Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects (2022)

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G-1   EReC3 User Manual A P P E N D I X G EARLY RISK-DRIVEN ESTIMATING AND MONITORING OF CONSTRUCTION COST CONTINGENCIES (EReC3) USER MANUAL May 2022

G-2 Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects CONTENTS 1 General Instructions .................................................................................................. G-3 2 Risk consideration for construction contingency estimating ..................................... G-5 3 Qualitative assessment for risk score measurement .................................................. G-6 4 Quantitative assessment for estimating construction contingencies.......................... G-8 5 Construction contingency tracking and monitoring ................................................ G-11

EReC3 User Manual G-3 1. General Instructions This user manual is designed to help DOT cost estimators become familiar with the Early Risk-Driven Estimating and Monitoring of Construction Cost Contingencies (EReC3) tool. This user-friendly tool helps highway agencies to (a) estimate construction contingencies for top priority risks and (b) monitor the performance of construction contingencies during the project delivery process. This tool is suggested for use on Microsoft Windows OS. The tool can be found on the National Academies Press website (nap.nationalacademies.org) by searching for NCHRP Research Report 1025: Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects. The tool includes the following three steps: 1. Project risk exploration and identification for construction contingency estimating 2. Qualitative assessments for risk score measurement 3. Quantitative assessments for estimating construction contingencies of significant risks 1.1 Getting Started To use the tool, click the Enable Content, Enable Editing, or Enable Macros button that appears when the tool is first opened (Figure G-1). If a user’s computer is set up to enable macros automatically in advance, the user will not see the Security Warning Dialogue Box. Figure G-1. Security warning dialogue box. 1.2 Launching EReC3 Once the tool is opened, the user can see the Home page, as shown in Figure G-2. The user is provided with (a) a brief use purpose of this tool, (b) three steps of risk-driven construction contingency estimating with descriptions (risk identification, qualitative assessment, and quantitative assessment), and (c) five points for construction contingency tracking and monitoring (scoping phase, 30% design, 60% design, 1

G-4 Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects 90% design, and end of construction). To see the details of each of the three steps, please click on its associated button under “Risk-driven construction contingency estimating process.” To move to risk measurement points, please click on the associated blue button in “Contingency tracking & monitoring.” Figure G-2. Home page of EReC3. Risk-driven construction contingency estimating process Contingency tracking & monitoring Warning: For the toolkit to work properly, please make sure you click on "Enable Content/Macros" if the security warning appears. Instruction: EReC3 is designed to help DOTs' early cost estimators to effectively estimate construction cost contingencies for top priority risks. - Select three steps of risk-driven construction contingency estimating if you are to figure out details of these steps. - Select blue boxes if you are to move to risk measurement points. Early Risk-Driven Estimating and Monitoring of Construction Cost Contingencies (EReC3) Risk Investigation 1. Move to 'RISK' tab. 2. SELECT 'YES' for the risks that should be considered. 3. If done, please click 'Go to qualitative assessment'. Risk Investigation Clear up Click blue boxes for movement: Qualitative Assessment Quantitative Assessment

EReC3 User Manual G-5 2. Risk consideration for construction contingency estimating Figure G-3 shows the list of risks for construction contingency estimating. Out of the 12 top risks provided, the user needs to determine which risks to consider for estimating construction contingency. • Please go to the third column and select “Yes” for the risk to be considered. • Select “No” if the risk can be ignored. • Once risk identification is completed, click “Go to qualitative assessment” to proceed with risk score measurement. Figure G-3. Risk list-up page. Top construction cost contingency risks ID. Description Considered? R01 Utility issues (e.g., utility conflicts, and utility relocation of identified utilities) Yes R02 Poor or incomplete project scope definition during the scoping phase Yes R03 Unexpected geotechnical issues (e.g., inadequate geotechnical investigation results, poor soil conditions, unsound subgrade conditions, large boulders contained in existing soils, or adverse groundwater conditions) Yes R04 Design changes (e.g., changes in the bridge foundation type or redesign of the drainage facility, changes in design standards, exceptions to design standards, and inaccurate design assumptions) Yes R05 Constructability issues (e.g., problems with construction sequencing/staging/phasing) Yes R06 Contractor availability and competition (e.g., lack of competition due to project size) Yes R07 Railroad involvement (e.g., additional requirements due to proximity to the railroad) Yes R08 Market conditions (e.g., a shortage of local contractors, labor, and material) Yes R09 Late changes requested by stakeholders Yes R10 Project duration-related issues (e.g., scheduling errors, inaccurate contract time estimates, restricted working windows for some activities, or issues with aggressive schedules) Yes R11 Errors in cost estimating Yes R12 Funding availability Yes Note: Please select the risks you would like to consider in your estimation using the last column of below table. If you are not sure, please consider them all at this stage. Below figure provides the general step-by-step process of evaluating each selected risk. Please click blue box to move to the next step or back to the previous step. EReC3_Risk list (Scoping phase) Grey cells: Automated Select “Yes” for the risk to be considered

