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July 2008
Special Research Conference Issue: Concurrent Sessions
Mn/DOT project to improve cost estimating, cost management
Laurie McGinnis
In this session, speakers discussed national trends in highway project cost estimation and cost management, as well as Minnesota's leading role in changing practice through Mn/DOT's Cost Estimation Process Improvement and Organizational Integration Project. The project, managed by CTS, includes changes in policy, internal and external communications, and cost-estimating and cost-management tools.
Jennifer Shane of Iowa State University set the stage for the panel, noting that cost increases are a national problem for both large and small agencies. She described a National Cooperative Highway Research Program (NCHRP) report that recommends solutions. The report—Guidance for Cost Estimation and Management for Highway Projects During Planning, Programming, and Preconstruction —served as the foundation for Mn/DOT's project.
Mike Ginnaty, project manager for Mn/DOT's initiative, said several factors are driving the need to change costestimating processes, such as environmental and historical preservation laws and the rising costs of bituminous and fuel. Mn/DOT's project, begun in 2006, includes four phases: gathering data, creating desired solutions and an implementation plan, developing a reference manual, and conducting training.
Pat Hughes of Parsons Brinckerhoff, technical consultant on the CTS team, said the project resulted in five policy recommendations, each with many guidelines. The first recommendation, regarding cost estimating, calls for all projectrelated costs to be expressed as a Total Project Cost Estimate. "Before, costs were chiefly construction costs," Hughes said, but the new policy calls for all elements to be considered, such as detours, utilities, landscaping, traffic management, and environmental clean-up. The other four recommendations cover uncertainty, risk, and contingency; cost estimate communication; project cost management; and program management.
The project also involves significant training and outreach components, Hughes said. A technical reference manual is being created and pilot training will be held this fall. (CTS is coordinating the training and outreach.)
Laurie McGinnis, CTS project manager, said the key to the project is successful integration into the department. One way to do so is communicating key project messages internally, to help staff understand the changes, and externally, to bring agencies, contractors, and consultants on board. The project is using communications expertise to increase awareness of cost estimating and cost management issues, promote understanding of the project, and develop shared understanding of language and terms. Tactics include workshops, articles in Mn/ DOT's newsletter, and a Web site. The ultimate goal, she said, is to restore public trust by better matching delivery to promise.