The National Academies Press

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From page 69... ... The question of which approach should be used is influenced by internal agency constraints. 7.1 Strategy: Management The execution side of cost estimation -- cost estimation practice -- depends highly on how the agency manages project development and the management support provided to those charged with executing project development, including estimate and schedule preparation. Read the entire page →
From page 70... ... Prepare Base Estimate Determine Risk (Set Contingency) Review Construction Estimate Compare Engineer's Estimate versus Bid Bid Data Obtain Appropriate Approvals Release Engineer's Estimate Traffic Pavements Structures ROW/RES Environmental Construction Utilities AD VE R TI SE & B ID Historical Data Market Conditions Project Scope Type Final Plans/Specs Schedule-Line Items & Quantities Project Complexity Input from Third Parties Input from Disciplines Engineer's Estimate CO NS TR UC TI ON Awarded FI N AL D ES IG N PS&E Documents Not Awarded Project Development Process COST ESTIMATION PRACTICE AND COST ESTIMATION MANAGEMENT Input Step Database Document Ph as e Legend Decision Macro Environment ROW = right-of-way RES = real estate service PS&E = plans, specifications, and estimates Figure 7.1. Read the entire page →
From page 71... ... Tips for Success Budget control is tied to scope control and rests in the hands of state highway agency management. The estimator provides a forecast of cost based on a defined project scope. Read the entire page →
From page 72... ... Tools C4.1 Cradle-to-Grave Estimators C4.2 Estimation Checklist C4.3 Estimation Manual (Guidelines) C4.4 Estimator Training C4.5 Major Project Estimation Guidance C4.6 Standardized Estimation and Cost Management Procedures C4.7 State Estimation Section 72 MANAGEMENT STRATEGY Manage the estimation process and costs through all stages of project development Cost Estimation Management Cost Estimation Practice Budget Control Budget Control B1.2 Constrained Budget B1.2 Constrained Budget B1.4 Summary of Key Scope Items (Original/Previous/Current) Read the entire page →
From page 73... ... In order to ensure that designers are aware of how scope changes will affect project cost, it is advantageous to require submittal of a cost estimate along with each design submittal. Management can then create a gated project development process that controls the project development steps and the advance of project development from one milestone to the next. Read the entire page →
From page 74... ... The establishment of a project scope and cost baseline is fairly straightforward for routine projects but becomes much more difficult as project complexity increases. This is primarily because complex projects have many more scope and design unknowns during the early phases of project development. Read the entire page →
From page 75... ... 75 SCOPE AND SCHEDULE STRATEGY Formulate definitive processes for controlling project scope and schedule changes Cost Estimation Management Cost Estimation Practice Buffers B2.1 Board Approvals B2.2 Constrained Budget B2.3 Management Approvals Communication C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.3 Communication within State Highway Agency C1.4 Definitive Management Plan C1.7 Year-of-Construction Costs Estimate Review -- External E2.1 Expert Team Estimate Review -- Internal E3.1 Formal Committee E3.2 Off-Prism Evaluation E3.3 In-House/Peer E3.4 Round Table E3.5 Year-of-Construction Costs Identification of Changes I1.1 Cost Containment Table I1.2 Estimation Scorecard I1.3 Project Baseline I1.4 Scope Change Form Value Engineering V2.1 Value Engineering Table 7.3. Final design phase scope and schedule strategy: Methods and tools. Read the entire page →
From page 76... ... Communication between internal departments of an agency is imperative throughout project development given the intricacy and number of people involved in developing even the simplest project. Tools C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.3 Communication within State Highway Agency C1.4 Definitive Management Plan C1.7 Year-of-Construction Costs 7.2.3 Estimate Review -- External Why? Read the entire page →
From page 77... ... The project baseline scope and cost estimate is used to measure performance throughout project development and construction. Different agencies that already practice baselining of their projects report doing so usually when an identified need becomes a real project and is budgeted. Read the entire page →
From page 78... ... 78 OFF-PRISM ISSUES STRATEGY Use proactive methods for engaging external participants and assessing the macroenvironmental conditions that can influence project costs Cost Estimation Management Cost Estimation Practice Communication Risk Analysis C1.2 Communication of Uncertainty R3.2 Contingency -- Identified C1.3 Communication within State Highway Agency R3.4 Estimate Ranges C1.5 Proactive Conveyance of Information to the Public Right-of-Way R2.5 Right-of-Way Estimator Training R2.6 Separate Right-of-Way Estimators Table 7.4. Final design phase off-prism issues strategy: Methods and tools. Read the entire page →
