fhwa major projects estimate training florida tea conference and workshop 2005
DESCRIPTION
FHWA Major Projects Estimate Training Florida TEA Conference and Workshop 2005. FHWA Major Projects Team:. Rodney Barry, Team Leader, (202)366-1561 Jim Sinnette, Engineering, (202)366-0479 Daniel C. Wood, Engineering, (202)366-4661 John Broadhurst, Finance, (202)366-5604 - PowerPoint PPT PresentationTRANSCRIPT
FHWA Major Projects Estimate Training
Florida TEA Conference and Workshop 2005
FHWA Major Projects Team:
Rodney Barry, Team Leader, (202)366-1561
Jim Sinnette, Engineering, (202)366-0479
Daniel C. Wood, Engineering, (202)366-4661
John Broadhurst, Finance, (202)366-5604
Chris Allen, Risk Management, (202)366-4104
Phil Barnes, Stewardship/Oversight,(202)366-0733
SAFETEA-LU
Title I – Federal-Aid Highways
Subtitle I (Miscellaneous)
Section1904. Stewardship and Oversight• Major Projects now $500 million• Value Engineering – More than 1 analysis for
major projects.• Finance Plans still required
– $100 million projects
• Project Management Plans now required
SAFETEA-LU
Title I – Federal-Aid Highways
Subtitle I (Miscellaneous)
Section1904. Stewardship and Oversight
• Project costs.--The Secretary shall develop minimum standards for estimating project costs and shall periodically evaluate the practices of States for estimating project costs, awarding contracts, and reducing project costs.
14 States with $1 billion projects (TEA-21)
Active States
DC
14
20 States with $500 million projects (SAFETEA-LU)
Active States
DC
20
33 States with active and future $500 million projects
Active States
Future States
DC
20
13
Cost Estimate Training for Major Projects
• 2 Pilots in DC in FY 2005
• 1 Course in Atlanta – September 2005
• 1 Course in Austin – October 2005
• 2 Courses in St. Louis and Denver – December 2005
• Dwight Sangrey of Golder Associates will be delivering a course to the Minnesota DOT and to Eastern Federal Lands Highway Division
Why?
• History of Cost Estimating issues with Major Projects
• Government Auditing Agencies (GAO, DOT IG)
• NCHRP 20-7 (152), Flyvbjerg, LA County Metro Transportation Planning Authority, etc.
Another Resource: July/August 2004 issue of Public Roads
Why?
• On a recent survey, FHWA Division Offices were asked what was needed to improve cost estimating:
• Responses:– Nothing (32%)– Guidance (25%)– Best Practices (23%)– Other (11%)– Training (9%)
Why?
• SAFTEA-LU– A financial plan shall–
• ``(A) be based on detailed estimates of the cost to complete the project; and
• ``(B) provide for the annual submission of updates to the Secretary that are based on reasonable assumptions, as determined by the Secretary, of future increases in the cost to complete the project.
0
2000
4000
6000
8000
10000
12000
14000
16000
Mill
ion
Dol
lars
1 2 3 4 5 6 7 8 9
Year
"BIG DIG" Cost Estimate
Inflation
Change in Scope,Schedule, Pricing
Original Scope
85 87 89 91 92 94 00 01 02
LESSON 1: Recent exampleEvolution of Cost for Boston Central Artery & Tunnel
LESSON 2: Past ExampleInterstate Highway System Case Study 1954 to 2000
• Authorization in 1956 for 41,000 miles of high quality highway for estimated $27 B... ($1955)
• Scope later increased to 42,500 miles
• Revised estimate of cost in 1958 was $41B ($1957)
• Original planned build-out schedule was 1975
• By 1980 … 40,000 miles completed—up to 42,793 today
LESSON 2: Past ExampleEvolution of Cost for US Interstate Highway System
0
20
40
60
80100
120
140B
illi
on
Do
llar
s
1 2 3 4 5 6 7 8
Year
Interstate Highway System
Scope Inflation
Base Inflation
Add. Scope
Base
1955 60 65 70 80 90
Again…scope & inflation are the changes
LESSON 3: Current Example
• East Span of the San Francisco – Oakland Bay Bridge
– Earthquake Retrofitting (just under $1 billion)
– Things happened …
– Now over $6 billion …• July 2005 Newspaper Reports
– And scheduled for completion in 2012
As a result FHWA has begun implementing the following:
“Major Project Program Cost Estimating Guidance”
http://www.fhwa.dot.gov/programadmin/mega/cefinal.htm
And
