August 30, 2012 Cost Estimate Review Closeout Presentation St. Croix River Crossing Project Minnesota and Wisconsin

2 Project Map

C ost Estimate Review Objective Conduct an unbiased risk-based review to verify the accuracy and reasonableness of the current total cost estimate to complete the St. Croix River Crossing Project and to develop a probability range for the cost estimate that represents the project’s current stage of design. 3

4 Review Agenda MONDAY – August 27  CER Introduction by FHWA  Project Overview by Project Personnel  Overview State Estimation Process  Define Contingency, Risk Template & Inflation  Roadway  Pavement TUESDAY – August 28  Structures  Retaining Walls  Noise Barriers  Right of way and Utilities  Erosion Control  Drainage  MOT  Environmental Mitigation Costs  Miscellaneous Costs

5 Review Agenda WEDNESDAY – August 29  Visual Enhancements  Lighting, Traffic Control, Traffic Surveillance and Signals  ITS  Soft Costs  Begin Findings and Report Preparation  Findings and Report Preparation Draft Presentation THURSDAY – August 30  Closeout Presentation

6 Basis of Review  Review based on estimates provided by the Project Team in advance with revisions made during the review  Reviewed estimates to determine the reasonableness of assumptions used  Reviewed project elements to identify and model risks  Discussed project conditions to develop base variability, market conditions and inflation percentage  Not an independent FHWA estimate Did not verify quantities and unit prices Goal is to verify accuracy and reasonableness of estimate Risk-based Probabilistic Approach

7 Review Participants  FHWA Headquarters – Office of Innovative Program Delivery MN Division Office  Minnesota Department of Transportation  Wisconsin Department of Transportation

8 Review Methodology  Verify Accuracy of Estimate Review major cost elements Review allowances and contingencies Adjust estimate as necessary  Discuss / Model Base Variability Market Conditions & Inflation Key Schedule & Cost Risks  Perform Monte Carlo simulation to generate a project estimate as forecast range  Communicate Results

9 Documentation Provided  Project Cost Estimate  LWD Cost Estimating Method - MnDOT  Project Schedule  Minnesota Inflation Forecast  Project Website  Project Map and Location

10 Review Findings  Estimate is comprehensive, covering entire construction scope of project Estimate includes all soft costs (design, CE, environmental mitigation) Estimate includes all ROW, Utility Relocation  Estimate current as of May 21, 2012  Found basis for pricing to be relevant and used similar project experience for the major bridge  Found the Project team used good estimating practices in preparation of the cost estimate  Good communication among Project Team to ensure estimate covered the entire project scope

Review Baseline Pre-CER Project Information Total Cost (YOE): $623,566,730 Total Cost (Current): $548,538,322 Project Completion Date: November

Estimate Adjustments ($ in millions) $ Pre-CER State Estimate (Current Year) Adjustments Reduction in pavement Depth/Reduction in pavement width on frontage approach.75 Communication (during Construction) -5 1 less cofferdam resulting from the elimination of 1 pier 1 Select subgrade treatment on Wisconsin approach Concrete Post Wooden Plank Noise wall in City of Oak Park Heights Based on (990 length 20').5 Stipend (bidders) 3 Field Office 2.5 Construction trestle to span wetlands -24 Shaft Design quantity corrections 6 Utility costs for Oak Park Heights($5.8mil includes traffic signals)($100K additional locations).365 ITS Costs for fiber optic network(cameras, DMS).15 ITS Costs for ITS infrastructure.1 ITS Costs for ITS security infrastructure on bridge

Estimate Adjustments ($ in millions).5 Test shaft for load testing foundation supports during construction (risk mitigation for ensuring foundation support).1 Filtration/Under-drain additions -5.5 Right of way Adjustment for reduced parcels(Minnesota) -$20.759Subtotal Adjustments $ CER Adjusted State Estimate (Current Year)

Adjusted Baseline CER Adjusted Project Information Total Cost (YOE): $565,389,188 † Total Cost (Current): $527,779,322 † Project Completion Date: November 2017 † - includes -$20.76 M in adjusted costs 14

15 Base Variation  Analyzed by Section of Project MN Section: +/- 15% WI Section: +/- 15%

Conceptual Overview of Inflation & Market Conditions Current Year YOE aba Base Estimate Inflation Worse As-Planned Better Market Conditions 16

17 Market Conditions - MN  Assumptions Market Conditions remain as-planned: 20% Market Conditions better than planned: 60% Market Conditions worse than planned 20% Variation of better than planned from as-planned: 10% Variation of worse than planned from as-planned: 10%

18 Market Conditions - MN As Planned Engineer Estimate = 20% Worse Than Planned = 20% Better Than Planned = 60% +10%-10% Variation from the Base

19 Market Conditions - WI  Assumptions Market Conditions remain as-planned: 25% Market Conditions better than planned: 50% Market Conditions worse than planned 25% Variation of better than planned from as-planned: 10% Variation of worse than planned from as-planned: 10%

