Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting: Guidebook for State Transportation Agencies (2020) / Chapter Skim
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1 Introduction 1.1 Introduction and Background "Although project cost escalation is usually caused by lack of project scope control and factors external to the state highway agency, it results in cost-estimation practice and costestimation management approaches that do not promote consistency and accuracy of cost estimates across the project development process" (Anderson et al.
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2 Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting: Guidebook for State Transportation Agencies read the NCHRP Web-Only Document 283: Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting for State Transportation Agencies (Rueda-Benavides et al.
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Introduction 3 1.3 Business Case for Implementation of Effective Cost Forecasting Programs Cost forecasting is just one part of the overall cost estimating process, but it is an essential component of an STA's planning and programming processes. Accurate cost forecasting early during project development is critical to making sound financial decisions and optimizing the use of limited available resources (Anderson et al.
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4 Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting: Guidebook for State Transportation Agencies a period of time (usually annual rates)
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Introduction 5 there are different approaches used to incorporate inflation rates into the cost forecasting process. There are two main types of inflation rates: • Simple annual inflation rate (not compounded)
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6 Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting: Guidebook for State Transportation Agencies 1.6 Current Practice Versus Ideal Practice Figure 1-2 illustrates the typical cost forecasting process currently followed by STAs. Once the scope of a given program has been defined, a cost estimate in current dollars is performed and then projected into the future by using a given inflation rate to generate a single-value estimate.
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Introduction 7 periods. For example, long-range programs usually involve a broad scope of work.
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