-95). New roads are a rarity. PCS estimate improvements: RIDOT does not see value in estimating PCS costs. Since it is a small organization, it has yet to develop a database to keep track of and evaluate design costs. Its priority lies in estimating construction costs. To improve these estimates, the agency believes it needs a database to pull scattered records and documentation of PCS into one place. If there was a system, RIDOT would probably not consider adopting it because the drivers of these costs tend to be out of the control of the agency. There is a 2-year election cycle, so government and legislative representatives change regularly; therefore, projects continue to lose and gain importance depending on political influence. Also, the projects will get built regardless of preconstruction; it is the construction cost that causes the most difficulties. RIDOT believes that having more accurate PCS cost estimates would have no impact on the planning process. The agency believes that PCS costs have very little impact on the overall program and that projects will be executed no matter the PCS costs. Agency: UDOT Location: Salt Lake City, Utah General information: UDOT’s yearly construction budget is approximately $1,100 million. In-house data collection: UDOT does record in-house PCS hours on a per-project basis; it charges hours to a PIN. It records these hours using project management software called ePM. The data recorded on their timesheets are rated 4 out of 5 for accuracy; sometimes staff will bill to overhead instead of a project. UDOT does not allocate in-house overhead cost to a specific project; however, it does charge all staff costs to a man- agement line item. UDOT uses data collected from past projects to estimate PCS costs for future projects. It uses a past project cost range as well as a direct estimate of hours to determine PCS hours. These estimates are project dependent. Outsourcing data collection: UDOT does contract out PCS. The agency uses on-call contracts for most outsourced work, but it can only use up to $40,000/consultant/project. If more work needs to be outsourced, it will advertise for con- tracts. UDOT can perform the entire preconstruction process in-house, except that Region 4 (southern region) cannot do ROW, hydraulics, and signal design services. UDOT can out- source all PCS except advertisement for bids, evaluation of bids, and award of contract. By dollar value, UDOT performs 25% PCS in-house, and 75% is outsourced. The main reasons it outsources PCS are staff availability and special expertise; the agency also chooses to outsource to strengthen the economy and expedite project delivery. It does not have a policy or regulations on how much it can or should outsource; however, it must always keep the in-house staff busy first. UDOT does not compare the cost of performing PCS in-house to consulting out as part of the outsourcing decision process; it is aware that this will cost more but is limited by staff levels. UDOT tries to decide early on whether the project will be outsourced or performed in- house so that it can set the budget early. PCS for simple proj- ects will usually be performed in-house; this decision is made at the program level. Occasionally UDOT will put design staff to work with the consultant on an outsourced project to get experience. The staff level at UDOT has been reduced from 3,500 in 2000 to 1,530 at the time of this writing.

81 The major influences on PCS cost for UDOT are: • Complexity, • Project type, • NEPA classification, and • Number of bridges. The minor influences on PCS cost for this agency are: • Highway classification, • Construction costs, • Number of plan sheets, • Number of lanes, and • Length of project. The characteristics that have no influence on PCS cost for this agency are: • Number of sub-consultants, • Geographical, and • Loss of design effort. UDOT does not believe it sets out to make mistakes; there- fore, it does not consider loss of design effort necessary in estimating PCS. PCS estimate improvements: UDOT is already estimat- ing PCS costs for all projects. To improve these estimates, the agency believes it needs to have more experience. New project managers do not have a good feel for the number of hours, required training, and time on the job needed to produce an accurate estimate. UDOT is happy with its cur- rent cost-estimating system, and it would prefer to refine its own system rather than adopt another system. UDOT believes that having more accurate PCS cost estimates could have some impact on the planning process and allow it to refine allocation of resources and negotiate with consultants better. Researchers’ observations: UDOT has a positive work environment that keeps it moving forward, which allows the agency to try new and innovative things and constantly push to get better results. Case study information for the agency is contained in Table D-1. Table D-1. UDOT case study data information. Project types • Bridge – major structure • Emergency repairs • Enhancement • Grade and drainage • ITS and signals • Not applicable • Other • Railroad related • Reconstruction • Roadway • Roadway work • Safety • Sidewalk • Sign • Signal and light • Structural – minor structural rehab • Structures • Studies • Surfacing or resurfacing • Traffic and safety • Traffic management Procurement methods • CMGC • Design–build • Design–bid–build • Other • Procurement • Blank