WIXLIB

CTC WorkshopCaltrans Project CostDevelopment Processby Mike Keever and Tim SobelmanDecember 5, 2018

Phases of Project DevelopmentCapital Outlay Support (COS)ProgramPS&E (Design)PIDProgramming& EDCompleteDEFINITIONSTransportation Asset Management PlanProject Initiation DocumentProject Approval and Environmental DocumentPlans, Specifications and EstimateReady to List for AdvertisingEnd ConstructionRight of WayProgrammingTAMPPIDPA&EDPS&ERTLCOS CloseoutBegin ConstructionNeed &PriorityIdentifiedPlanningDesign Complete, RTL andRight of Way CertificationTAMPEndProject

Risk and Uncertainty During Project Phases20% Known80% UnknownRisk and UncertaintyHigh80% Known20% leteProject InitiationDocumentProgrammedLowProject LifecycleModified version of Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK Guide) – Fifth Edition,Project Management Institute Inc., 2013 Page 40 Figure 2-9

Phases of Project reliminary Engineering (15 )Construction (85 )Closeout Complete80% Known20% UnknownConstruction Complete20% Known80% UnknownDesign CompleteRight of WayPA&EDCompleteRisk and UncertaintyHighProgramming& AllocationPIDCOS CloseoutAllocationPS&E (Design)ProgrammedNeed &PriorityIdentifiedCapital Outlay Support (COS)Program

What is a costestimate?

Cost Estimate Definition1.2.3.Forecasting the expense of building aprojectAn approximate prediction of howmuch money is needed to complete aprojectThe art of assigning value combinedwith the science of making use oftechniques to predict the cost ofactivities and assets.

Risk RegisterProject Management Forum

How CaltransDevelops CostEstimates

Bid Summaries/Raw Data

Bid Summaries/Raw Data

Probabilistic Cost Estimateusing Monte Carlo simulationCertainty dRange of ValuesSensitivityAnalysis

CCARTLPA&EDPIDCost Estimating Uncertainty

The Challenge of aDynamic BiddingEnvironment

Construction Costs can be Volatile andDifficult to Predict2018?2006

What’sNext?Construction Cost ar2014201620182020

More Bidders Equals Lower CostsLow Bidder Above or Below Estimatevs. Number of BiddersAverage Number of Bidders perProject20%Average Percentage Low Bidder was Above orBelow Engineer’s EstimateAverage Number of Bidders per Project9.08.07.06.05.04.03.02.01.00.02007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017YearAverageNumber ofBidders perProject is 5.810%0%-10%-20%Low Bidequals-30%-40%-50%-60%-70%0246810121416Number of Bidders per Project(Projects Bid Opened from July 2004 to December 2017)18

What Can Happenin 6 Months?

100 Oil Becomes 50 OilMay 10, 2018CNBC: “Oil prices risk spiking to 100 next year, Bank of Americaanalysts say.”October 3, 2018Reuters: “Oil traders have piled into wagers that U.S. crude oilcould surge to 100 a barrel by next year.”November 29, 2018CNN: “US crude fell below 50 a barrel Thursday .”

Crude Oil PricesMacrotrends

The Results

Data set is 476 projectsawarded in the FY 17/18FY

PROJECT COST RISK MANAGEMENTProject Change Management HierarchyCTCWatch ListCaltrans HQ - ProjectChange ManagementCaltrans District - ProjectChange Management

PROJECT COST RISK MANAGEMENTCaltrans Identifies Changes: during allproject phases through: Studies – Environmental, Engineering Surveys Geotechnical Analysis Field Reviews Coordination with Local Partners andthe public Permit NegotiationsCaltrans District - ProjectChange ManagementCaltrans Manages Changes through: Project Development Teams District Status Meetings Executive Review Task Management Qualitative and Quantitative RiskManagement

PROJECT COST RISK MANAGEMENTWatch ListCaltrans HQ – ProjectChange ManagementDistricts Coordinate with Headquartersto Identify, Evaluate, Manage andMitigate Change: Quarterly Status Meetings HQ Functional Coordinators HQ Executive MeetingsConsiderations Amendments- Cost or Schedule Split or Combine Projects Time Extensions Greater than 20% Allocations Supplemental Fund Requests

PROJECT COST RISK MANAGEMENTBefore project changes ( 20 percent orSupplemental allocations) are presentedto the Commission for action:CTC Caltrans - Office of CTC LiaisonCoordinationPre-meetings with CTC Staff

