Transportation Estimators AssociationConference

Saratoga Springs, New YorkOctober 4, 2008

Procedures Guide for Right of Way Cost Estimation and Cost Management

Biloxi, MississippiJune 13, 2007

NCHRP Project 8- 49 (2)

Stuart Anderson Texas A&M

Cliff Schexnayder Del E. Webb School of Const., ASU

Keith Molenaar Univ. Colorado

Outline• Background

• Methodology

• Data Collection and Results

• Issues

• Procedure Guide

• Discussion

Background

• State highway agencies (SHAs) have identified cost escalation to be a consistent problem

• Phase I of NCHRP Project 8-49– Focused on the larger issue of cost escalation relative

to general project cost estimating– Produced Guidance, Report 574, which focused on

strategies, methods, and tools

• Phase II of NCHRP 8-49– Target specific area for elaboration – Right of Way

Research Objective

Develop an all-inclusive set of right-of-way

cost estimation and cost estimation

management procedures based on literature

and current practice, which integrates

cost estimate and cost management steps

documented in NCHRP Report 574

to support the right-of-way process.

Research Tasks

• Task 1. Update Literature Review

• Task 2. Examine and Document Successful Right-of-Way Estimating and Management Practices

• Task 3. Develop Methods and Tools for Right-of-Way Estimating and Management

• Task 4. Develop Procedures on Right-of-Way Cost Estimating and Management

• Task 5. Prepare Report and Right-of-Way Cost Estimating and Management Procedures

MethodologyFramework

• Phase I implications– Project development phases– General project cost estimation and estimate

management steps– Cost estimating and cost management

flowcharts– Tool appendix approach

MethodologyFramework

• Impact of Phase I approach on Phase II– Focus on creating a ROW Cost Estimating

and Cost Management Procedures Guide – a “how to”

– Create more detailed processes for cost estimating and cost management for ROW to support procedure guide

– Use some Phase I tools but created a few additional tools focused on ROW using same format and structure

MethodologyData Collection

• Literature review• On-site interviews

– Interview Protocol• 15 questions• Six areas of interest which focused on different aspects of

the cost estimation and estimate management process – Interview Process

• Who?– SHAs and other organizations that acquire ROW– Central Office and Region/District perspectives

• How?– Use the protocol as a roadmap during interviews– Ask each question relative to the development phase

MethodologyData Analysis Approach

• Review of Practices– Critical issues to ROW cost estimation– Successful practices and tools

• Flowchart technique– Data was subdivided into four categories:

• Inputs (primary and secondary)• Process steps• Outputs• Decisions and loops (cycles within the process)

Data Collection

• Interview participants– 7 State Highway Agencies (40 individuals)– 2 Local Public Agencies (5 individuals)

• Interview process– Open discussion– Protocol as a checklist

• Documents collected– ROW manuals– Unique tools used in practice (i.e. cost estimating

systems, estimate documents, spreadsheets)

• Early flowchart feedback

Limitations of the Research

• Small sample size

• Differences between agencies being interviewed:– Large verses small– Organizational make-up – centralized verses

decentralized– Project development phases– Terminology and acronyms

ResultsProblem Areas

• Damages • Condemnations• Appreciation and other market conditions• Risk analysis and contingency• Early scope definition• Estimating tools• Estimator experience and knowledge

Right of Way Issues

• Current practices lack structure and organization.

• Communication between ROW personnel and project development team personnel needs to improve.

• The ROW cost estimation process is highly dependent on the level of scope definition.

Right of Way Issues (continued)

• Planning estimates do not typically involve ROW personnel.

• SHAs underutilize risk analysis and the application of contingency in all estimates.

• Cost estimation management and cost control are underutilized.

PROGRAMMING

ROW Project Development:· Define Project Scope:

Identify ROW area and/or rough parcels needed (impacted)

· Document ROW Required on rough conceptual plan or aerial photo (schematic)

Determine Baseline ROW Estimate Basis· Review ROW required as documented per

project type and scope· Request clarification of uncertain ROW

requirements· Document requirements in project estimate

file

Approve & Communicate Baseline ROW Cost Estimate· Obtain management approval· Authorize communication internally and

externally

Determine Baseline ROW Risk & Set Contingency· Identify risks· Assess and analyze risks· Assign contingency· Document risk analysis and basis for

contingency· Compile baseline ROW cost estimate (base

plus contingency)

Review Baseline ROW Cost Estimate· Determine level of review· Review estimate basis & assumptions· Verify completeness and Cost Data· Review Contingency amount based on

identified risks

Baseline ROW Cost Estimate

To PreliminaryDesign

ScopeDevelopment

ROW Requirements

Input from Environmental,

Utilities, Railroad

Prepare Baseline ROW Base Estimate· Review estimate basis· Document observations from field visit · Calculate potential area of land by land type· Develop cost basis for each ROW element· Convert cost basis to estimate for each

element· Document estimate assumptions including

uncertain items· Summarize all estimate elements for total

ROW base cost

Real Estate Appreciation

Rate

Land Market Values

Field Visit by Estimator (Improvements,

Damages, Existing Conditions, etc.)