G-6 Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects 3. Qualitative assessment for risk score measurement Qualitative assessment for measuring risk scores is composed of two parts. The first part is used to determine whether the risks under consideration have triggers (also called risk symptoms or warning signs), with common triggers automatically generated and provided to support the evaluation (see Figure G-4). • Select “Yes” in the fourth column if a trigger exists. • Write triggers into the sixth column for documentation and tracking purposes. • If necessary, click “Back to risk investigation” to return to the risk identification page. • Note that gray cells are automatically generated. Figure G-4. Determining risk triggers in qualitative assessment. ID. Risk factor Common triggers for checking Are there any triggers in this project? Action What are the triggers in this project? RISK IDENTIFICATION (SCOPING PHASE) Project size and type in relation to the projects currently in progress within the district Location of the project (e.g., rural areas) Projects that are advertised late in the season Continue R02 Poor or incomplete project scope definition during the scoping phase R01 Utility issues (e.g., utility conflicts, and utility relocation of identified utilities) Proximity to urban centers Proximity to urban centers Rocky or variable subsurface conditions No recent major roadwork within the alignment Yes Continue Many stakeholders involved in the project Yes R03 Unexpected geotechnical issues (e.g., inadequate geotechnical investigation results, poor soil conditions, unsound subgrade conditions, large boulders contained in existing soils, or adverse groundwater conditions) Unknown groundwater flow direction Variability of subsurface conditions Known geotechnical issues in the area Inadequate geotechnical investigations Yes Continue Lack of surveys and field reviews New materials or technologies (e.g., channel stabilization) used in the project Lack of communications between the project team, designers, and stakeholders Long planning and scoping process Constructability issues (e.g., problems with construction sequencing/staging/phasing) Yes Continue Continue Proximity to water features Unusual or critical construction sequencing Critical or complex traffic control Utilities that impact construction phasing and scheduled competition Retaining walls, structures, and grading as a major design component Continue Yes R04 Design changes (e.g., changes in the bridge foundation type or redesign of the drainage facility, changes in design standards, exceptions to design standards, and inaccurate design assumptions) R05 Yes R06 Contractor availability and competition (e.g., lack of competition due to project size) Select “Yes” if there are triggers for risks Write down triggers

EReC3 User Manual G-7 Figure G-5 shows the second part of the qualitative risk assessment step. • Record specific contact points related to identified risks. Common SMEs for each risk are provided by the tool for reference. • Measure the likelihood and impact of each identified risk using a 5-point rating scale (1 for very low and 5 for very high). Risk matrix and risk score are then automatically generated. • Select “Yes” in the last column if the risk is deemed significant by the user given the risk score. If “No” is selected, this risk will be ignored in the next step. • Click “Go to quantitative assessment” to proceed to the next quantitative assessment step. ID. Typical Subject Matter Experts (SMEs) to contact Specific contact for this project Likelihood (1-5) Impact (1-5) Risk score Significant ? 5 4 X 3 2 1 1 2 3 4 5 5 4 3 X 2 1 1 2 3 4 5 5 4 X 3 2 1 1 2 3 4 5 5 4 3 X 2 1 1 2 3 4 5 5 4 X 3 2 1 1 2 3 4 5 5 4 3 X 2 1 1 2 3 4 5 Risk matrix Lik el ih oo d 12 Traffic group Maintenance personnel Local construction personnel Environmental staff Sandie Angulo Chen, Project engineer 205 R01 3 4 R02 4 Lik el ih oo d Area engineers and area maintenance staff Designers Functional groups Yes Local area ROW personnel Maintenance personnel that have worked in the area for an extended amount of time Utility managers Jane Done, Geotechnical engineer Yes Impact Lik el ih oo d 12 Professional engineers or architects representing the stakeholders’ interests DOT’s functional groups Sandie Angulo Chen, Project engineer Impact 20 David Martinez, Maintenance Office, District 1 R06 DOT’s project managers and site managers Local AGC (the Associated General Contractors of America) Current contractors working within the district or nearby counties Sandie Angulo Chen, Project engineer Yes Yes Impact 12 Impact Yes3 4 Lik el ih oo d 4 4 Yes Impact Lik el ih oo d 16 Geotechnical engineers Maintenance office Previous contractors in the area USDA Extension agents regarding water levels R03 R04 R05 Robert Garcia, Project Engineering Designer QUALITATIVE RISK ASSESSMENT (SCOPING PHASE) 3 4 4 5 Lik el ih oo d Impact Record contact points related to risks Estimate likelihood and impact Select “Yes” if the risk is significant Figure G-5. Calculate the likelihood and impact of identified risks using 5-point rating scale.