PROJECT COST RISK MANAGEMENTCTCWatch ListCaltrans HQ - ProjectChange ManagementCaltrans District - ProjectChange ManagementApprovals Supplemental Funding Greater Than 20% AllocationDecisions Amendments Splits/Combines Accelerate/Delay Time ExtensionsActions Alternatives Scope Changes Staff Redirection Brokering

Supplemental and “Greater than 20%” AllocationsGreater than 20%(Tab 68-69)Supplemental to Award(Tab 70-76)Supplemental toComplete Construction(Tab 78)Greater than 20% - Initial AllocationSupplemental - Secondary AllocationSupplemental toConstruction Closeout(Tab 77)

Five-Year Greater Than 120% vs AwardedFYs 13/14 to 17/180.60%1.60%

Five-Year Supplementals to Award vs AwardedFYs 13/14 to 17/18 1%2.60%

Five-Year Supplementals to Complete Construction vsConstruction Contracts Completed-FYs 13/14-17/180.63%1.40%

PROJECT COST RISK MANAGEMENTCTCWatch List95-99% ofProjectsCaltrans HQ - ProjectChange ManagementCaltrans District - ProjectChange ManagementSupplemental Funding andGreater Than 20%Allocation Requests

What We areDoing to Improve

Cost Estimating Improvement Initiative Improved Estimating Tools Identification of Best Practices Quantification of Risk Training Business Intelligence Economist

Construction Cost Escalation Study Research and assess Caltrans’ construction cost escalationpractices and existing forecast methodology Generate risk-adjusted forecasts for the CaliforniaHighway Construction Cost index (CHCCI) Develop regional factors to account for different pricedynamics across the State37

3rd4th2020/1st2nd% of 1987 BasePrice Trends Forecast700QUARTERLYPRICE TRENDS AND FORECASTFOR HIGHWAY CONSTRUCTION550500450Structural Concrete(Iowa)50th percentile forecast80 percent confidenceinterval25020015010050Year/Quarter38

Delivery Results

FY 17-18 4th QuarterProject Delivery Performance MeasuresProject Costs at End of Construction1ExpendedBudgetSavings%AnnualGoal (%)On TargetCosts for 29Completed STIPProjects 1.37 B 1.59 B 218 M86% 100% Costs for 388CompletedSHOPP Projects 2.11 B 2.34 B 228 M90% 100% Measure1 Constructioncosts are calculated 6 months after the end of construction

Questions?

CTC WorkshopBidding Environmentby Rachel FalsettiDecember 5, 2018

Bidding EnvironmentAverage Number of BiddersAverage Number of Bidders per Fiscal Year16/1717/1818/19

Bidding EnvironmentLow Bid vs. Engineer's EstimatePercentage of Low Bid Above/Below Engineer's %-20%Fiscal Year16/1717/1818/19

Bidding EnvironmentConstruction Cost ar2014201620182020

More Bidders Equals LowerCostsAverage Number of Bidders per ProjectLow Bidder Above or Below Estimatevs. Number of Bidders9.0Average Percentage Low Bidder was Aboveor Below Engineer’s EstimateAverage Number of Bidders per Project8.07.06.05.04.03.020%AverageNumber ofBidders perProject is 5.810%0%-10%-20%Low Bidequals-30%-40%2.0-50%1.0-60%0.02007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-70%Number of Bidders per Project(Projects Bid Opened from July 2004 to December 2017)05101520Year46

Bidding EnvironmentNUMBER OF CONTRACTS AWARDED TOBIDDERS8 New Bidders Awarded14 of 659 Contracts170 Previous Bidders Awarded645 of 659 ContractsApril 2017 – November 2018

Bidding EnvironmentBids Received for Advertised Projects43 bidders submittedmore 50% of the bids 1852 Projects advertised 9575 bids submitted501 bidders submittedless than 50% of the bidsJanuary 2015 - November 2018

Awarded Projects (17/18) 698 Projects Awarded 89%less than 10m 78%less that 5m 38% less that 1m

Factors Potentially InfluencingConstruction Costs General inflation Market conditions Materialshortage Labor costs Highway construction spending Unforeseen events Insufficient bid competition

Questions?

