Programmatic Cost Risk Analysis for Highway Megaprojects
Publication: Journal of Construction Engineering and Management
Volume 131, Issue 3
Abstract
Highway megaprojects (construction projects over $100 million) are fraught with uncertainty. These projects have historically experienced increases in project costs from the time that a project is first proposed or programmed until the time that they are completed. Persistent cost underestimation reflects poorly on the industry in general but more specifically on engineers. Traditional methods take a deterministic, conservative approach to project cost estimating and then add a contingency factor that varies depending on the stage of project definition, experience, and other factors. This approach falls short, and no industry standard stochastic estimating practice is currently available. This paper presents a methodology developed by the Washington State Department of Transportation (WSDOT) for its Cost Estimating Validation Process. Nine case studies, with a mean cumulative value of over $22 billion, are presented and analyzed. Programmatic risks are summarized as economic, environmental, third party, right-of-way, program management, geotechnical, design process, construction, and other minor risks. WSDOT is successfully using the range cost output from this procedure to convey project costs to management and the public.
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Acknowledgments
Numerous CEVP participants provided information for this report. The following individuals helped to establish the CEVP methodology and contributed substantially to this paper: Adam Brown, WSDOT; Jennifer Brown, WSDOT; Jeff Carpenter, WSDOT; James Diekmann, University of Colorado; David Dye, WSDOT; Bill Elliott, WSDOT; Art Jones, KJM Associates; Cliff Mansfield, Parsons Corporation; Mike McBride, McBride Consulting; Travis McGrath, Golder Associates; Richard Rast, Azimuth Group, Ltd; John Reilly, John Reilly Associates International; William Roberds, Golder Associates; Keith Sabol, Parsons Corporation; Dwight Sangrey, Golder Associates; Jennifer Shane, University of Colorado; Shari Schaftlein, WSDOT; Greg Selstead, WSDOT; and George Xu, WSDOT.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 131 • Issue 3 • March 2005
Pages: 343 - 353
Copyright
© 2005 ASCE.
History
Received: Jul 16, 2003
Accepted: Mar 16, 2004
Published online: Mar 1, 2005
Published in print: Mar 2005
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