August 30, 2012

Cost Estimate Review Closeout Presentation

St. Croix River Crossing ProjectMinnesota and Wisconsin

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Project Map

Cost Estimate ReviewObjective

Conduct an unbiased risk-based review to verify the accuracy and reasonableness of the current total cost estimate to complete the

St. Croix River Crossing Project

and to develop a probability range for the cost estimate that represents the project’s current stage of design.

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Review Agenda

MONDAY – August 27 CER Introduction by FHWA Project Overview by Project Personnel Overview State Estimation Process Define Contingency, Risk Template & Inflation Roadway Pavement TUESDAY – August 28 Structures Retaining Walls Noise Barriers Right of way and Utilities Erosion Control Drainage MOT Environmental Mitigation Costs Miscellaneous Costs

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Review Agenda

WEDNESDAY – August 29 Visual Enhancements Lighting, Traffic Control, Traffic Surveillance and

Signals ITS Soft Costs Begin Findings and Report Preparation Findings and Report Preparation Draft Presentation  

THURSDAY – August 30 Closeout Presentation

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Basis of Review Review based on estimates provided by the Project Team in

advance with revisions made during the review Reviewed estimates to determine the reasonableness of

assumptions used Reviewed project elements to identify and model risks Discussed project conditions to develop base variability, market

conditions and inflation percentage Not an independent FHWA estimate

• Did not verify quantities and unit prices

• Goal is to verify accuracy and reasonableness of estimate

Risk-based Probabilistic Approach

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Review Participants

FHWA • Headquarters – Office of Innovative Program

Delivery• MN Division Office

Minnesota Department of Transportation

Wisconsin Department of Transportation

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Review Methodology Verify Accuracy of Estimate

• Review major cost elements• Review allowances and contingencies• Adjust estimate as necessary

Discuss / Model• Base Variability• Market Conditions & Inflation• Key Schedule & Cost Risks

Perform Monte Carlo simulation to generate a project estimate as forecast range

Communicate Results

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Documentation Provided

Project Cost Estimate

LWD Cost Estimating Method - MnDOT

Project Schedule

Minnesota Inflation Forecast

Project Website

Project Map and Location

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Review Findings Estimate is comprehensive, covering entire construction scope

of project

• Estimate includes all soft costs (design, CE, environmental mitigation)

• Estimate includes all ROW, Utility Relocation

Estimate current as of May 21, 2012

Found basis for pricing to be relevant and used similar project experience for the major bridge

Found the Project team used good estimating practices in preparation of the cost estimate

Good communication among Project Team to ensure estimate covered the entire project scope

Review Baseline

Pre-CER Project InformationTotal Cost (YOE): $623,566,730

Total Cost (Current): $548,538,322

Project Completion Date: November 2017

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Estimate Adjustments ($ in millions)$548.638 Pre-CER State Estimate (Current Year)

Adjustments-1.75 Reduction in pavement Depth/Reduction in pavement width on frontage approach

.75 Communication (during Construction)-5 1 less cofferdam resulting from the elimination of 1 pier1 Select subgrade treatment on Wisconsin approach

0.526 Concrete Post Wooden Plank Noise wall in City of Oak Park Heights Based on (990 length 20')

.5 Stipend (bidders)3 Field Office

2.5 Construction trestle to span wetlands-24 Shaft Design quantity corrections

6 Utility costs for Oak Park Heights($5.8mil includes traffic signals)($100K additional locations)

.365 ITS Costs for fiber optic network(cameras, DMS).15 ITS Costs for ITS infrastructure

.1 ITS Costs for ITS security infrastructure on bridge

Estimate Adjustments ($ in millions).5 Test shaft for load testing foundation supports during construction (risk mitigation

for ensuring foundation support)

.1 Filtration/Under-drain additions

-5.5Right of way Adjustment for reduced parcels(Minnesota)

-$20.759 Subtotal Adjustments

$527.779 CER Adjusted State Estimate (Current Year)

Adjusted Baseline

CER Adjusted Project InformationTotal Cost (YOE): $565,389,188 †

Total Cost (Current): $527,779,322 †

Project Completion Date: November 2017

† - includes -$20.76 M in adjusted costs

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Base Variation

Analyzed by Section of Project• MN Section: +/- 15%• WI Section: +/- 15%

Conceptual Overview of Inflation & Market Conditions

CurrentYear

YOEaba

BaseEstimate

Inflation

Worse

As-Planned

Better

MarketConditions

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Market Conditions - MN Assumptions

• Market Conditions remain as-planned: 20%• Market Conditions better than planned: 60%• Market Conditions worse than planned 20%

• Variation of better than planned from as-planned: 10%

• Variation of worse than planned from as-planned: 10%

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Market Conditions - MN

As Planned Engineer

Estimate = 20%

WorseThan Planned =

20%

BetterThan Planned =

60%

+10%-10%

Variation from the Base

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Market Conditions - WI Assumptions

• Market Conditions remain as-planned: 25%• Market Conditions better than planned: 50%• Market Conditions worse than planned 25%

