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Cost Estimate Reviews for Ohio’s Major Projects

Cost Estimate Reviews for Ohio’s Major Projects. Presented by Jason P. Spilak, PE Technical Programs Team Lead Ohio Division – FHWA ODOT Planning Conference July 16, 2014. Let’s Blame Boston. The Boston “Big Dig” Project Modern-day poster child for Construction Cost Estimate gone bad

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Cost Estimate Reviews for Ohio’s Major Projects

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  1. Cost Estimate Reviews for Ohio’s Major Projects Presented by Jason P. Spilak, PE Technical Programs Team Lead Ohio Division – FHWA ODOT Planning Conference July 16, 2014

  2. Let’s Blame Boston • The Boston “Big Dig” Project • Modern-day poster child for Construction Cost Estimate gone bad • Mid-1980’s Estimate for project was just over $2 billion • Final costs exceeded $17 billion • A Lesson learned for Planning Estimators – • 1st estimate of a project cost will never be forgotten • We mustaddress Risk

  3. Addressing Risk • Planning Estimates prepare us to fund projects • Present day costs alone is not enough for a planning estimate • will not adequately fund a project • adding blanket “contingency” costs are dangerous • We must thoughtfully identify risk, contingency, inflation • must be included so there is a higher confidence in the funds needed to build the project

  4. FHWA vs Ohio DOT Cost EstimateReview (CER) • CER’s are conducted to bring higher confidence to Planning Estimates • FHWA performs mandatory CER’s on Projects larger than $500 million • Ohio will conduct CER’s on projects of interest less than $500 million • We believe much can be gained by extending the CER process beyond that required by FHWA

  5. Expected results • Affording better communication among planners • Identify risks present in project development • Quantifying the effect of that risk • Discuss way to mitigate risk • Ultimately provide a more reliable planning Estimate of cost

  6. The Process • Follows FHWA CER very closely • Assemble Review Team • ODOT personnel • District -owns the CER for their project • Central Office –facilitates the CER • FHWA, Local Division –technical expertise and guidance • Subject Matter Experts (SME’s) • From ODOT • Consultant community

  7. How does the process work? • Review accuracy & reasonableness of estimate • Using ODOT and/or consultant estimators • Identify threats and opportunities and how they impact the final cost • Use technical experts from appropriate areas • Identify the probability of threats and opportunities

  8. The Results • Model the impact on cost and schedule • Present day Estimate • Provided by the estimate • 70% Confidence (present day) estimate • Using Oracle Crystal Ball software to perform Monte Carlo simulations • 70% Year of Expenditure Estimate • Incorporating inflation forecasts to year of expenditure

  9. Results (cont.) • CER Team produces a Final Report • Executive Summary Highlights significant results • Present day and Confidence Level Estimates • Identified Threats • Identified Opportunities • Recommendations – next steps • List of Participants • Close-out Presentation for Upper Management

  10. Where We Stand • Last year completed a CER for Cleveland’s Opportunity Corridor • Next planned CER will be for an I-75 project in District 2 in the fall of this year • Looking at other candidate projects for winter/spring

  11. Questions?

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