Cost Estimate Training for Major Projects
Cost Estimating Guidance and Training
• Guidance and Training are based on the concept of including estimates of all costs at all stages of a project.– Deterministic with contingencies = VDOT
– Risk-based probabilistic = WS DOT
• For Major Projects, there appears to be initial successes with risk-based probabilistic estimates, like WS DOT’s CEVP– Utah and Pennsylvania Turnpike have already used
CEVP.– EFLHD is planning to use a risk-based assessment on
one of their $10 million projects– Nevada, Minnesota, Texas have all expressed interest
Planning ProgrammingPreliminary Design Final Design A/B/A Construct
Where Uncertainties (Risks) Need to be Resolved
Environment
Right of Way
Governance/Stakeholders
Financing
Civil & Environmental Justice
Multi-modal Systems
Teaming
Options/Alternatives
Geotechnical
Structures
Pavements
Hydraulics
Stormwater
Tunnels
Intelligent Transportation
Permitting
Contracts
Insurance/Bonds
Construction Methods
MOT
Market Conditions
Disputes
Weather
Security
SCOPE
Cost Risk Contribution By Item
00.020.040.060.08
0.10.12
78 87 96
105
114
123
132
141
Total Project Duration (months after Jul/02)
Pro
bab
ilit
y
Base Schedule
0
0.05
0.1
0.15
0.2
1200
1320
1440
1560
1680
1800
1920
2040
2160
Total Project Cost (Current $M)
Pro
bab
ility
Base Cost
also:••uncertainty in escalated cost•••prioritized list of activities (for VE)••effectiveness of risk management••chance of meeting milestones••cash flow
CEVP Results & Deliverables
RICH SOURCE OF INFORMATION
Quantified risk registry can feed & focus VE & Risk Management
Current $ or YOE $
% Current $M1 14.9% 6.6 43. Additional cost for Vehicles due to decision delay 2 9.0% 4.0 50. Dispute Resolution and Litigation (other than listed separately)3 9.0% 4.0 49. Clarity of Contract Documents4 8.5% 3.8 55. Cashflow and debt-service cost (5% on $100M)5 6.7% 2.9 Aggregate Identified Minor Risks (or Opportunities)6 4.4% 2.0 Unidentified Risks7 3.4% 1.5 63. Geotechnical Instrumentation (ECIS) for Tunneling8 3.4% 1.5 45. Utilities, Cost sharing at 50:50 may change9 2.7% 1.2 23. Ground Control (grouting,etc.) (tunnel)10 2.3% 1.0 64. Maintenance and Protection of Traffic11 1.8% 0.8 54. Delay reaching FFGA
Contribution to Expected Cost Risk
Risk Rank
Risk Event
•prioritized list of delay risks
Using Results of a Risk-Based Analysis
• Project Assessment & Validation
• Risk Management
• Communication
• Financial Management
Cost Risk Contribution By Item – March 2003
1 14% Future Leadership & Management
2 11% Contracting Process
3 11% Guideway Design Cost Risk
4 10% ROW Acquisition Uncertainty
5 8% Additional Parking Required
6 8% Urban Design Risk
7 6% other risk items
8 6% Utility Relocation Issues
9 5% Other Scope Risk
10 5% W. Seattle Bridge Design Risk
all others 17%
Rank Relative Contribution to Risk Cost
Rank
Comparison of Probability Mass Functions
66
75
84
93
10
2
11
1
12
0
12
9
13
80
0.05
0.1
0.15
0.2
0.25
Pro
ba
bilit
y
Total Project Duration (months after Jan/03)
Jul-02 Mar-03
Uncertainty Decreases with Design Development
Ultimate cost (or schedule)
design level1% 5% 30%
Significant risks realized
Few risks realized
Risk Management or other ?
Range of Initia
l Estim
ate
CommunicationsCEVP – Washington State DOT
2002 -- Developed CEVP for proposed “mega-projects” in Seattle area (assessment & communication)
Success led to broad application within WSDOT:
More than 150 projects
$10M up to $4B
CREM staff function
In use by 150+ staff
S R 1 6 7 , T a c o m a t o P u y a l l u p N e w F r e e w a y C o n s t r u c t i o n
1 0 Y e a r - P r o j e c t i n
F u l l
D e s c r i p t i o n :
• C o m p l e t e s S R 1 6 7 f r o m P u y a l l u p t o t h e P o r t o f T a c o m a w i t h a s i x l a n e f r e e w a y • I n c l u d e s a n H O V l a n e i n e a c h d i r e c t i o n f r o m S R 1 6 1 n e a r P u y a l l u p t o I - 5 • I n c l u d e s f o u r l a n e s b e t w e e n I - 5 a n d S R 5 0 9 n e a r t h e P o r t o f T a c o m a
S c h e d u l e :
