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The Right Projects at the Right Price

Case Studies

Estimating the Costs of Managed Motorways

Faced with increasing congestion and greater financial, environmental and physical constraints, roads authorities across the world are seeking out alternatives to the traditional ways of increasing capacity on their networks. Particularly in the developed countries, the focus has shifted from “predict and provide” to more sustainable development and technology is playing an ever-increasing part in these alternatives.

Estimating the Costs of Managed Motorways

One way in which the Highways Agency is responding to this challenge is through the development of its “Managed Motorway Programme”. This programme comprises a number of interventions that are designed to deliver more capacity improvements for less money, improve sustainability and bring about a step change in the Agency’s ability to pro-actively manage and operate the road network. These include:

  • Dynamic Hard-Shoulder Running
  • Variable Speed Limits
  • Ramp Metering
  • Variable Message Signs
  • Vehicle and Incident Detection Systems
  • Enhanced CCTV Coverage
  • Comprehensive Communications Networks

In 2009, the Highways Agency launched a major study to assess the feasibility and value for money of implementing Managed Motorways schemes at twenty-seven locations on the England’s strategic road network. The Managed Motorway proposals were compared with traditional methods for providing extra capacity, such as widening of existing carriageways to provide additional running lanes.

Accurate and consistent cost estimates for all proposals were naturally essential for a successful study. Several factors complicated the production of cost estimates. Firstly, proposals were at an early stage of development with high levels of uncertainty. Twelve different design firms were involved in studying the twenty-seven locations, which brought significant challenges in ensuring consistency. Also the study was particularly intensive: once the design teams had completed their work, sixty-four estimates were required in a six-week period.

Faced with these challenges, the Highways Agency turned to Benchmark Estimating Ltd to provide an expert, independent and objective cost estimating service.

Whilst the design teams were preparing their proposals, we carried out a detailed review of the preliminary design standards for Managed Motorways developed by the HA and the delivery process for similar works. Through this research and interviews with stakeholders, we developed a comprehensive work breakdown structure for the MM works and identified hundreds of variables and associated cost estimating relationships.

We then constructed and trialled the model and developed a standard data collection sheet that was distributed to all project teams who populated the sheets for each road link following meetings to ensure consistency of designs. The data collection sheets were then reviewed and imported into the Benchmark Professional MM cost model with a single click. The model output a detailed schedule of items for each link with resource build-ups using the latest rate data stored within the Benchmark Professional cost data libraries, exporting this output to the HA’s standard estimate template.

The construction of the Managed Motorways model realised many benefits:

  • Substantial time was saved to produce cost estimates allowing more focus on project idiosyncrasies, risk assessment and any non-standard, complex works
  • Links, or entire schemes, could be quickly re-estimated to take account of late design changes and test scenarios
  • Rates were built-up using up-to-date libraries developed specific to the HA’s Roads Programme
  • Unaffordable and unviable options were quickly ruled out, saving design development time and cost
  • The model output a detailed schedule of quantities so that the basis of each cost estimate was clear and documented
  • Cost estimates were prepared by an expert, independent team removing the problems associated with optimism bias when project teams
  • Cost estimates were comprehensive and consistent across all schemes in the programme ensuring accurate investment appraisal decisions
  • Expert estimating knowledge is captured in an easy-to-use model for future schemes and programmes – not just by expert estimating staff

The Highways Agency has commissioned us to continue to develop the Managed Motorways model in line with proposed changes to design standards. The increased level of design definition and knowledge of the technologies and processes required for Managed Motorways has been progressively built into the Managed Motorways model. The model has also been verified and validated during the Agency’s 2010 tender to appoint contractors to its Managed Motorways Delivery Partner Framework where the model was used to benchmark tender submissions. It continues to be used extensively for preparation of Managed Motorways scheme cost estimates up to and including preferred option selection (detailed first principles estimates are prepared after this stage).

“Well done for completing the estimates on time – a fantastic achievement. Some said we would not do it – we can all stand proud and say we did (and that despite a few obstacles and extra work on the way).”
Nick Hopcraft, Highways Agency Managed Motorways Delivery Office

Cost Estimating at the Early Stages of Major Highways Projects

A Familiar Problem

Estimating the outturn costs of major projects when only a limited design concept exists is fraught with problems. Estimators and decision makers are faced with a lack of information, high levels of uncertainty and a delivery programme that may run many years into the future. But making sure that the first cost estimate prepared for a major project is accurate is hugely important.

All too often schemes struggle through the project lifecycle requiring a succession of lengthy, additional budget approvals. Or worse, schemes that were initially purported to offer excellent value for money don’t; schemes that appeared affordable aren’t – and both are ditched after wasting considerable development time and money. Optimum solutions are discarded because the costs of poorer choices are underestimated.

The earliest cost estimates for schemes often have a disproportionate influence on forward plans and budgets. So decision-makers need to have reliable, comprehensive and consistent cost estimates that not only have a transparent basis but also communicate the range of realistic potential outturn costs.

England’s Highways Agency was not alone in facing this problem in 2007 when a review of its cost estimating and project management was commissioned by the Secretary of State for Transport (The Nichols Review). This followed following a series of increases in estimated cost for individual road schemes (by up to 300%) from the time of their entry to the Highways Agency’s Roads Programme.


Benchmark Estimating’s Response

The Highways Agency approached Benchmark Estimating for solutions to inaccurate cost estimates utilising Benchmark’s expert cost estimating service and consultancy.

  • Consistent, Controlled and Robust Estimating Process – Working with HA Major Projects, a comprehensive Work Breakdown Structure was established covering all construction and non-construction costs; a standard cost-build was developed and rigorously implemented covering the base estimating, risk, uncertainty and inflation. Range estimating was introduced to reflect the range of potential outturns rather than reporting just point estimates.
  • Expert Estimating Service – Since 2008, Benchmark has produced over two hundred cost estimates for Roads Programme scheme options at the Stages 0 – 3 of the HA’s project lifecycle (ideation to selection of preferred route). Typically schemes are in excess of £50million but several schemes are over £1billion in value and estimates encompass motorway and dual carriageway widening, bypasses, junction improvements, ITS works, major bridgeworks and tunnelling works. Each estimate has included extensive liaison with project teams and designers and input to risk and value management. The basis of estimate is documented including bill of quantities and all estimate data stored centrally in a single, easy accessible database for excellent knowledge management.

Successful Outcomes

HA Major Projects has made huge improvements to its cost estimating and cost engineering practices since the Nichols Report. Benchmark’s services have been a key contributor to realising these benefits including:

  • Robust decision support and transparency of the range of potential outturn costs
  • Consistent, comprehensive appraisal of schemes and analysis of alternatives
  • Quick turnaround of estimates for project teams
  • Better integration of cost, risk and value
  • All awarded target costs within estimate ranges and KPIs for cost predictability achieved
  • Smoother progress of schemes to construction and progress KPIs achieved
  • Good data management, development and sharing of knowledge and commercial capability
  • Greater assurance and credibility with stakeholders – “Green” status awarded at audit of Commercial Division progress to address Nichols and NAO recommendations
“When the Highways Agency was looking for a supplier who could provide immediate expertise with estimating project costs in a more accurate and consistent way, Benchmark stood out as a talented consultancy that offered a unique service. Benchmark Estimating have provided invaluable assistance in preparing and reviewing the Agency’s major roads project estimates. Your work has always been timely and of the highest quality and we are delighted with the work you have done for us to date.”
Paul Doney, Highways Agency Change