Highway Project Cost Estimating Methods Used in the Planning Stage of Project Development

About the report:

Highway project cost estimation methods that are used in the planning process have recently become a significant concern for the Virginia Department of Transportation (VDOT) because of the impact that these estimates have on the final cost of a project. Furthermore, metropolitan planning organizations (MPOs), local and federal government agencies, and the news media have increased their oversight regarding the accuracy of the results. The purpose of this report was to conduct a literature review of the methods used in highway cost estimation and to identify the state of the practice used by state DOTs for estimating highway project costs in the planning phase of project development.

In recent years, increases in highway project cost estimates on VDOT projects have received attention from the news media and elected officials. For example, cost estimates of the Springfield Interchange Improvement Project, the junction of Interstates 95,395, and 495 in Fairfax County, increased by more than 60% between 1994 and 2000. The Joint Legislative Audit Review Commission of the General Assembly and the Office of Inspector General in the U.S. Department of Transportation investigated this project, and the results were widely reported in the media. Fortunately, the Springfield interchange is not representative of most VDOT projects. Nonetheless, the factors influencing the increases in its cost estimates provide insight that may be transferable to more typical projects.

This study is envisioned as a first step in an examination of practices for estimating highway project costs; therefore, its focus is on the initial cost estimate made for a project, typically during the planning stage. At this stage, only general information is known about the ultimate form a project will take and precise estimates of the quantities of project bid items (e.g., cubic yards of excavation) are not known.

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