Cost Estimating TRT

1. Cost Estimating TRT Initial Meeting Executive Summary Salem, Oregon May 20 – 22, 2008

2. All six appointed members • Tony Bianchi – AASHTO • John Riedl - TTF • Jennifer McAllister - ODOT • Cheri Sylvester - FLDOT • Kathleen Stutsman - MnDOT • Lesly Tribelhorn - MtDOT • Mike Fowler - VTDOT • Mike Jenkins - INDOT

3. The expectations for the meeting • Mission • process improvements related to cost-estimating • software applications • cradle-to-grave approach • estimating and processing of those estimates through a project life-cycle

4. Mission • TRT is charged with developing a "requirements document" for the wT version of the estimation system. The message is for the membership to forward any and all requirements to make current and advance the discipline of engineering economics and costing for projects and transportation programs.

5. Define the scope • (aim before you fire). Identify what is being estimated. • Determine the full scope of the project before putting an estimate together. • Be as thorough as we can. • Put together a comprehensive list of all of the elements that will be required in the project.

6. Visit the various Products • in person. • Become familiar with not only operational issues, but other issues as well. • What will have an effect on the project costs • the more familiar we are with them the more likely the issue with these will be considered.

7. Do not reinvent the wheel • Review similar projects/products for items and costs. • Use the spreadsheets and databases others have developed to build our estimating tool.

8. Don’t go it alone • Use the expertise and support of the DOT’s and vendors to provide input to our estimates and assumptions. • For example, the Vendors can provide help on potential mitigation and associated costs. • ASSHTO can provide guidance for costs in given development areas. • DOT’s can tell us what other tools they are using and what works. • Each one will have a significant effect on project costs and development. • This information is easy to get and will greatly increases the value of the product.

9. You missed something • Despite our best efforts to develop a comprehensive and accurate product for estimating, something more or different will be needed by the time the project is programmed. • It could be an omission, a change in design standards, a change in regulatory agency requirements, or something completely different. • Like any estimate contingencies must be included in our planning estimate for this product. • The amount will depend on how much time is spent putting the details together and how much risk is associated with some of the higher cost items. • We will include documentation of the assumptions used in putting the project together.

10. PLANNING (watchouts) • Change is constant • Project size influences unit prices • Have someone else check our work • Plans and product does not grow better with age! • Wrap up

11. Change is constant • Price can vary greatly over time based on requirements so we need to keep a short time line. • It is important to review the larger cost items on this project, to reflect current and future trends. • We need to review historically what has been used with great care and augmented with additional investigation and judgment by the estimating community. • Sometimes historical assumptions are years old and too old. (i.e. escalation cost)

12. Project size influences cost • Wonderful opportunity because we have several products to compare against. • When using these products for prices and scoping: • make sure that we are comparing with similar function and purpose • or adjust appropriately

13. Have someone else check our work • One of the easiest and often overlooked ways to eliminate errors is simply to have our project reviewed by an experienced co-workers. (YOU)

14. Plans and product does not grow better with age! • We can not sit this on the shelf for years before we programmed for the design and development. • Like estimates, our plan needs to be reviewed and refreshed regularly (every 4-6 months • In detail prior to the budget cycle would be a minimum) to reflect potential changes in scope, prices, regulatory requirements, etc. • This is also a good time to review the assumptions and revise as necessary.

15. Wrap up • The estimating tool available needs to provide very precise numbers – the arithmetic is precise, the estimate is not. • Remember it is better to be “approximately right rather than precisely wrong”. • The total cost needs to reflect on the relative magnitude of this project.

16. SCOPING (tips) • Ensure the scope of work and design requirements are known • don’t assume deviations will be approved. • Understand the current design standards and this products impact. • Anticipating potential design changes by staying actively engaged in design development.

17. SCOPING • Visit product with specialty groups • get input from them while reviewing the items listed in the design matrices. • Verify at reasonable intervals. • Compare existing conditions against the Design guidelines to determine need for realignment.

18. SCOPING • Experience is critical • Meetings with experience developers of various area of the software to get a detail understanding • No “on-the-job-training” as this is to critical for the supporting agencies involved

19. SCOPING • Have more than one person review • this includes the calculation file and all formulas. • Document how we came up with the estimates • this will reduce duplicating work.

20. November next step • DESIGN (tips) • Note any obstacles that could affect the project • Analyze our risks • Are we limiting contractors’ work? • Are our specifications performance/outcome based? • Do we intend to direct much of the contractors work? • Is there an accelerated working days timeline? • Are documents complete?

21. November next step • Watch out for SCOPE CHANGE • when beginning a design confirm that the scope of work described is accurate, correct, complete and up to date. • Look at the project with fresh eyes and make sure any non-standard conditions are addressed with appropriate documentation. • Create a approving authority if deviations or design variances are needed. • Check Project Definitions and/or Scoping Files to make sure the extent of the work required has been identified correctly.

22. ASK THE EXPERTS • (do not limit ourselves to one information source). • Don’t be afraid to call DOT’s, suppliers, specialists, or contractors to get an idea. • And don’t be afraid to change their numbers to fit our situation.

23. Any Questions