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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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 must address Risk
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n FHWA vs Ohio DOT Cost Estimate Review (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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n 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
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O h i o D e p a r t m e n t o f T r a n s p o r t a t i o n Questions?
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