Cost Estimating TRTCost Estimating TRTInitial Meeting Executive SummaryInitial Meeting Executive Summary

Salem, OregonSalem, Oregon

May 20 – 22, 2008May 20 – 22, 2008

All six appointed members All six appointed members

Tony Bianchi – AASHTOTony Bianchi – AASHTOJohn Riedl - TTFJohn Riedl - TTFJennifer McAllister - ODOTJennifer McAllister - ODOTCheri Sylvester - FLDOTCheri Sylvester - FLDOTKathleen Stutsman - MnDOTKathleen Stutsman - MnDOTLesly Tribelhorn - MtDOTLesly Tribelhorn - MtDOTMike Fowler - VTDOTMike Fowler - VTDOTMike Jenkins - INDOTMike Jenkins - INDOT

The expectations for the meeting The expectations for the meeting

MissionMission

process improvements related to cost-process improvements related to cost-estimating estimating

software applicationssoftware applications

cradle-to-grave approachcradle-to-grave approach

estimating and processing of those estimating and processing of those estimates through a project life-cycleestimates through a project life-cycle

MissionMission

TRT is charged with developing a TRT is charged with developing a "requirements document" for the wT "requirements document" for the wT version of the estimation system. The version of the estimation system. The message is for the membership to forward message is for the membership to forward any and all requirements to make current any and all requirements to make current and advance the discipline of engineering and advance the discipline of engineering economics and costing for projects and economics and costing for projects and transportation programs.transportation programs.

Define the scopeDefine the scope

(aim before you fire). Identify what is (aim before you fire). Identify what is being estimated.being estimated.

Determine the full scope of the project Determine the full scope of the project before putting an estimate together.before putting an estimate together.

Be as thorough as we can.Be as thorough as we can.

Put together a comprehensive list of all Put together a comprehensive list of all of the elements that will be required in of the elements that will be required in the project.the project.

Visit the various ProductsVisit the various Products

in person.in person.

Become familiar with not only operational Become familiar with not only operational issues, but other issues as well.issues, but other issues as well.

What will have an effect on the project What will have an effect on the project costscosts

the more familiar we are with them the the more familiar we are with them the more likely the issue with these will be more likely the issue with these will be considered.considered.

Do not reinvent the wheelDo not reinvent the wheel

Review similar projects/products for items Review similar projects/products for items and costs.and costs.

Use the spreadsheets and databases Use the spreadsheets and databases others have developed to build our others have developed to build our estimating tool. estimating tool.

Don’t go it aloneDon’t go it alone

Use the expertise and support of the DOT’s Use the expertise and support of the DOT’s and vendors to provide input to our estimates and vendors to provide input to our estimates and assumptions.and assumptions.

1.1. For example, the Vendors can provide help on For example, the Vendors can provide help on potential mitigation and associated costs.potential mitigation and associated costs.

2.2. ASSHTO can provide guidance for costs in given ASSHTO can provide guidance for costs in given development areas.development areas.

3.3. DOT’s can tell us what other tools they are using DOT’s can tell us what other tools they are using and what works. and what works.

4.4. Each one will have a significant effect on project Each one will have a significant effect on project costs and development.costs and development.

5.5. This information is easy to get and will greatly This information is easy to get and will greatly increases the value of the product.increases the value of the product.

You missed somethingYou missed something

Despite our best efforts to develop a comprehensive Despite our best efforts to develop a comprehensive and accurate product for estimating, something more and accurate product for estimating, something more or different will be needed by the time the project is or different will be needed by the time the project is programmed.programmed.It could be an omission, a change in design standards, It could be an omission, a change in design standards, a change in regulatory agency requirements, or a change in regulatory agency requirements, or something completely different.something completely different.Like any estimate contingencies must be included in Like any estimate contingencies must be included in our planning estimate for this product.our planning estimate for this product.The amount will depend on how much time is spent The amount will depend on how much time is spent putting the details together and how much risk is putting the details together and how much risk is associated with some of the higher cost items.associated with some of the higher cost items.We will include documentation of the assumptions We will include documentation of the assumptions used in putting the project together. used in putting the project together.

PLANNING (watchouts)PLANNING (watchouts)

Change is constantChange is constant

Project size influences unit pricesProject size influences unit prices

Have someone else check our workHave someone else check our work

Plans and product does not grow Plans and product does not grow better with age!better with age!

Wrap upWrap up

Change is constantChange is constant

Price can vary greatly over time based on Price can vary greatly over time based on requirements so we need to keep a short time requirements so we need to keep a short time line.line.It is important to review the larger cost items It is important to review the larger cost items on this project, to reflect current and future on this project, to reflect current and future trends. trends. We need to review historically what has been We need to review historically what has been used with great care and augmented with used with great care and augmented with additional investigation and judgment by the additional investigation and judgment by the estimating community.estimating community.Sometimes historical assumptions are years Sometimes historical assumptions are years old and too old. (i.e. escalation cost)old and too old. (i.e. escalation cost)

Project size influences costProject size influences cost

Wonderful opportunity because we have Wonderful opportunity because we have several products to compare against.several products to compare against.