20 Market Conditions - WI Worse Than Planned = 25% Better Than Planned = 50% +10%-10% Variation from the Base As Planned Engineer Estimate = 25%

21 Inflation Forecasts  MnDOT Construction Inflation STIP/HIP Projections for SFY (based on recent trends and available forecasting through September 2011) 2012 – 2013 = 5% (modeled to +/- 10%) 2014 = 4% (modeled to +/- 10%) 2015 – 2022 = 5% (modeled to +/- 10%)

22 Risk Register  Risks identified through discussions with SMEs  Modeled significant risks (threats and opportunities)  Cost Risk / Schedule Risk  Project team quantified unidentified risks

23 Significant Cost Threats  Difficulty in constructing foundations due to contaminated materials and remnant from the energy plant, land fills site or other unknown difficulties related to the Super Fund site  Superfund Site Wall construction  Superfund Site ROW Purchase  Complications during construction of the drop shaft on the Wisconsin bluff  Material and labor costs increase above estimated inflation increasing project costs  Issues with casting and transporting precast deck sections and River access  Cost associated with Procuring an early foundation contract

24 Significant Cost Threats  Unfavorable weather may impact construction activities  Foundation work, difficulty in construction due to artesian pressure  MOT complications associated with maintaining Beach Rd with possible Temporary Bridge  Presence of endangered species may impact the construction of the bridge (during construction)  Permits delay from other regulatory agencies  Risk of Loop Trail support wall not being able to support bike/ped trail  Use of a precast cofferdam seal/marine enclosure to mitigate the inability of a traditional coffer dam to work with poor subsurface material

25 Significant Cost Opportunities  There is an opportunity to reduce the size of the drilled shafts piles(from 10 ft. to 8 ft. shafts feet deep)

26 Significant Schedule Threats  Utility Relocation Impacts and coordination  Unfavorable weather may impact construction activities  Foundation work, difficulty in construction due to artesian pressure  Flow rate impacts to ponds at Wisconsin approach  MOT complications associated with maintaining Beach Rd with possible Temporary Bridge  Presence of endangered species may impact the construction of the bridge (during construction)  Permits delay from other regulatory agencies  Issues with casting and transporting precast deck sections and River access  Use of a precast cofferdam seal/marine enclosure to mitigate the inability of a traditional coffer dam to work with poor subsurface material

27 Significant Schedule Opportunities  Opportunity with Procuring an early foundation contract my offer potential schedule advantages for the project

28 CER Outputs  Review findings/recommendations  Adjustments made to estimate during review  Project cost estimate at 70% level of confidence  Risk Register – Threats/Opportunities

Total Project Cost with Risks (2012 Dollars ) 29

Total Project Cost with Risks (YOE) 30

CER Outputs – Total Cost Forecast PercentileTotal Project Costs Forecast values 0%$416,384,859 10%$501,759,702 20%$524,168,319 30%$538,705,057 40%$552,126,372 50%$564,172,878 60%$575,938,951 70%$588,834,169 80%$603,797,304 90%$624,371, %$740,854,665 31

Project Schedule – 70% Confidence 32

MnDOT & WisDOT Cost Forecasts Information Only 33

MnDOT Remaining Costs (YOE) 34

CER Outputs – MnDOT Cost Forecast PercentileTotal Project Costs Forecast values 0%$210,887,579 10%$246,401,524 20%$260,216,183 30%$270,476,788 40%$278,936,749 50%$287,728,327 60%$296,298,284 70%$306,042,397 80%$317,543,386 90%$332,904, %$389,821,390 35

WisDOT Remaining Costs (YOE) 36

CER Outputs – WisDOT Cost Forecast PercentileTotal Project Costs Forecast values 0%$178,334,425 10%$212,290,679 20%$224,606,681 30%$233,766,565 40%$241,401,652 50%$249,477,083 60%$257,665,492 70%$266,533,175 80%$275,762,175 90%$288,450, %$332,131,186 37

38 Recommendations  Include range of YOE forecast values in NEPA document  Submit revised Major Project Initial Financial Plan with value equal to or greater than CER 70% results – prior to authorization of construction  Develop a plan to manage threats and opportunities  Continue to work towards procurement to take advantage of current market conditions  Continue to monitor market conditions through procurement

39 Risk Management Process Identification Assessment/ Analysis Mitigation & Planning Allocation Monitoring & Control

 FHWA will prepare a final report documenting review findings. Draft report for review within 30 days Draft report will be ed to Division Office Division Office will review the draft and forward it to the State Project Team Final report issued within 30 days after receipt of comments Final report forwarded to the Division Office for distribution to the State Project Team  FHWA uses the report for the review of the Initial Financial Plan  Estimate review is a snapshot of the current estimate CER Next Steps 40

Questions? St. Croix River Crossing Project