From page 79... ... The costs of various project items that are included in the estimate must be managed in different ways, and they are usually the responsibility of different sections of a state highway agency, so estimators must involve those supporting sections in order to produce accurate project cost estimates. Project Complexity As projects become more complex, there is a greater need for coordination and communication between the disciplines participating in the development of the project's scope and estimate. Read the entire page →
From page 80... ... Tips for Success A risk charter is a list of identified risks that may be encountered during the life of the project. Such a charter is 80 RISK STRATEGY Identify risks, quantify their impact on cost, and take actions to mitigate the impact of risks as the project scope is developed Cost Estimation Management Cost Estimation Practice Communication Risk Analysis C1.2 Communication of Uncertainty R3.2 Contingency -- Identified C1.3 Communication within State Highway Agency R3.3 Contingency -- Percentage C1.4 Definitive Management Plan C1.7 Year-of-Construction Costs Identification of Risk I2.1 Red Flag Items I2.2 Risk Charter Table 7.5. Read the entire page →
From page 81... ... Cost estimation management is the key to controlling project scope and schedule. However, market conditions and macroeconomic events, which state highway agencies and estimators do not commonly consider, can significantly affect project cost. Read the entire page →
From page 82... ... There are three different document quality methods described here for use during the final design phase of project development. 82 DOCUMENT QUALITY STRATEGY Promote cost estimate accuracy and consistency through improved project documents Cost Estimation Management Cost Estimation Practice Computer Software Document Estimate Basis and Assumptions C C2.1 2.2 C Agency Estimation Software ommercial Estimation Software D4.1 Project Estimation File Estimate/Document Review E1.1 Estimate/Document Review -- External E1.2 Estimate/Document Review -- Internal Table 7.7. Read the entire page →
From page 83... ... A few state highway agencies use a combination of their in-house software and the AASHTO programs. Estimation software provides a structured format for preparing estimates and promotes estimate consistency. Read the entire page →
From page 84... ... However, it must not be forgotten that success in estimation practice is linked to the work environment created by agency management. There are four different cost estimation practice methods and two cost estimation management methods for this strategy for use during the final design stage of project development. Read the entire page →
From page 85... ... To be of value, the review must closely examine the match between the stated scope and the project design as presented in the contract documents that are available at this point in project development. Tool E2.1 Expert Team 7.7.2 Estimate Review -- Internal Why? Read the entire page →
From page 86... ... Tips for Success To be successful, the review must closely examine the assumptions that form the basis of the estimate and must be conducted by knowledgeable and experienced individuals. Tool E2.1 Expert Team 86 INTEGRITY STRATEGY Ensure that checks and balances are in place to maintain estimate accuracy and to minimize the impact of outside pressures that can cause optimistic biases in estimates Cost Estimation Management Cost Estimation Practice Estimate Review -- External E2.1 Expert Team Estimate Review -- Internal E3.1 Formal Committee E3.3 In-House/Peer E3.4 Round Table Table 7.9. Read the entire page →
From page 87... ... B1.5 Variance Reports on Cost and Schedule Buffers B2.1 Board Approvals B2.2 Constrained Budget B2.3 Management Approvals Communication C1.1 Communication of Importance C1.2 Communication of Uncertainty C1.3 Communication within State Highway Agency C1.4 Definitive Management Plan C1.5 Proactive Conveyance of Information to the Public C1.7 Year-of-Construction Costs Computer Software C2.1 Agency Estimation Software C2.2 Commercial Estimation Software Consistency C4.1 Cradle-to-Grave Estimators C4.2 Estimation Checklist C4.3 Estimation Manual (Guidelines) C4.4 Estimator Training C4.5 Major Project Estimation Guidance C4.6 Standardized Estimation and Cost Management Procedures C4.7 State Estimation Section Constructability C5.1 Constructability Reviews Document Estimate Basis and Assumptions D4.1 Project Estimation File Estimate/Document Review E1.1 Estimate/Document Review -- External E1.2 Estimate/Document Review -- Internal Estimate Review -- External E2.1 Expert Team Estimate Review -- Internal E3.1 Formal Committee E3.2 Off-Prism Evaluation E3.3 In-House/Peer E3.4 Round Table E3.5 Year-of-Construction Costs Gated Process G1.1 Checklists Table 7.10. Read the entire page →

From page 69...

... The question of which approach should be used is influenced by internal agency constraints. 7.1 Strategy: Management The execution side of cost estimation -- cost estimation practice -- depends highly on how the agency manages project development and the management support provided to those charged with executing project development, including estimate and schedule preparation.