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Federal Agency Update - A Public Real Estate Symposium. Procedures Guide for Right of Way Cost Estimation and Cost Management. Las Vegas, Nevada January 26, 2010. NCHRP 8- 49 (2).

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Federal agency update a public real estate symposium

Federal Agency Update - A Public Real Estate Symposium

Procedures Guide for Right of Way Cost Estimation and Cost Management

Las Vegas, Nevada

January 26, 2010


Nchrp 8 49 2

NCHRP 8- 49 (2)

Stuart AndersonTexas A&MKeith MolenaarUniv. ColoradoCliff SchexnayderDel E. Webb School of Const., Arizona State U.


Outline
Outline

  • Background

  • Methodology

  • Data Collection & Results

  • Issues

  • Procedure Guide

  • Discussion


Background
Background

  • State highway agencies problems with project cost escalation.

  • Phase I of NCHRP Project 8-49

  • Focused on cost escalation relative to general project cost estimating

  • Product - Guidance, Report 574, focuses on estimating strategies, methods, & tools


NCHRP Report 574Guidance forCost Estimation and Management for Highway Projects During Planning, Programming, andPreconstruction

http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_574.pdf


Phase II of NCHRP 8-49

  • Targeted – Right of Way

  • Cost estimation and

  • Cost estimation management


Nchrp report 625 procedures guide for right of way cost estimation and cost management
NCHRP Report 625Procedures Guide forRight-of-Way Cost Estimationand Cost Management

http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_625-2.pdf


Nchrp report 625 procedures guide for right of way cost estimation and cost management1
NCHRP Report 625Procedures Guide forRight-of-Way Cost Estimationand Cost Management

This ROW Guidebook includes content from the accompanying project Research Report 132 and the Estimating Guide 574


NCHRP Web-Only Document 132Right of Way Methods and Tools to Control Project Cost Escalationhttp://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_w132.pdf


Research objective
Research Objective

Develop inclusive right-of-way cost estimation and cost estimation management procedures based on literature and current practice, that integrates with the cost estimate steps documented in

NCHRP Report 574


Framework
Framework

  • Phase I  Implications

  • Project development phases

  • General project cost estimation & estimate management steps

  • Cost estimating & cost management flowcharts

  • Tool appendix approach


Framework1
Framework

  • Impact of Phase I on Phase II

  • Focus on creating a ROW Cost Estimating & Cost Management Procedures Guide – a “how to”

  • Create more detailed processes for cost estimating & cost management for ROW to support procedure guide


Framework2
Framework

  • Impact of Phase I on Phase II

  • Use some Phase I tools but created additional tools focused on ROW using same format and structure as in the

    NCHRP Report 574


Data collection
Data Collection

1. Literature review

2. On-site interviews

 Interview Protocol

Six areas of interest that focused on different aspects of the cost estimation & estimate management process


Data collection1
Data Collection

 Interview Process

Who?

SHAs and other organizations that acquire ROW

Central Office and Region/District perspectives

How?

Ask questions relative to project development phase


Data collection2
Data Collection

Documents collected

  • ROW manuals

  • Unique tools used in practice (i.e. cost estimating systems, estimate documents, spreadsheets)

    Early flowchart feedback


Data analysis
Data Analysis

  • Review of Practices

  • Critical issues to ROW cost estimation

  • Successful practices and tools


Data analysis1
Data Analysis

  • Flowchart technique

  • Data subdivided into four categories:

  • Inputs (primary and secondary)

  • Process steps

  • Outputs

  • Decisions and loops(cycles within the process)


Limitations
Limitations

  • Small sample size

  • Differences between agencies:

  • Large verses small

  • Organizational make-up ― centralized verses decentralized

  • Project development phases

  • Terminology and acronyms


Results
Results

Problem Areas

  • Damages

  • Condemnations

  • Appreciation & market conditions

  • Risk analysis & contingency

  • Early scope definition

  • Estimating tools

  • Estimator experience & knowledge


Right of way issues
Right of Way Issues

  • Current practices lack structure and organization.

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

  • The ROW estimation is highly dependent on scope definition.


Right of way issues1
Right of Way Issues

  • ROW planning estimates typically not prepared by ROW staff.

  • SHAs do not utilize risk analysis and the application of contingency to all estimates.

  • Cost estimation management and cost control are underutilized.