Condemnation RateHistorical

Data

- Removal of Improvements- Relocation Assistance- Support Costs

Future Development (Community

Planning)

Represents the dynamic nature of the milestone dependant on the practices

of the State highway agency.

*

Priority Program≤ 10 years

*

FromPlanning

Modifications

Update Estimate Basis(Scope/

Location)

Prepare Base Estimate

Perform Risk Analysis

(Set Contingency)

Review Total Cost Estimate

Historical Data Input from 3rd Parties

Input from Disciplines

Market Conditions

Baseline Estimate

TrafficRoadwayStructures

ROWEnvironmentalConstruction

Utilities

Project Scoping5-25% Design

Project Complexity

Obtain Appropriate Approvals

Communicate Approval

Macro Environment

Project Estimate

P

RE

LIM

IN

AR

Y D

ES

IG

N

Authorize Project

*

PR

OG

RA

MM

IN

G

Database

Document

Step

Input

Milestone

Pha

se

Legend

Decision

COST ESTIMATING AND COST ESTIMATING MANAGEMENT

To Final Design

ROWResearchResults

ProceduresGuide

Development

Procedure GuideOutline

• Chapter 1 Introduction• Chapter 2 Integrated Estimating Process• Chapter 3 Agency Level Process Overview• Chapter 4 Conceptual ROW Estimating• Chapter 5 Baseline ROW Estimating• Chapter 6 Update ROW Estimating• Chapter 7 ROW Cost Management• Chapter 8 Conclusions• Appendix - Tools

Agency Level Process

Flowchart

Plan

ning

Transportation Need

Conceptual ROW Cost Estimating

ROW CostManagement

Update ROW CostEstimating

Baseline ROW Cost Estimating

Pro

gram

ming

Preli

mina

ryDe

sign

Conceptual ROWRequirements

Conceptual ROWCost Esimate

ROWRequirements

Baseline ROW Cost Estimate

(for Authorization)

ROW Requirements(Preliminary ROW

Plans)

Updated ROW Cost Estimate

Final ROWPlans

Forecasted Total Cost

Letting

F

inal D

esign

*

STIP

Priority Program

Long RangePlan

*

Represents the dynamic nature of the milestone dependant on the practices

of the State highway agency.

*

Actual Parcel Cost

ROW Estimate Elements

• Land only

• Land and structures

• Other property improvements

• Damages

• Utility relocations

ROW Estimate Elements

• Relocation assistance program

• Administrative settlements

• Settlements or trails

• Support Costs

• Appreciation

Key ROW Estimate Inputs

• Requirements

• Values for land and structures

• Historical data

• Inflation/appreciation rates

• Condemnation rates

• Future highest and best use

Conceptual ROW Cost Estimating Planning Phase

PLANNING

ROW Project Development:· Define Project Scope:

Planner & Project Engineer perform field visit to determine Conceptual ROW Scope

· Document ROW Required

Determine ROW Estimate Basis· Review ROW required as documented

on schematic (Land Use, Location, etc.)· Create ROW Estimate file

Prepare Conceptual ROW Estimate· Determine Total ROW area and

approximate # of parcels to be impacted· Determine approximate # of parcels to

be impacted· Document location, existing conditions,

assumptions, and limitations for ROW requirements

· Develop cost basis including land values, RAP, support costs, improvements, damages, etc.

· Estimate condemnation rate and costs· Apply inflation rate

Determine ROW Risk & Set Contingency· Identify and evaluate major risks· Assign percentage to account for risks

Conceptual ROW Cost Estimate

To Programming

Conceptual ROW Cost Estimating

Historical Data

- Removal of Improvements- Relocation Assistance- Support Costs

Real Estate Inflation

Rate

ROW Requirements

Land Market Values

Field Visit by Estimator (Improvements,

Damages, Existing Conditions, etc.)

Review ROW Cost Estimate· Review estimate basis/assumptions· Verify completeness and cost data

Condemnation Rate

Future Development (Community

Planning)

Approve and Release ROW Cost Estimate

Transportation Need

Long Range Plan

>20 years

Baseline ROW Cost Estimating

PROGRAMMING

ROW Project Development:· Define Project Scope:

Identify ROW area and/or rough parcels needed (impacted)

· Document ROW Required on rough conceptual plan or aerial photo (schematic)

Determine Baseline ROW Estimate Basis· Review ROW required as documented per

project type and scope· Request clarification of uncertain ROW

requirements· Document requirements in project estimate

file

Approve & Communicate Baseline ROW Cost Estimate· Obtain management approval· Authorize communication internally and

externally

Determine Baseline ROW Risk & Set Contingency· Identify risks· Assess and analyze risks· Assign contingency· Document risk analysis and basis for

contingency· Compile baseline ROW cost estimate (base

plus contingency)

