United States Department of Transportation
i
Highway Cost Index Estimator Tool
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2017-10-01
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[PDF-1.04 MB]
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TRIS Online Accession Number:01653310
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Edition:Final Report
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Abstract:To plan and program highway construction projects, the Texas Department of Transportation requires accurate construction cost data. However, due to the number of, and uncertainty of, variables that affect highway construction costs, estimating future funding needs can be an exceedingly difficult task. This research project sought to improve future forecasting projections through the creation of a Highway Cost Index Estimator Tool. Key points from the study include: (1) TxDOT maintains the Texas Highway Costs Index (HCI) to monitor price changes in 34 items that are highly correlated to the highway construction industry. (2) Currently, there are no models that attempt to forecast the Texas HCI, the changes in which indicate that TxDOT’s purchasing power has declined substantially since 1997. (3) While revenue forecasting has been established, there remains a need to identify purchasing power of that revenue to accurately estimate project costs. (4) The HCI, first calculated in 1998, tracks the price and quantity of 34 highway construction items (cement, steel, etc.) and is represented in one-month, threemonth, and 12-month moving averages. The moving averages reduce the effects of seasonality in contract letting to indicate a clearer trend. (5) Researchers developed the Highway Cost Index Estimator tool to allow users to account for world events and changing markets. (6) The tool allows users to input prices of selected construction items to generate an estimated HCI, and also to run what-if scenarios to produce a range of possible outcomes. Estimations generated by the model fall within an acceptable margin of error or less than 10 percent. (7) Policymakers can use this tool to create their own cost projections and estimate the purchasing power of dollars dedicated for highway-related expenditures by adjusting the costs per unit of different control items in different market scenarios. Policymakers can also approximate changes in the purchasing power of revenue slated for highway construction or maintenance, allowing for better planning and allocation of future revenues.
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