General Lessons Learned

Cost Estimating:

• Cost estimates must be prepared in year-of-expenditure dollars, inflated to the midpoint of construction, with some allowance for schedule slippage taken into account. Reporting the costs in year-of-expenditure dollars will greatly reduce the media and public perception of "cost growth".
• Reasonable contingencies should be built into the total project cost estimate. It is suggested that the following contingencies be included: 1) a Construction contingency for cost growth during construction; 2) a Design contingency based on different levels of design completion; 3) an overall Management contingency for third-party and other unanticipated changes; and 4) other contingencies for areas that may show a high potential for risk and change, i.e., environmental mitigation, utilities, highly specialized designs, etc.
• Cost estimates should consider the economic impact of the Major project on the local geographical area. For example, material manufacturers that would normally compete with one another may be "forced" to team together in order to meet the demand of the Major project. Extremely large construction packages also have the potential to reduce the amount of contractors that have the capability of bidding on the project, and may need to be broken up into smaller contracts to attract additional competition. Bid options (simultaneous procurements of similar scopes with options to award) should also be considered for potential cost savings resulting from economies of scale and reduced mobilization. A Value Analysis should be performed on the project to determine the most economical and advantageous way of packaging the contracts for advertisement.

Cost, Schedule, and Status Reporting:

• Cost, Schedule, and Status reporting should be done on a periodic basis (at least monthly), and must be as accurate and upfront as possible concerning cost changes, schedule delays, and other significant project issues. It is essential that open communications and close coordination between the State Transportation Agency (STA), the FHWA, consultants, local agencies, and the media be maintained at all times throughout the life of the project.
• Periodic reporting should include reasons for cost and schedule deviations from the approved budget and schedule, impacts resulting from the deviations, and initiatives being analyzed or implemented in order to recover any cost overruns or schedule delays. Transfer of costs to and from contingency line items should also be reported, including reasons supporting the transfers.
• Periodic reporting should include speculative cost changes that may potentially develop in the future, a quantified dollar range for each potential cost change, and the current status of the speculative change. Also, a comparison analysis to the available contingency amounts should be included, showing that reasonable and sufficient amounts of contingency remain to keep the project within the latest approved budget.
• Areas and reasons for cost growth should be tracked and reported, for analysis in improving future cost estimates on Major projects.
• The master program schedule for Major projects should be integrated, i.e., the individual contract milestones tied to each other, such that delays occurring in one activity will be reflected throughout the entire program schedule, with a realistic completion date being reported.

Cost Containment:

• Decisions as to what design stage to perform Value Engineering reviews, Value Analyses, and constructability reviews should be made during the early stages of preliminary engineering, and funding for each review set up. Timely completion and implementation of these reviews can eliminate having to repackage contracts after advertisement due to a lack of competition, thereby delaying schedules. Timely analyses and reviews will also help maximize the total cost savings for the entire Major project.
• The contract documents must be clear and unambiguous. The responsibilities of the contractors, owners, and third parties must be clearly understood by all involved parties.
• Contractors should be brought into the project early via contractor outreach meetings, so that they can participate in the design process; provide input into the constructibility of specialized designs; and become familiar with the scope of work, design details, and special site conditions.
• A reasonable and credible plan to finance the entire Major project must be in place at the start of construction. Major projects can no longer be financed on the "pay-as-you-go" basis, which further lends the project to scope and cost increases. Also, because of the extraordinary resources required to fund Major projects, consideration must be given to balancing the entire Statewide program to obtain funding equity for other necessary road and bridge programs.
• A Project Management Plan should be developed during the early stages of design, with the ultimate purpose of clearly defining the roles, responsibilities, processes, and activities which will result in the Major project being completed on time, within budget, with the highest degree of quality, and in a safe manner. The Scope of Work should be clearly defined in the Plan, along with change order and claims controls and other cost containment strategies to be used throughout the life of the project. Upper management buy-in from all sponsoring agencies should also be included in the form of a signature page.
• On highly sensitive environmental projects, an environmental monitoring team should be established with input and buy-in from involved cooperating agencies, in order to maintain a working knowledge of permits and commitments, to monitor contractor activities and maintain documentation, and to proactively lend guidance and resolve environmental issues and concerns before they impact the project schedule.
• Wrap-up or Owner Controlled Insurance Programs (OCIP) should be considered at the onset of Major projects to determine if overall insurance costs reductions can be realized, along with improvements in the safety of construction operations.
• Safety must be a primary focus and must be stressed from the corporate level down to each individual participant, with regularly scheduled safety meetings, inspections, and training.
• Innovative contracting techniques such as Design-Build, cost-plus-time bidding, lane rental, etc. should be considered to determine if overall cost and time savings can be realized. Design-Build contracting on Major projects has thus far shown very little increase from the negotiated contract amount to the final project completion, with a major overall design and construction time savings realized.

Project Personnel:

• Project personnel must completely cooperate in any audits or reviews performed by Federal or State audit agencies. The audits should not just be viewed as criticism, but rather as a means to help improve the management and delivery of the Major project. Project personnel must completely review the audits, and take appropriate action on any recommendations having merit.
• Project team must have experienced key personnel dedicated to the success of the Major project, with the requisite technical, managerial, leadership, and communication skills needed to proficiently perform the required tasks. A high standard of ethical integrity is a must.
• The use of consultants on Major projects must be carefully structured and reviewed, to make sure that no conflicts of interest exist from a Government-Contractor relationship aspect, and to ensure that no one consultant is responsible for both a design/construction role and an oversight role.

Technical:

• Numerous technical lessons learned in the areas of: 1) slurry wall construction in urban areas; 2) soil improvement techniques; 3) ITS/traffic simulation models; 4) immersed tube tunnels; 5) tunnel jacking; and 6) tunnel fireproofing and ventilation systems has been compiled from the Boston Central Artery/Tunnel project, and are available through the "Innovations and Advancements" workshop conducted by FHWA.