Review Baseline ROW Cost Estimate· Determine level of review· Review estimate basis & assumptions· Verify completeness and Cost Data· Review Contingency amount based on

identified risks

Baseline ROW Cost Estimate

To PreliminaryDesign

ScopeDevelopment

ROW Requirements

Input from Environmental,

Utilities, Railroad

Prepare Baseline ROW Base Estimate· Review estimate basis· Document observations from field visit · Calculate potential area of land by land type· Develop cost basis for each ROW element· Convert cost basis to estimate for each

element· Document estimate assumptions including

uncertain items· Summarize all estimate elements for total

ROW base cost

Real Estate Appreciation

Rate

Land Market Values

Field Visit by Estimator (Improvements,

Damages, Existing Conditions, etc.)

Condemnation RateHistorical

Data

- Removal of Improvements- Relocation Assistance- Support Costs

Future Development (Community

Planning)

Represents the dynamic nature of the milestone dependant on the practices

of the State highway agency.

*

Priority Program≤ 10 years

*

FromPlanning

Modifications

Update ROW Cost Estimating

PRELIMINARY DESIGN

ROW Project Development:· Refine ROW Scope per

preliminary plans and refined overall Project Scope

· Develop preliminary ROW plan

Approve & Communicate Updated ROW Cost Estimate· Review Impacts of changes· Obtain management approval· Authorize communication internally and

externally

Review Updated ROW Cost Estimate· Review estimate changes (basis and

assumptions)· Verify completeness and cost data for

changes· Review effect of changes on contingency

amount

Updated ROW Cost Estimate

To FinalDesign

ROW Requirements (Preliminary ROW

Plans)

Revised ROW Required

(Revised Plans)

Estimate on Budget?

YES

NO

Update ROW Estimate Basis· Review current ROW plans and

compare to previous requirements· Identify changes· Update ROW Estimate file

Update ROW Risks & Contingency· Review risks· Update risks as necessary· Update contingency value· Document update to risk and contingency

Input from Environmental,

Utilities, Railroad

Update ROW Base Estimate· Review updated estimate basis to understand

changes· Document observations of field visit to

confirm modifications· Review changes to existing estimate

assumptions/limitations· Calculate total area of land for each parcel· Revise cost basis to update estimate for each

element· Convert cost basis to update estimate for

each element· Update estimate documentations include

uncertain items· Summarize all estimate elements for updated

total ROW cost

Real Estate Appreciation

Rate

Land Market Values

Field Visit by Estimator (Improvements,

Damages, Existing Conditions, etc.)

Condemnation Rate

Historical Data

- Removal of Improvements- Relocation Assistance- Support Costs

Future Development (Community

Planning)

*

STIP≤ 4 years

Represents the dynamic nature of the milestone dependant on the practices

of the State highway agency.

*

FromProgramming

Potential Design/ROW Trade offs

CostEstimation

ManagementLoop

Modifications

ROW Cost Management -

Final Design Phase

No

Assess ROW Scope, Conditions, and Cost· Compare final ROW plan requirements with

previous requirements· Identify specific changes in ROW

requirements by parcel· Estimate Cost Impact on each affected parcel· Compare with current budget for impacted

parcel

Evaluate Potential Cost Impact· Compare actual ROW cost against

current budget by parcel· Determine cost impact on total ROW

budget

Adjust ROW Budget· Document change including changes to

estimate basis and assumptions· Notify Project Development Team of

modified budget

To Construction

Actual ParcelCost Data

FINAL DESIGN

ROW Project Development:· Finalize ROW

Requirements· Finalize ROW Plans

Appraisal & Acquisition Activities· Select Parcels · Appraise Property· Acquire Property· Obtain ROW Clearance· Initiate and perform

ROW condemnation (if necessary)

RecommendBudget

Adjustment?

YES

CostManagement

Loop

No

Adustm

ent

ROW Requirements (Final ROW Plan)

Forecasted Total ROW Cost

(W/Deviations)

FromPreliminary

Design

Updated ROW Cost Estimate

• Cost Estimation/Cost Management Step– Introduction– Flowchart– Flowchart step

• Project complexity• Phase inputs• Process step description• Tools (tied to tool appendix)• Tips for success• Outputs

Procedure Guide“How to” Chapter Contents

• Structured Approach• Collaborative Atmosphere• Key principles

– Create an environment for success– Create procedures for establishing a Baseline

ROW Cost Estimate– Create processes to identify risk and for

setting appropriate contingency– Require ROW reviews– Create ROW cost control mechanisms– Support good communications practices

Procedure GuideConclusions

Questions, Answers, and Discussion!