B e g i n C o n s t r u c t i o n R a n g e : 2 0 0 5 - 2 0 0 6 E n d C o n s t r u c t i o n R a n g e : 2 0 1 0 - 2 0 1 2 I n f l a t i o n e s c a l a t i o n i s t o y e a r 2 0 0 8 , a p p r o x i m a t e m i d p o i n t c o n s t r u c t i o n
C E V P R e s u l t :
P r o j e c t C o s t R a n g e
B e n e fi t s t h i s p r o j e c t w o u l d p r o v i d e : • P r o v i d e s a k e y l i n k f o r f r e i g h t t o m o v e t o a n d f r o m t h e P o r t o f T a c o m a • R e l i e v e s c o n g e s t i o n b y o f f e r i n g c o m m u t e r s , t r a v e l e r s , a n d s h i p p e r s a n a l t e r n a t i v e t o I - 5 • R e d u c e s c o n g e s t i o n a n d i m p r o v e s a f e t y o n l o c a l r o a d s b y c o n n e c t i n g S R 1 6 7 t o I - 5
R i s k i s s u e s t h a t c o u l d i m p a c t p r o j e c t c o s t o r s c h e d u l e : • P r o j e c t r e q u i r e s t h e a c q u i s i t i o n o f l a r g e a m o u n t s o f p r o p e r t y i n a c o r r i d o r w h e r e l a n d i s r a p i d l y d e v e l o p i n g . D e l a y s i n a c q u i r i n g n e w p r o p e r t i e s w i l l r e s u l t i n s i g n i f i c a n t c o s t i n c r e a s e s t o t h e p r o j e c t . • P r o j e c t w i l l b e c o n s t r u c t e d n e a r H y l e b o s C r e e k , W a p a t o C r e e k , w e t l a n d s a n d w i l d l i f e h a b i t a t . E n v i r o n m e n t a l p e r m i t t i n g a n d m i t i g a t i o n r e q u i r e m e n t s m a y c h a n g e s i g n i f i c a n t l y b e t w e e n n o w a n d c o n s t r u c t i o n , t e n d i n g t o i n c r e a s e c o s t s a n d c a u s e d e l a y s . • P r o j e c t i n c l u d e s a m a j o r n e w i n t e r c h a n g e w h e r e I n t e r s t a t e 5 a n d S R 1 6 7 c o n n e c t . D e s i g n o f t h i s i n t e r c h a n g e a s s u m e s F e d e r a l H i g h w a y A d m i n i s t r a t i o n ( F H W A ) a p p r o v a l o f a n u m b e r o f d e s i g n f e a t u r e s . I f n o t a p p r o v e d b y F H W A , c h a n g e s i n t h e d e s i g n w o u l d r e s u l t i n i n c r e a s e d c o s t a n d t i m e f o r t h e p r o j e c t . • L i m i t e d n u m b e r o f c o n t r a c t o r s a r e q u a l i f i e d a n d a v a i l a b l e t o p u r s u e a p r o j e c t t h i s l a r g e , i n c r e a s i n g c o n t r a c t c o s t s a n d p r o j e c t d e l a y s .
L e v e l o f P r o j e c t D e s i g n :
00 . 0 20 . 0 40 . 0 60 . 0 8
0 . 10 . 1 20 . 1 40 . 1 6
1525
1600
1675
1750
1825
1900
1975
2050
2125
2200
C o s t ( $ M )
Proba
bility
T h e r e i s a 1 0 % c h a n c e t h e c o s t i s l e s s t h a n $ 1 . 6 B i l l i o n T h e r e i s a 5 0 % c h a n c e t h e c o s t i s l e s s t h a n $ 1 . 7 B i l l i o n T h e r e i s a 9 0 % c h a n c e t h e c o s t i s l e s s t h a n $ 1 . 8 B i l l i o n
L o w M e d i u m H i g h J u n e 3 , 2 0 0 3
Communications
• Value of audience understanding– More realistic expectations– Framework for time delay & low probability
risk– WSDOT experience in 2002 is good example
• The public is very savvy when it comes to transportation projects. – WS DOT CEVP – VDOT’s Dashboard
Financial Management (Programming)
0
0.02
0.04
0.06
0.08
0.1
7150
7375
7600
7825
8050
8275
8500
8725
8950
9175
Total Project Cost (Current $10k)
Pro
bab
ility
00.050.1
0.150.2
0.250.3
0.350.4
210
230
250
270
290
310
330
350
Total Project Cost (Current $M)
Pro
bab
ility
0
0.02
0.04
0.06
0.08
0.1
0.12
1080
1100
1120
1140
1160
1180
1200
1220
1240
Total Project Cost ($100k)
Pro
bab
ility
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
26
26
.8
27
.5
28
.3 29
29
.8
30
.5
31
.3 32
Total Project Cost (Current $M)
Pro
ba
bil
ity
0
0.05
0.1
0.15
0.2
0.25
13
2
13
8
14
4
15
0
15
6
16
2
16
8
17
4
Total Project Cost (Current $M)
Pro
ba
bili
ty
0
0.05
0.1
0.15
0.2
0.25
1040
1160
1280
1400
1520
1640
1760
1880
Total Project Cost (Current $k)
Pro
bab
ilit
y
Simulated Program Cost
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
510 520 530 540 550
Program_Cost ($ Million)
Program Combined Cost
QUESTIONS ????