FTA Oversight Procedures - Federal Transit Administration - U.S. ...

• The construction phase for the Line and Stations Contracts is approximately 3 years spanning
from the 1st quarter of 2009 to December 2011.
Thus, the duration for the design phase is 2.25 years and the total construction phase duration is
approximately 4 years. The total project duration is from October 2006 to December 2011, or 5 years and
3 months (5.25 years).
These summary project performance schedules for the design and construction phases allow the estimates
to be escalated to more fully represent the likely YOE estimates for each phase. Consequently, these
project expenditure schedules were used to escalate the year 2006 dollar estimates to the more likely yearof-expenditure.
The project schedule in its current form lacks the detail to determine the validity of the longest path of the
project. Critical areas such as right-of-way acquisition, utility relocation, wetland mitigation and
construction are insufficient in detail to confirm if the schedule is reasonable and to estimate a probability
of schedule slippage.
The methodology used in the [title of Grantee’s estimate] to account for the effects of inflation is sound.
A cost loading by Standard Cost Category items was performed for each year of the design and
construction year. In other words, between the base year of 2006 and the end of construction of 2011, the
standard cost category work items from the Line, Stations, and Breakout Contracts were estimated in
2006 dollars and then these cost items were segregated/time-phased according to the anticipated year of
performance. Once these out-year design and construction costs for all contracts were calculated and
allocated according to expected year of expenditure or performance, the appropriate escalation factor (4%
compounded annually) corresponding to that year was applied.
The second issue in this conversion of year 2006 dollar costs to the YOE costs is the inflationary index to
be applied. As previously mentioned, the [Grantee’s] Project Cost Estimates use a 4% compounded
annual inflation factor. The indices available to review and compare the accuracy of this percentage
included the following:
• FTA Transit Price Index – Study was published in 1995 and completed by [name of consultant].
The study developed a transit specific index to estimate the future effects of inflation on major
transit capital projects. The index for heavy construction projects was 3.5% over the next twentyyear
period covering these project development schedules.
• [Commercial cost index] Heavy Construction Cost Data Historical Cost Indices – Annual report
identifies cost impacts for various heavy construction projects. This report indicates an the
average cost increase (index increase) of 3.6% for overall heavy construction projects over the
past six and a quarter years in the 2000 decade (2000 – first quarter 2006).
• Engineering News Record (ENR) – This magazine produces a construction cost index that is
reflective of actual cost change rather than a forecaster of future change. Nevertheless, it offers
some insight into the most recent cost change in the heavy construction field. The ENR
Construction Cost Index has a materials and labor component. Based on the ENR June 2006
Construction Cost Index, the percent change of construction costs over the past year is 3.8%.
OP 33 Capital Cost Estimate Review
Revision 0, June 2008
Page D-9