Title: Cost Estimating, Probable Cost, Risk Identification and Risk Management for Infrastructure/Rail Projects
Abstract: Historically, engineers and planners have not adequately estimated the ultimate costs and schedules of major transit and infrastructure projects. Subsequently, “unidentified” problems have often caused large budget and schedule overruns with negative consequences. The Federal Transit Administration (FTA) has recognized this problem and now requires probabilistic risk assessment and risk management for New Starts projects to better control cost and schedule. This paper presents a practical, effective approach to determine probable cost and schedule, with risk assessment and risk management. The approach helps mitigate historical estimating problems by: (1) quantifying actual project cost and schedule uncertainty within a probabilistic, risk-based, integrated cost and schedule model, in which the uncertainties are de-biased, assessed and incorporated; (2) identifying and prioritizing cost and schedule risks and opportunities; (3) quantifying the costs and benefits of proposed mitigation strategies to address critical risks and opportunities; and (4) improving communication and decision-making, including clarifying funding and cashflow requirements. The approach is fully collaborative works to achieve consensus between the project staff and independent subject-matter experts in a facilitated environment. It sufficiently and defensibly quantifies uncertainty in the ultimate project costs and schedule. While it is not yet possible to fully validate this new approach (an evaluation process is being discussed) it is anticipated that this will be done and that, in the interim period, general recognition will grow that this, and similar processes, are significant advances in cost estimation.
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
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Cited By Count: 1
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