# Presentation: 842061

## Federal Transit Administration

**HEAVY RAIL TRANSIT CAPITAL COST STUDY**

**Final Draft**

- May 4, 2004

## Overview

- Project Goals and Objectives
- Study Methodology
- Capital Cost Database
- Capital Cost Calculator
- Project Cost Variance Analysis
- Analysis of HRT Cost Inflation
- Summary of Key Findings

## Project Goals and Objectives

- Document the “as-built” costs for a wide range of HRT investments
- Develop unit-cost relationships for all HRT project components
- Better understand what drives the cost differences between projects
- Determine how HRT investment costs are changing over time
- Develop an HRT Capital Cost Calculator

## Methodology: The Study Included Three Primary Steps 

**Populate Database**

**Revise/Update**
**Database Definition**

**Perform Cost Analyses**

## The Original Database Definition from 1994 Study was Improved Yielding More Accurate Modeling Results

- The updated database reflects improvements to the 1994 Heavy Rail Study
- Segmentation of underground alignment into four types (cut & cover, bored earth, bored rock, and sunken tunnel)
- Segmentation of stations into three size groupings (small, medium and large) based on total number square feet
- Segmentation of Subway stations based on construction type (cut & cover, bored)
- Detailed breakout of station access investments (bus and auto by station size)
- Segmentation of utility relocations and ROW acquisition by urban vs. suburban
- In addition to asset unit quantities, the revised structure also documents basic design characteristics that influence project cost including:
- Procurement Type (e.g., traditional versus design build)
- Design Ridership
- Service headways

## The Final Database Identifies Eight Primary Cost Categories and Related Cost Elements...

**The Final Database Identifies Eight Primary Cost Categories and Related Cost Elements...**

**Note: Tables do not display all cost elements **

## For Each Project Cost Element, the Database Documents the Total Cost, Unit Quantity and Mid-Point of Construction

## These Data are Used to Calculate Unit Costs

**Note: Unit Costs are Adjusted to Current, National Dollars Using Means Construction Cost Indices**

## The Database was Populated with the “As-Built” Capital Costs for Thirty HRT Projects 

**Atlanta North Line Dunwoody Extension**** **
**Atlanta North South Line**** **
**Baltimore Metro Sections A and B**** **
**Boston Orange Line**** **
**Chicago - O'Hare Extension Blue Line**** **
**Chicago - Southwest Orange Line**** **
**Chicago Blue Line (Douglas) Rehabilitation**** **
**Chicago Brown Line Rehabilitation**** **
**Los Angeles Red Line Segment 1**
**Los Angeles Red Line Segments 2A & 2B**** **
**Los Angeles Red Line Segment 3**
**Miami Dade Metrorail **
**New York 63rd Street Tunnel **
**New York Stillwell Terminal Rehabilitation **** **
**Philadelphia Frankford Rehabilitation**** **

**San Francisco SFO Extension**** **
**San Juan Tren Urbano**** **
**Washington, D.C. - Addison (G)**** **
**Washington, D.C. - Anacostia (F)**** **
**Washington, D.C. - Anacostia Outer (F)**** **
**Washington, D.C. - Glenmont (B)**** **
**Washington, D.C. - Glenmont Outer (B)**** **
**Washington, D.C. - Greenbelt Mid (E)**** **
**Washington, D.C. - Huntington (C)**** **
**Washington, D.C. - L'Enfant (L)**** **
**Washington, D.C. - New Carrollton (D)**** **
**Washington, D.C. - Shady Grove (A)**** **
**Washington, D.C. - Springfield (J,H)**** **
**Washington, D.C. - U Street (E)**** **
**Washington, D.C. - Vienna (K)**** **

## The Thirty HRT Projects Represent a Broad Range of Costs,...

## ...Sizes and Alignment Types

## The Populated Capital Cost Database Provides a Platform for Conducting a Broad Range of Cost Analyses

**Unit Cost Functions**

**Normalized and **
**Adjusted Unit Costs**

**Project Cost **
**Variance Analysis**

**Capital Cost Calculator**

## Unit Cost Functions: The Study Developed over Sixty Different Unit Cost Functions, One for Each Cost Element Type

- The 1994 HRT Cost Study provided cost ranges for each cost element, including minimum, mean and maximum values
- This provided the cost range experienced, but little information on the factors driving those cost differences
- The Study Update sought to provide a better understanding of cost differences through the development of unit cost functions
- Cost functions explicitly recognize the factors that drive cost
- As with the 2003 Light Rail Capital Cost Update, this study also hypothesized that New Starts capital costs include both fixed and variable components
- Fixed costs capture unavoidable costs relating to set-up, design, admin staffing
- Variable costs capture the number of units acquired (e.g., vehicles, stations)
- The hypothesis implies the presence of economies of scale
- The hypothesis was again supported by the data

## The Estimated Unit Cost Functions Capture the Economies of Scale Associated with Increased Investment 

## The Unit Cost Functions Provided the Basis for Development of a Capital Cost Calculator

- The HRT Capital Cost Calculator is a tool for estimating total project costs for proposed heavy rail projects
- The Calculator can be used either to:
- Generate a preliminary cost estimate if none is available or
- Provide an independent reference point to help a validate an existing cost estimate
- Users generate cost estimates by entering both the unit quantities, projected mid-point of construction and project location
- The calculator then uses the unit cost functions to estimate a total project cost, including project soft-costs
- The calculator automatically adjusts costs for inflation and regional cost differences

