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

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1 Building long-lasting roads necessarily involves planning and designing those roads in a manner that results in a high-quality constructed product. To achieve this requires that the necessary resources be allocated to the preconstruction process to permit planners and designers the time and funding to be able to solve technical, environmental, and constructa- bility problems before the construction contract is advertised. Research has proven that cor- recting errors, omissions, and ambiguities in preconstruction is far less expensive than during construction (Anderson et al. 2007). This issue becomes more critical if the preconstruction process is outsourced to a consultant whose fee limits the number of billable hours it can spend before releasing final construction documents. Therefore, ensuring that the preconstruction phases are allocated sufficient funding to adequately complete the necessary investigations, analyses, and so forth is a previously unrecognized determinant of not only the project’s final quality but of the agency’s ability to control cost and schedule growth during project delivery. Hence, making a reasonably accurate estimate of preconstruction services (PCS) costs becomes the first stage in delivering the best possible project for the available funding. NCHRP Project 15-51, “Preconstruction Services Cost Estimating Guidebook,” was initi- ated to provide agencies guidelines for conducting PCS cost estimates. The question of whether “better, faster, cheaper” truly applies to a public transportation agency’s construction projects has rarely, if ever, been asked. A strong argument can be made that the traveling public deserves something better than “cheap” roads and bridges. One can also argue that since the agency must operate and maintain the completed project, it would want to build the best and most resilient facility that its appropriated budget allows to minimize life-cycle and road user costs during the facility’s actual service life. In 2010, the FHWA introduced the Every Day Counts program, the aim of which is to propagate proven methods to “get in, get out, and stay out” (Mendez 2010). To accomplish that aim, the FHWA administrator stated that “it’s imperative we pursue better, faster, and smarter ways of doing business” (Mendez 2010). One must note that the FHWA substantially changed the “better, faster, cheaper” phrase by substituting “smarter” for “cheaper.” As the nation’s transportation infrastructure continues to deteriorate, the apparent policy shift from cheap to smart tacitly advocates the delivering of transportation projects that ultimately last longer with less maintenance than the ones previously built. Public-sector transportation projects must be delivered on tight budgets, within statutory funding constraints, and with an increased emphasis on government accountability. Thus, the need to manage and control costs for state departments of transportation (DOTs) on capital development projects has become more critical. The result is a drive to develop more accurate cost estimates for construction projects. Past research largely focused on construction and to a lesser extent on design cost estimates. In this project, a guidebook detailing effective practices for estimating the cost of the entire preconstruction period, termed preconstruction S U M M A R Y

2services, was developed to provide guidance for state DOTs to estimate the cost of planning, engineering, and other professional services required before a construction project is let. The research uses case study methodology and results in the development of a stochastic parametric estimating model. The guidebook produced by this research presents a data-driven holistic framework that comprises both top-down and bottom-up approaches to estimate PCS costs that meet vari- ous stakeholders’ needs during the preconstruction phases of the project. It demonstrates how to complete PCS cost estimates at the point in project development where the typical project is assigned a project identification number. The proposed top-down estimating approach addresses the need to make estimates at a point where very little design detail is known. This approach assumes that a database of past projects’ PCS costs is available and that the data are reasonably accurate. The research that led to this document found that this assumption is not necessarily valid in most state highway agencies. As a result, the guidebook contains guidance on how to collect, clean, reduce, and assemble the necessary data to populate the PCS cost-estimating database. The proposed bottom-up approach is provided to allow agencies to conduct the indepen- dent cost estimate required by statute for federal-aid projects where preconstruction plan- ning and design services are outsourced to an engineering consultant. As such, it is based on establishing a PCS work breakdown structure that forms the framework for both collecting PCS cost data for top-down estimates and for providing an apples-to-apples comparison with consultant fee proposals. The two approaches converge and furnish the required back-check on the PCS cost estimate. The guidebook was created using information obtained from case study research performed in nine states: California, Colorado, Iowa, Maryland, Montana, New York, Oklahoma, Rhode Island, and Utah. The guidebook represents the effective practices observed in those states vali- dated by 5 years’ worth of PCS cost data received from DOTs in California, Iowa, New York, and Utah. The major finding of the research and the guiding principle of the guidebook can be expressed in the following way: Investing in preconstruction activities by ensuring that they are fully funded based on a rational, project-specific PCS cost estimate leads to increased cost and schedule certainty during construction. Therefore, it is essential that agency upper management provide the necessary resources to populate the PCS cost database and then commit the resources to maintain that database as a robust tool for mitigating project cost and schedule uncertainty. Doing so will enhance the quality of the bidding documents produced to build and maintain the nation’s transportation infrastructure.