Prepare Cost Estimate (pdf 33 KB)
This process supports decision making required for the allocation of funds to program areas and/or specific projects for inclusion in the Highway System Plan, the Capital Improvement and Preservation Program, the State Transportation Improvement Program, the Biennial Program, and for obligating funds for project engineering, right-of-way, and/or construction. Project Design Teams lead the cost estimating effort for their projects.
PROCESS ACTIVITY
Determine Estimate Basis(pdf 33 KB)
This activity focuses on obtaining Project Information including Project Scope details and data from which a project cost estimate can be prepared. The level of scope detail varies depending on the project phase, project type (program area – preservation and improvement), and project complexity.
Prepare Base Estimate (pdf 36 KB)
This activity covers the development of estimated costs for all components of a project. These components may be estimated using different techniques depending on the level of scope definition and the size and complexity of the project. The number of components estimated may vary depending on the project development phase. For example, in the scoping phase the cost estimate covers preliminary engineering, ROW, and construction. Later in the design phase only construction related costs are estimated. Key inputs to this activity include Historical Databases, knowledge of Market Conditions, and use of Inflation Rates. Internal Specialty Groups provide estimate information when preparing base estimates.
Review Base Estimate (pdf 32 KB)
This activity is necessary to ensure that the base cost estimate is an accurate reflection of the project’s scope of work that items are not missing, that historical data reasonably reflects project scope and site conditions, that assumptions and basis are appropriate for the project. Internal Specialty Groups must participate in reviewing the base estimate.
Determine Risks and Set Contingency (pdf 38 KB)
This activity is part of developing a risk management plan for a project as identified in the Project Management Process online guide. Risk Management is the process of maximizing the probability and consequences of positive risk events (opportunities) and minimizing the probability and consequences of negative risk events (threats) to the project objectives. In the context of cost estimating the cost impact of project risks (favorable or unfavorable) must be included to derive a total project cost. External Specialists are involved in a workshop format to validate the base estimate, provide input on specific issues such as construction staging, and elicit risks for modeling purposes. Risk assessments consider Market Conditions and Inflation Rates.
Determine Estimate Communication Approach (pdf 29 KB)
Cost estimate information is communicated to both internal and external constituencies. The communication approach covers what estimate information should be communicated, who should receive this information, how should the information be communicated and when should it be communicated. Conveying cost estimate information should be included when the Communication Plan is developed as part of the Project Management Process.
Obtain Management Endorsement (pdf 29 KB)
Endorsement of the Project Management Plan is a step in the Project Management Process. In the context of cost estimating, the baseline cost should be endorsed by Regional/HQ Management as part of the Project Management Plan. As estimated costs are updated, management approval will be required with respect to adjustments to the baseline cost. Estimates are the main outputs of the cost estimating process.