## HRT Capital Cost Calculator 

- Note: Example does not display all cost elements

## Project Cost Variance Analysis 

** ****HRT investment costs are frequently quoted as being ”$*****X*****” per mile of alignment**
**In practice, there is a wide range of cost experience across projects (ranging from $45M to over $500M per mile across the 30 database projects. The average was $185M per mile).  **
**These cost differences result from a variety of factors including:**
**Mix of alignment types (at-grade, subway, elevated structure, retained cut)**
**Mix of trackwork types (direct fixation, ballasted, in-street, special)**
**Station grades, density (# per guideway mile), design, materials and amenities**
**Facilities Needs (driven by fleet size and the availability of existing facilities)**
**Design ridership (impacting fleet size, station size, electrification capacity, etc.)**
**Special conditions and right-of-way acquisition needs**
**Variations in project size (economies of scale) **
**The ****HRT ****Capital Cost Update addresses the quantitative component of these cost drivers through development of a “Cost Variance Analysis Tool”**** **

## Cost Variance Analysis Tool and Standard Model HRT 

**The Cost Variance Analysis tool compares unit cost and unit quantity values for a selected database project (e.g., Atlanta North South Line) against an average or “typical” HRT investment referred to as the “*****Standard Model HRT*****”**
**This comparison provides a cost baseline for identifying what drives project costs (up or down) for individual database projects relative to a “typical” HRT investment**
**The Standard Model HRT is defined as the average mix of alignment grades, trackwork types, station densities, fleet size, etc. across all projects documented in the Capital Cost Database**
**Cost differences between an actual project and the Standard Model HRT arise from:**
_**Variations in Unit Quantities**_** (e.g., differences in the mix of alignment grades etc. between a specific project and the Standard Model) and**
_**Variations in Unit Costs**_** (differences in unit costs between a specific project cost and the “average” across all database projects)**** **

## Slide 19

## The Cost Variance Analysis Helps Explain Differences in Cost Between Projects

**The Cost Variance Analysis Helps Explain Differences in Cost Between Projects**

## The Cost Variance Analysis Helps Explain Differences in Cost Between Projects...

## The Mix of Assets Within Standard HRT Model are Scalable to Reflect the Dimensions of the Project Under Analysis

## The Scalable Standard Model HRT Provides a Valuable Means of Analyzing Cost Differences Across Projects of Varying Size

## Standard Model Unit Costs Decline with Project Size Reflecting Economies of Scale: Project Cost Actuals Exhibit Similar Behavior

## The Log-Log Format Underscores the Relationship Between Project Size and Unit Cost, Especially for Cost Actuals Adjusted to a Common Asset Mix

## Most Variations in Cost Between Projects are Explained By Differences in Alignment Mix

## Unit-Cost Variance Analysis: High Cost Projects 

## What Drives Costs for the Highest Cost Projects? 

- The Study identified an investment as “high cost” if its total unit cost variance (corrected for unit-quantity differences) was more than 25% above that predicted by the Standard HRT
- Five of the thirty study projects were identified as high cost.  The average unit-cost variance for these investments exceeded the Standard Model HRT prediction by more than 85%
- Cost variances for these projects were highest for the Guideway Elements, Systems, Special Conditions, right-of-way and project soft-costs
- When combined with each cost category’s share of total project costs, the highest contributing cost categories were Guideway Elements and Soft-Costs

## How Are Guideway Costs and Soft Costs Related? 

- The preceding analysis suggested that Guideway Elements and Soft-Costs were the largest contributors to cost for the highest cost projects
- Is there a relationship between high guideway costs and high soft-costs?
- More precisely, do projects with higher proportions of grade-separated alignment tend to have higher soft-costs _as a percent of total hard costs_?
- Analysis of the Capital Cost Database suggests that this statement is true

## How Are Guideway Costs and Soft Costs Related? 

## Trend Analysis Suggests Costs for Many HRT Cost Elements are Increasing At The Same or Less Than General Construction Inflation

- In contrast to total project cost analysis, trend analysis represents a “bottoms-up” approach to examining changes in HRT project costs
- Analysis at the cost element level of detail eliminates cost variations resulting from differences in asset mix between projects (helping isolate price inflation from other cost factors)
- In addition, the “Adjusted” Trend eliminates cost increases due to the shift towards smaller (higher unit cost) project sizes
- Specifically, this adjustment places all projects at the same quantity point along the unit cost functions, eliminating cost differences due to differences in unit quantities

## Costs for Many HRT Cost Elements are Increasing at the Same Rate or Less Than General Construction Inflation...

## Costs for Many HRT Cost Elements are Increasing at the Same Rate or Less Than General Construction Inflation...

## Key Findings: The Study Has Yielded Several Interesting Results...

_**Unit Cost Functions**_ – The study team hypothesized New Starts capital costs include both fixed and variable components
- Hypothesis implies the presence of economies of scale
- Supported by the data
_**Standard HRT Model**_ – To facilitate cost comparisons between projects, the team developed the “Standard HRT Model” concept
- The Standard HRT Model represents a “typical” HRT investment, including an average mix of alignment grades, station spacing and vehicle procurements
- The Standard Model is based on the average of all projects documented by the study
- The Standard Model provides a reasonable basis for assessing why project costs are higher for some projects / lower for others

## Key Findings...

_**Cost Variance Analysis**_ – The study assessed the reasons for differences in costs between projects
- Alignment Mix – Variations in cost primarily reflected differences in quantities and alignment mix
- Economies of Scale – Smaller projects typically exhibited the higher unit costs than their larger counterparts
- High Cost Projects – Costs for higher cost projects were frequently driven by high risk elements including:
- Above grade / below grade investments (alignment and stations)
- Systems
- Utility and traffic relocations
- Right-of-Way acquisition
- Soft Costs

## Questions?