WSDOT Scoping and Cost Estimating for Highway Construction Projects Proposed Final Report

1. WSDOT Scoping and Cost Estimating for Highway Construction ProjectsProposed Final Report Joint Legislative Audit & Review Committee January 5, 2010 John Woolley, JLARC Staff

2. Key Question for JLARC Analysis of WSDOT Highway Construction? • Do the Washington State Department of Transportation’s (WSDOT) scoping and cost estimating policies and procedures align with industry guidelines? YES JLARC Analysis of WSDOT Scoping/Cost Estimating

3. JLARC Developed 5 Key Questions From Literature to Test Alignment Does WSDOT have systematic, documented policies and procedures for: • Managing scope and scope change? • Managing the cost estimation process and changes to the cost estimate? • Keeping stakeholders informed? • Reviewing, quantifying, and mitigating risks? • Providing “checks and balances” to review and protect the cost estimate? YES YES YES YES YES JLARC Analysis of WSDOT Scoping/Cost Estimating Report Page 7 & Appendix 4

4. Also: In the Field, Do They Actually Follow These Policies and Procedures? JLARC Analysis of WSDOT Scoping/Cost Estimating Report Pages 7-8

5. Looked at 8 Projects in the Field Northwest North Central Eastern Olympic South Central Southwest • Practices followed in these 8 case studies JLARC Analysis of WSDOT Scoping/Cost Estimating Report Pages 7-8 & Appendix 5

6. 2003/2005 Fuel Tax Increases (Nickel/TPA) Funded Many New Highway Projects • Since 2003 and 2005, many new policies and procedures put in place • WSDOT is now able to more accurately estimate costs than in 2003 and 2005 • Three issues to consider to make estimates more accurate: • Time • Resources • Communication JLARC Analysis of WSDOT Scoping/Cost Estimating Report Pages 10-13

7. Literature: As More is Known, Estimates Should Become More Accurate Planning Planning Scoping $300 million $300 Scoping Design Design Plans, Specification, Estimate Plans, Specification, Estimate 74% of Nickel/TPA project budgets established at 3% maturity $250 74% of Nickel/TPA project budgets established at 3% maturity Construction Complete Project Cost equals$100 Million $200 $150 million 3% Estimate Range ($ in millions) 3% $110 million $150 $100 $95 million $50 million $70 million $50 Source: JLARC analysis of Association for Advancement of Cost Estimating International (AACE);WSDOT guidelines, manuals, and budget reports. $0 2% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Project Maturity – Percent of Design Completed JLARC Analysis of WSDOT Scoping/Cost Estimating Report Pages 10-13

8. Time, Resources, and Communication and an Easy-to-Follow Budget Trail • WSDOT aligns with industry guidelines • Literature: importance of time, resources, and communication • JLARC found it hard to track estimate to what goes into budget request • Recommendation: Include in project record easy-to-follow trail between cost estimate number and budget request number WSDOT and OFM concur JLARC Analysis of WSDOT Scoping/Cost Estimating Report Page 14

9. Contact Information John Woolley Woolley.john@leg.wa.gov 360-786-5184 www.jlarc.leg.wa.gov JLARC Analysis of WSDOT Scoping/Cost Estimating