Synthesis of Practices and Tools for Cost Estimation and Cost Management for Transportation Projects
Keywords:Baseline Cost Estimate, Cost Control, Cost Estimation, Cost Management, Risk Management
Cost escalation during project development is inevitable on transportation projects. The lack of a systematic process for establishing a baseline budget with the consideration of potential issues (risks) that negatively impact project cost throughout project development presents a major challenge for State Departments of Transportation (DOTs). The overarching objective of this paper is to identify best practices for cost estimation and management that can aid project managers and engineers throughout the project development process (PDP). To achieve the objective, this paper conducted a systematic literature review, comprehensive content analysis of cost estimation and cost management processes in other State DOTs, and interviews with transportation cost professionals. A systematic literature review identified four key areas for cost estimation and cost management, including: (1) risk analysis and contingency; (2) identification of cost escalation factors; (3) accuracy of preliminary cost estimate; (4) and constructability review. Cost estimation and control processes in Minnesota, California, Texas, Ohio, and Washington State DOTs are provided as examples of best practices for establishing reliable baseline cost estimates. This paper represents a current synthesis of state DOTs’ practices on cost estimation and cost management in the U.S.