G-8 Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects 4. Quantitative assessment for estimating construction contingencies To estimate construction contingency for each significant risk, early cost estimators may need to gather additional data and information relevant to the risk from SMEs. Common information and data to be collected are available for reference (see Figure G-6, third column). The SMEs’ input and the additional data can help estimate the expected value of contingency for each risk. • Estimate the minimum, most likely, and maximum impacts of each significant risk. • Determine the probability of risk occurrence. • The expected contingency value of each risk is calculated and provided in the last column. Figure G-6. Estimate the expected contingencies of significant risks . Note: Minimum Most likely Maximum Probable impact Impact on construction cost Probability of occurrence Expective value R01 Utility issues (e.g., utility conflicts, discovery of previous ly unknown utilities, and utility relocation) Utility cost information for recent projects with similar scope in the same general area 370,000.00$ 420,000.00$ 490,000.00$ 423,333.33$ 423,333$ 85% 359,833.33$ R02 Poor or incomplete project scope definition during the scoping phase Clarifications from functional groups for unclear requirements Alternative analyses such as pavement analysis and life cycle analysis Local/federal policies with possible ripple effects on project requirements Scoping reports from past similar projects in the area 80,000.00$ 140,000.00$ 180,000.00$ 136,666.67$ 136,666.67$ 90% 123,000.00$ R03 Unexpected geotechnical issues (e.g., inadequate geotechnical investigation results, poor soi l conditions, unsound subgrade conditions, large boulders contained in existing soi ls, or adverse groundwater conditions) Existing geotechnical reports, lab tests, and test borings As-built plans and maintenance records Production rate information for different subsurface conditions (e.g., equipment manufacturers’ published rates) Cost data (e.g., loading and trucking cost if off- site material is required or cost of the geotechnical soil improvements known in the area) 100,000.00$ 145,000.00$ 185,000.00$ 144,166.67$ 144,166.67$ 85% 122,541.67$ R04 Des ign changes (e.g., changes in the bridge foundation type or redes ign of the drainage faci l ity, changes in des ign standards, exceptions to des ign standards, and inaccurate des ign assumptions) Anticipation of possible design changes Changes in design manuals and standards Information about materials and technologies that have or have not worked well in the area Design alternatives and cost impacts 75,000.00$ 140,000.00$ 190,000.00$ 137,500.00$ 137,500.00$ 90% 123,750.00$ R05 Constructabi l ity issues (e.g., problems with construction sequencing/staging/phas ing) Traffic control in past similar contracts Environmental information such as working window constraints and corresponding loss of production Cost data such as the cost of renting nearby property for staging equipment or storing materials 80,000.00$ 120,000.00$ 168,000.00$ 121,333.33$ 121,333.33$ 85% 103,133.33$ Cost estimator's calculation Risk factor Risk Impact ($) from the data and information obtained Information & data typically obtained from SMEs Specific details for this project ID. QUANTITATIVE RISK ASSESSMENT (SCOPING PHASE) Grey cells: Automated Estimate minimum, most likely, and maximum impacts Determine the probability of risk occurrence

EReC3 User Manual G-9 Figure G-7 shows an extra function to determine residual contingency if an action is performed to mitigate the expected impact of a specific risk. • Explore actions for mitigating the impact of risks and estimate costs for the actions. • Redetermine the probability of risk occurrence after performing risk mitigation. • Calculate the reduction of expected contingencies of significant risks.   Figure G-7. Estimate contingencies of significant risks after performing risk mitigation . Risk control method Responsibility Action to control risk Construction cost impact of the action Probability of occurrence after risk response Expective value R01 Transfer Utility Engineer Subsurface Utility Engineering (SUE) Survey 14,000.00$ 75% 317,500.00$ R02 Accept Project Engineer Subsurface Utility Engineering (SUE) Survey 4,500.00$ 82% 112,066.67$ R03 Accept Project Engineering Des igner Des ign alternative 3,000.00$ 81% 116,775.00$ R04 Accept Site manager Additional areas for construction staging 4,000.00$ 85% 116,875.00$ Contingency after risk response ID. RISK RESPONSE (SCOPING PHASE) Risk response Explore actions for mitigating the impact of risks and estimate costs for the actions Redetermine the probability of risk occurrence after performing risk mitigation

