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Ohio's Major Projects Cost Estimate Review Process

Learn about the FHWA vs. Ohio DOT Cost Estimate Review, the significance of addressing risks, and the outcomes of the CER process for planning estimates in major projects. Explore the results, process, and future plans discussed at the 2014 Ohio Division FHWA-ODOT Planning Conference.

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Ohio's Major Projects Cost Estimate Review Process

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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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