• Variation of better than planned from as-planned: 10%

• Variation of worse than planned from as-planned: 10%

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Market Conditions - WI

WorseThan Planned =

25%

BetterThan Planned =

50%

+10%-10%

Variation from the Base

As Planned Engineer

Estimate = 25%

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Inflation Forecasts MnDOT Construction Inflation STIP/HIP Projections for SFY

2013 - 2022 (based on recent trends and available forecasting through September 2011)

• 2012 – 2013 = 5% (modeled to vary @ +/- 10%)

• 2014 = 4% (modeled to vary @ +/- 10%)

• 2015 – 2022 = 5% (modeled to vary @ +/- 10%)

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Risk Register Risks identified through discussions with SMEs

Modeled significant risks (threats and opportunities)

Cost Risk / Schedule Risk

Project team quantified unidentified risks

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Significant Cost Threats Difficulty in constructing foundations due to contaminated materials and

remnant from the energy plant, land fills site or other unknown difficulties related to the Super Fund site

Superfund Site Wall construction

Superfund Site ROW Purchase

Complications during construction of the drop shaft on the Wisconsin bluff

Material and labor costs increase above estimated inflation increasing project costs

Issues with casting and transporting precast deck sections and River access

Cost associated with Procuring an early foundation contract

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Significant Cost Threats Unfavorable weather may impact construction activities

Foundation work, difficulty in construction due to artesian pressure

MOT complications associated with maintaining Beach Rd with possible Temporary Bridge

Presence of endangered species may impact the construction of the bridge (during construction)

Permits delay from other regulatory agencies

Risk of Loop Trail support wall not being able to support bike/ped trail

Use of a precast cofferdam seal/marine enclosure to mitigate the inability of a traditional coffer dam to work with poor subsurface material

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Significant Cost Opportunities

There is an opportunity to reduce the size of the drilled shafts piles(from 10 ft. to 8 ft. shafts - 130 feet deep)

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Significant Schedule Threats Utility Relocation Impacts and coordination Unfavorable weather may impact construction activities Foundation work, difficulty in construction due to artesian pressure Flow rate impacts to ponds at Wisconsin approach MOT complications associated with maintaining Beach Rd with possible

Temporary Bridge Presence of endangered species may impact the construction of the bridge

(during construction) Permits delay from other regulatory agencies Issues with casting and transporting precast deck sections and River access Use of a precast cofferdam seal/marine enclosure to mitigate the inability

of a traditional coffer dam to work with poor subsurface material

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Significant Schedule Opportunities

Opportunity with Procuring an early foundation contract my offer potential schedule advantages for the project

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CER Outputs

Review findings/recommendations Adjustments made to estimate during review Project cost estimate at 70% level of

confidence Risk Register – Threats/Opportunities

Total Project Cost with Risks (2012 Dollars) 29

Total Project Cost with Risks (YOE)30

CER Outputs – Total Cost ForecastPercentile Total Project Costs

Forecast values

0% $416,384,859 10% $501,759,702 20% $524,168,319 30% $538,705,057 40% $552,126,372 50% $564,172,878 60% $575,938,951 70% $588,834,169 80% $603,797,304 90% $624,371,327 100% $740,854,665

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Project Schedule – 70% Confidence

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MnDOT & WisDOT Cost Forecasts

Information Only

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MnDOT Remaining Costs (YOE) 34

CER Outputs – MnDOT Cost ForecastPercentile Total Project Costs

Forecast values

0% $210,887,579 10% $246,401,524 20% $260,216,183 30% $270,476,788 40% $278,936,749 50% $287,728,327 60% $296,298,284 70% $306,042,397 80% $317,543,386 90% $332,904,228 100% $389,821,390

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WisDOT Remaining Costs (YOE)36

CER Outputs – WisDOT Cost ForecastPercentile Total Project Costs

Forecast values

0% $178,334,425 10% $212,290,679 20% $224,606,681 30% $233,766,565 40% $241,401,652 50% $249,477,083 60% $257,665,492 70% $266,533,175 80% $275,762,175 90% $288,450,177 100% $332,131,186

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Recommendations

Include range of YOE forecast values in NEPA document

Submit revised Major Project Initial Financial Plan with value equal to or greater than CER 70% results – prior to authorization of construction

Develop a plan to manage threats and opportunities Continue to work towards procurement to take

advantage of current market conditions Continue to monitor market conditions through

procurement

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Risk Management Process

Identification

Assessment/

Analysis

Mitigation &

PlanningAllocation

Monitoring &

Control

FHWA will prepare a final report documenting review findings.• Draft report for review within 30 days• Draft report will be e-mailed to Division Office• Division Office will review the draft and forward it to the State

Project Team• Final report issued within 30 days after receipt of comments• Final report forwarded to the Division Office for distribution to

the State Project Team

FHWA uses the report for the review of the Initial Financial Plan

Estimate review is a snapshot of the current estimate

CER Next Steps

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Questions?

St. Croix River Crossing Project