G-10 Contingency Factors to Account for Risk in Early Construction Cost Estimates for Transportation Infrastructure Projects Figure G-8 shows the page indicating actual amounts paid for identified risks at the end of construction. • Input the amount paid to address each risk after completing construction. • Calculate the total amounts for all identified risks. Figure G-8. Calculate actual amounts paid for identified risks. ID. Risk factor Common triggers for checking Actual paid amounts 490,501.00$ R12 Funding availability Expected target condition levels for roadways Projected budget levels for next ten years Projected adjusted inflation $ 8,000.00 R11 Errors in cost estimating Undeveloped project work scope Incomplete or in-error geotechnical site analysis Diverse and unpredictable labor productivity $ 9,000.00 R10 Project duration-related issues (e.g., scheduling errors, inaccurate contract time estimates, restricted working windows for some activities, or issues with aggressive schedules) High complexity project Missing work windows related to traffic control Unusual weather patterns Potential availability of materials and subcontractors $ 10,000.00 R03 Unexpected geotechnical issues (e.g., inadequate geotechnical investigation results, poor soil conditions, unsound subgrade conditions, large boulders contained in existing soils, or adverse groundwater conditions) Variability of subsurface conditions Known geotechnical issues in the area Inadequate geotechnical investigations $ 50,000.00 R02 Poor or incomplete project scope definition during the scoping phase Many stakeholders involved in the project $ 20,000.00 $ 150,000.00R01 Utility issues (e.g., utility conflicts, and utility relocation of identified utilities) Proximity to urban centers Rocky or variable subsurface conditions No recent major roadwork within the alignment Input the amount paid to address risks Calculate the total amounts for all identified risks Total Actual paid amounts (END OF PROJECT)

EReC3 User Manual G-11 5. Construction contingency tracking and monitoring Figure G-9 shows the summary page for construction contingency tracking and monitoring. • Perform risk-driven contingency estimating over four measurement points during the preconstruction phase. • Once a project is completed, review and check the actual paid amounts of identified risks. • The user can track and monitor the performance each risk’s contingency using bar charts over the project delivery process. Figure G-9. Summary page for construction contingency tracking and monitoring. Before risk response After risk response Before risk response After risk response Before risk response After risk response Before risk response After risk response R01 359,833 317,500 304,800 296,333 254,000 254,000 190,500 169,333 R02 123,000 112,067 102,500 102,500 88,833 82,000 65,600 61,500 R03 122,542 116,775 111,008 100,917 89,383 86,500 74,967 69,200 R04 123,750 116,875 104,500 96,250 85,250 82,500 70,125 59,125 R05 103,133 92,213 84,933 80,080 72,800 72,800 60,667 50,960 R06 210,750 187,333 175,625 168,600 152,208 140,500 124,108 117,083 R07 84,858 79,867 71,880 69,883 64,892 57,903 50,915 47,920 R08 30,000 30,000 28,800 26,000 24,000 23,200 22,000 20,000 R09 20,000 20,000 20,000 18,800 16,000 14,800 14,000 12,800 R10 24,000 22,000 20,000 18,000 16,000 14,800 14,000 12,800 R11 19,200 18,000 17,200 16,000 16,000 14,000 12,000 12,000 R12 20,800 20,000 18,000 16,000 14,800 14,000 12,800 12,000 Construction contingency monitoring and tracking Scoping 30% design 60% design 90% design End of construction 9,000 8,000 Actual paid amounts 2,501 8,000 12,000 11,000 10,000 150,000 20,000 50,000 200,000 10,000 0 200000 400000 600000 800000 1000000 1200000 1400000 Before response After response Before response After response Before response After response Before response After response Actual paid amounts Scoping 30% design 60% design 90% design End of construction R01 R02 R03 R04 R05 R06 R07 R08 R09 R10 R11 R12

Abbreviations and acronyms used without denitions in TRB publications: A4A Airlines for America AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FAST Fixing America’s Surface Transportation Act (2015) FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration GHSA Governors Highway Safety Association HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers MAP-21 Moving Ahead for Progress in the 21st Century Act (2012) NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S. DOT United States Department of Transportation

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