CTC WorkshopResource Agency Influence onProject Deliveryby Jeff Wiley and Phil StolarskiDecember 5, 2018

Environmental LawsFish and Game CodeSection 4(f)CA Coastal ActResource Conservation andRecovery Act

Agencies and RequirementsNumber ofLawsIncreasing Project Delivery Requirements(Pre- 1940 to Present)20010002554708191102108To 1970To 1980To 1990To 2000To 2010To 2015To Present Environmental Laws, Regulations and Orders

Environmental DocumentsSHOPP Projects Categorical Exemptions – Over 90% Initial Studies/Negative Declarations – Almost 9% Environmental Impact Reports – 0.5%STIP Projects Categorical Exemptions – 33% Initial Studies/Negative Declarations – 41% Environmental Impact Reports – 26%

Environmental Costs Support Capital expenses Right-of-way

Costs Related to Permits57

Costs for Project with Permitting FeesProjects With Mitigation or Permitting Fees that achieved CCA within the14/15, 15/16 or 16/17 FYAvg. Mitigation Max Mitigation andPermit Costand PermittingNumber Avg. Total Env Cost(% of Total Cost)CostSHOPP222 167,606 41,80113.38%STIP72 908,442 463,0809.92%Data set 745 SHOPP and 166 STIPProjects that achieved ConstructionCompletion in FYs 14/15, 15/16, or 16/17

SHOPP: Environmental Cost vs Total CostEnvironmental Cost vs Total CostSHOPP with Mitigation or Permit FeesMitigation andPermit Fees0.35%RemainingProject Costs98.60%Env. SupportCosts1.05%Data set 222 SHOPP Projects that achieved ConstructionCompletion in FYs 14/15, 15/16, or 16/17, and had specificpermitting or mitigation expenditures

STIP: Environmental vs Total CostEnvironmental Cost vs Total CostSTIP with Mitigation or Permit FeesMitigation andPermit Fees0.68%RemainingProject Costs98.67%Env. SupportCosts0.65%Data set 72 STIP Projects that achieved ConstructionCompletion in FYs 14/15, 15/16, or 16/17, and hadspecific permitting or mitigation expenditures

Efficiencies NEPA Assignment Advance Mitigation Program AB 1282 – Transportation Permitting Task Force

NEPA Assignment Reduces reviews Time-savings for projects Requires waiver of immunity

Advance MitigationAcceleratetransportationproject cationwith stakeholdersEnsure theProgramaccount isself-sustainingAdvance Mitigation ProjectsPurchase or Create Mitigation

AB 1282Establishes the Transportation Permitting Task ForceStatutory Goals: Early engagement Reasonable deadlines Greater certainty of permit approval requirements

Questions?

CTC WorkshopEngaging the Industryby Janice Salias and Ramon HopkinsDecember 5, 2018

Caltrans’ Small Business ProgramSmallBusiness(SB)Disabled ssEnterprise(DBE)17.6% Overall Goal25% Overall Goal3% Overall GoalState-FundedContracts andProcurementsState-FundedContracts andProcurementsFHWA-AssistedContracts andProcurementsCalifornia Code ofRegulationsCalifornia Code ofRegulationsCode of FederalRegulations

Caltrans’ SB, DVBE, and DBE ParticipationSB Participation - 25% GoalDVBE Participation –3% GoalDBE ParticipationOverall GoalDBE Dollars% atCommitment% 47,149,004 3.83% 275,730,54912.40%12.5%15/16 519,879,000 46.05% 57,190,818 5.07% 314,950,43013.15%12.5%16/17 408,919,922 28.86% 46,800,099 3.30% 264,592,75912.08%12.5%17/18 509,017,424 28.51% 87,857,147 4.92% 359,506,55414.88%12.5%18/19 95,056,771 28.40% 11,010,7271st Qtr 24,980,875(1st month of FY)16.98%17.6%FYSB Dollars%14/15 349,378,944 28.4%DVBE Dollars%3.3%

OBEO’s Training and Outreach to Support Business Training, technical assistance, and advocacy services Training to help prepare small businesses to competefor Caltrans’ contracting and procurementopportunities Certification workshops Prime contractor training Subcontractor training “Doing Business with Caltrans: Getting Started”

OBEO’s Training and Outreach Objectives Organize and participate in outreach events Promote awareness of Caltrans’ contracting andprocurement opportunities Pre-bid meetings/pre-proposal conferences Business matchmaking events Procurement fair Develop comprehensive Senate Bill 1 and Senate Bill103 outreach plans