When using these products for prices When using these products for prices and scoping:and scoping:

1.1. make sure that we are comparing with make sure that we are comparing with similar function and purpose similar function and purpose

2.2. or adjust appropriately or adjust appropriately

Have someone else check our Have someone else check our workwork

One of the easiest and often overlooked One of the easiest and often overlooked ways to eliminate errors is simply to have ways to eliminate errors is simply to have our project reviewed by an experienced our project reviewed by an experienced co-workers. (YOU) co-workers. (YOU)

Plans and product does not grow Plans and product does not grow better with age!better with age!

We can not sit this on the shelf for years We can not sit this on the shelf for years before we programmed for the design and before we programmed for the design and development.development.Like estimates, our plan needs to be reviewed Like estimates, our plan needs to be reviewed and refreshed regularly (every 4-6 monthsand refreshed regularly (every 4-6 monthsIn detail prior to the budget cycle would be a In detail prior to the budget cycle would be a minimum) to reflect potential changes in minimum) to reflect potential changes in scope, prices, regulatory requirements, etc.scope, prices, regulatory requirements, etc.This is also a good time to review the This is also a good time to review the assumptions and revise as necessary.assumptions and revise as necessary.

Wrap upWrap up

The estimating tool available needs to The estimating tool available needs to provide very precise numbers – the provide very precise numbers – the arithmetic is precise, the estimate is not. arithmetic is precise, the estimate is not.

Remember it is better to be Remember it is better to be “approximately right rather than precisely “approximately right rather than precisely wrong”. wrong”.

The total cost needs to reflect on the The total cost needs to reflect on the relative magnitude of this project.relative magnitude of this project.

SCOPING (tips)SCOPING (tips)

Ensure the scope of work and design Ensure the scope of work and design requirements are knownrequirements are known

1.1. don’t assume deviations will be approved.don’t assume deviations will be approved.

2.2. Understand the current design standards Understand the current design standards and this products impact.and this products impact.

3.3. Anticipating potential design changes by Anticipating potential design changes by staying actively engaged in design staying actively engaged in design development. development.

SCOPINGSCOPING

Visit product with specialty groupsVisit product with specialty groups 1.1. get input from them while reviewing the get input from them while reviewing the

items listed in the design matrices.items listed in the design matrices.

2.2. Verify at reasonable intervals.Verify at reasonable intervals.

3.3. Compare existing conditions against the Compare existing conditions against the Design guidelines to determine need for Design guidelines to determine need for realignment.realignment.

SCOPINGSCOPING

Experience is criticalExperience is critical1.1. Meetings with experience developers of Meetings with experience developers of

various area of the software to get a detail various area of the software to get a detail understandingunderstanding

2.2. No “on-the-job-training” as this is to critical No “on-the-job-training” as this is to critical for the supporting agencies involvedfor the supporting agencies involved

SCOPINGSCOPING

Have more than one person reviewHave more than one person review this includes the calculation file and all this includes the calculation file and all

formulas.formulas. Document how we came up with the Document how we came up with the

estimatesestimates this will reduce duplicating work.this will reduce duplicating work.

November next stepNovember next step

DESIGN (tips)DESIGN (tips)Note any obstacles that could affect the Note any obstacles that could affect the projectprojectAnalyze our risksAnalyze our risks

Are we limiting contractors’ work?Are we limiting contractors’ work? Are our specifications performance/outcome based?Are our specifications performance/outcome based? Do we intend to direct much of the contractors Do we intend to direct much of the contractors

work?work? Is there an accelerated working days timeline?Is there an accelerated working days timeline? Are documents complete?Are documents complete?

November next stepNovember next step

Watch out for SCOPE CHANGEWatch out for SCOPE CHANGE when beginning a design confirm that the scope of when beginning a design confirm that the scope of

work described is accurate, correct, complete and work described is accurate, correct, complete and up to date. up to date.

Look at the project with fresh eyes and make sure Look at the project with fresh eyes and make sure any non-standard conditions are addressed with any non-standard conditions are addressed with appropriate documentation.appropriate documentation.

Create a approving authority if deviations or design Create a approving authority if deviations or design variances are needed.variances are needed.

Check Project Definitions and/or Scoping Files to Check Project Definitions and/or Scoping Files to make sure the extent of the work required has been make sure the extent of the work required has been identified correctly.identified correctly.

ASK THE EXPERTSASK THE EXPERTS

(do not limit ourselves to one (do not limit ourselves to one information source)information source)..

Don’t be afraid to call DOT’s, suppliers, Don’t be afraid to call DOT’s, suppliers, specialists, or contractors to get an idea.specialists, or contractors to get an idea.

And don’t be afraid to change their And don’t be afraid to change their numbers to fit our situation.numbers to fit our situation.

Any QuestionsAny Questions