Improving Mid-Term, Intermediate, and Long-Range Cost Forecasting for State Transportation Agencies (2020) / Chapter Skim
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17 2 State-of-the-Practice of Cost Forecasting 2.1 Introduction This chapter summarizes the state-of-the-practice of cost forecasting in the transportation construction industry. The chapter is focused on current practices, needs, and opportunities for improvement in mid-term (3 to 5 years)
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18 2.2 Transportation Planning Programs and Cost Forecasting Periods Mid-term (3 to 5 years) , intermediate-range (up to 15 years)
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19 Department of Transportation covers a 32-year period from 2018 to 2050 (CTDOT 2017)
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20 Figure 2.3 Cost Estimate Configuration per Transportation Program – Survey Responses (Survey Responses = 18) 2.3 Forecasting Tools and Methods Survey participants were also asked to indicate what forecasting tools and methods are used by their agencies for cost forecasting purposes in mid-term, intermediate, and long-range planning.
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21 Using a panel of experts to provide input during the forecasting process is a formal way to bring valuable staff experience and knowledge into this process. Usually, these panels are strategically formed on a program-by-program basis or for major capital projects, attempting to cover all knowledge areas and disciplines required by each program/project.
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22 methodology proved to be effective at producing forecasted values from the analysis of historical bid data and is the one that produces outputs in the form of risk-based forecasting timelines. The survey also asked STAs about information technology (IT)
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23 the CPI and PCE price indexes are not intended to be used at the microeconomic level, such as to forecasting transportation construction prices at the program o project level. They do not use construction-related inputs, making them unsuitable to represent the construction market.
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24 Even though the use of in-house CCIs is the preferred approach recommended by the FHWA, the proposed cost forecasting guidelines include the use of an alternative cost indexing system call a Multilevel Construction Cost Index (MCCI)
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25 of three-point estimates to account for estimating uncertainty in current-dollar estimates. Thus, the risk-based forecasting timeline generated by the MFE could also consider pre-forecasting uncertainty if a three-point current-dollar estimate is used.
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