ProceduresGuide

ROW

Research

Results


Organization of guide
Organization of Guide

Chp 1 Introduction

Chp 2 Integrated Estimating Process

Chp 3 Agency Process Overview

Chp 4 Conceptual ROW Estimating

Chp 5 Baseline ROW Estimating

Chp 6 Update ROW Estimating

Chp 7 ROW Cost Management

Chp 8 Conclusions

Appendix - Tools


Organization of guide1
Organization of Guide

Tools Appendix – provides detailed information on each of the tools discussed in the Procedures Guide.

Tool description is consistent with that used in NCHRP Report 574.


Agency level process flowchart

Transportation Need

Conceptual ROW

estimate

Agency Level ProcessFlowchart

Baseline ROW

estimate

Update ROW

estimate

ROW Cost

Management


Row estimating elements
ROW Estimating Elements

  • Land only

  • Land and structures

  • Other property improvements

  • Damages

  • Utility relocations


Row estimating elements1
ROW Estimating Elements

  • Relocation assistance program

  • Administrative settlements

  • Settlements or trials

  • Support Costs

  • Appreciation (market forces)depreciation is possible but as much of a problem


Key row estimating inputs
Key ROW Estimating Inputs

  • Requirements

  • Values for land and structures

  • Historical data

  • Inflation/appreciation rates

  • Condemnation rates

  • Future highest and best use


Baseline row cost estimate

Baseline ROW Estimate Basis

PrepareBaseline ROW Base Estimate

Baseline ROW Cost Estimate

Baseline ROW Risk/Contingency

Review Baseline ROW Estimate

Approval Baseline ROW Estimate


Update row cost estimate

Update ROW Estimate Basis

Update ROW Base Estimate

Update ROW Cost Estimate

Update ROW Risks/contingency

Review Updated ROW Estimate

Estimate in Budget

NO

Yes

Approve Updated ROW Estimate


Row cost

Management

Final Design Phase

ROW Cost


How to chapter
“How to” Chapter

Estimation/Cost Management

Introduction

Flowchart

  • Project complexity

  • Phase inputs

  • Process step description

  • Tools (tied to tool appendix)

  • Tips for success

  • Outputs


Tools
Tools

Generic methods include:

• B1 Budget Control

• C1 Communication

• E2 Estimate Review - External

• E3 Estimate Review - Internal

• I2 Identification of Risk

• R3 Risk Analysis


Risk analysis
Risk Analysis

Analysis of Risk and Uncertainty

Analysis of uncertainty involves quantifying identified risks. Risk analysis is used to prioritize identified risks for mitigation, monitoring, and control purposes. Risk analysis can be extremely helpful for understanding project uncertainty and setting appropriate contingencies.


Risk analysis1
Risk Analysis

What Is It?

In the context of cost estimation, this tool quantifies project risk and uncertainty to provide a better understanding of contingency and the ultimate project cost.


Risk analysis2
Risk Analysis

Why?

Highway project delivery, particularly the estimation of right-of-way cost, is a complex task heavy with uncertainty.

What Does It Do?

This tool quantifies the effect of potential risks in terms of their consequences to cost and schedule.


Risk analysis3
Risk Analysis

When?

Risk analysis can be used throughout the project development process.

Examples

Caltrans has documented a qualitative risk analysis procedure: Project Risk Management Handbook: Threats and Opportunities,May 2007


Risk analysis4
Risk Analysis

Tips

Conduct the risk analysis early in the project development process.

Resources

Project Risk Management Handbook: Threats and Opportunities, Caltrans,

www.dot.ca.gov/hq/projmgmt/guidance_prmhb.htm


Guide conclusions
Guide Conclusions

Structured Approach

Collaborative Atmosphere

Key Principles

  • Create an environment for success

  • Create procedures for establishing a Baseline ROW Cost Estimate


Guide conclusions1
Guide Conclusions

Key Principles

  • Create processes to identify risk and for setting contingency

  • Require ROW reviews

  • Create ROW cost control mechanisms

  • Support good communication practices


Magic bullets
Magic Bullets

Stick to the process ―a process that:

  • Considers risk – identify and mitigate

  • Requires reviews and approvals

  • Involves updating the estimate when new or more detailed information is available.


Communicate estimate consistency and accuracy to the project team and management
Communicate estimate consistency and accuracy to the project team and management



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