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Project Development Workflow Tasks (PDWT)
Part 3 - Identify Project Need and Project Initiation Document
II. Project Initiation Document
D. Analyze Alternatives (WBS 150.15) - Develop Cost Estimates (WBS 150.15.55)
The project cost estimate is the capital project costs used for project justification, analysis, approval and for programming. The reliability of project cost estimates is critical to maintain the Department's credibility with the California Transportation Commission (CTC), the Legislature, local and regional agencies, and the public. Cost estimating is not an exact science but the Department does have a specified methodology for consistency. Chapter 20 and Appendix AA of the PDPM provide detailed information for estimating costs. The following, however, is worth emphasizing. There are specialized formats for the various types of PIDs. The formats are found in Appendices E, G, H, J, P and Q of the PDPM.
The project engineer must obtain as much information as possible. Other functional units (Division of Structures, Right of Way, Traffic Operations, Materials, Maintenance, Construction, Environmental, Landscape Architecture, Planning, etc.) and local entities should be involved, as appropriate, in the preparation of project cost estimates. The following considerations are required in preparing cost estimates:
- Contingencies are intended to compensate for the use of limited information and should not justify incomplete preliminary engineering work. Cost should not be artificially reduced or increased due to programming or funding availability.
- Segregated cost estimates should be used when the project has local funds, or when the project limits cross a county line.
- Estimates shall be created for each alternative.
- Document all risks, assumptions, and details that aided in the development of each estimate. Assumed data must be verified later on.
- The PID cost estimate shall be dated January 1 of the first calendar year of the first fiscal year of programming. It is entered into PMCS as the base project cost.
- Certain cost components are increased to a future dollar value using approved factors.
- The programmed amount is based on escalating the base cost for the alternative that is chosen for programming.
- The current construction cost component value is escalated to January 1, of the state’s fiscal year (not federal fiscal year) that the project will be advertised for construction.
- The Program/Project Management Branch is responsible for project programming and for the proper escalation of project cost estimates.
- The project engineer is responsible only for the development of the base costs.
Example of how a cost estimate is programmed:
The project engineer has estimated the project’s capital cost on August 2005. The proposed project’s schedule indicates that the RTL date is April 2009 and that Advertisement date is July 2009.
Assume that the project engineer should date the estimate as January 2006 (Aug 2005 and Jan 2006 are within the same state fiscal year). Mid-year estimates will be escalated or de-escalated to January.
The project is then submitted for programming into the 2006 STIP, which programs projects starting July 2006.
The estimate calculated on the PID Cost Estimate Sheet and to be entered into PMCS is based on the dollar value for January 1, 2006. This estimate represents the original August 2005 estimate escalated by one year. For a $10 million project programmed during the 2006 STIP, the Engineer’s base cost estimate is increased by $350,000, an escalation factor of 3.5%. The escalated base cost becomes the program estimate value.
The program estimate value is then escalated to the program year 2009/10 (or Jan 2010) since the advertisement date is July 2009. If the RTL date is used, the program year would be noted incorrectly as 2008/09 and the program amount would be shorted by one year’s rate of escalation.
If you have any questions about the Project Development Procedures Manual send e-mail to:email@example.com
This page last updated November 20, 2010