Improving Cost Estimation and Budget Planning with New Michigan Highway Construction Cost Index

Details

• Creators:
  Liu, Hexu ; Kwigizile, Valerian ; Abudayyeh, Osama ; Huang, Wei-Chiao
• Corporate Creators:
  Western Michigan University
• Corporate Contributors:
  Michigan Department of Transportation ; United States. Department of Transportation. Federal Highway Administration
• Subject/TRT Terms:
  Budgeting Contract-Level Cost Index Contracts Cost Estimating Data Analysis Highway Construction Cost Index (HCCI) Planning Predictive Models Road Construction
• Publication/ Report Number:
  SPR-1743
• Resource Type:
  Tech Report
• Geographical Coverage:
  United States ; Michigan
• Edition:
  Final Report, 6/1/2023 - 9/30/2024
• Corporate Publisher:
  Western Michigan University
• Abstract:
  Accurate cost estimation plays a pivotal role in effective budget planning for highway construction projects, ensuring that resources are allocated appropriately and projects are completed within financial constraints. Traditional cost estimation methods, commonly used by transportation agencies like the Michigan Department of Transportation (MDOT), often rely on historical data, which can fail to account for dynamic market conditions and inflation. This report explores advanced cost estimation approaches by developing contract- and item-level cost indices, integrating economic factor-based index predictive models, and applying index-based methods to cost estimation and budget planning. The report begins by identifying the key factors influencing construction pricing, including economic indicators, market factors, and project-specific variables. New cost indices are developed to track price trends for specific contracts and pay items, allowing for more accurate adjustments to historical prices. Next, the report introduces economic factor-based predictive models to forecast the Michigan Highway Construction Cost Index (MHCCI). These models incorporate economic trends, such as inflation and market dynamics, to predict future index fluctuations more effectively than traditional methods. Furthermore, the report details how these indices and the newly developed MHCCI tool can be integrated into budget planning and cost estimation processes. This index-based approach provides a more precise framework for estimating construction costs and improving budget planning. The report also includes a comparison of state and regional cost indices to highlight geographic variations in MHCCI and construction pricing, offering insights into how regional factors affect construction costs. In conclusion, the findings and recommendations in this report provide MDOT with innovative tools for cost estimation and budget planning, aiming at more accurate cost forecasting and better resource allocation.
• Format:
  PDF
• Funding:
  2022-0434/Z5
• Collection(s):
  US Transportation Collection
• Main Document Checksum:
  urn:sha-512:618961b675930ad32d1da981ec25897547d2d7b14f6dce1d8d21b72971b8b38902a6ecc32e9f91d14f33861e519dc5f8c9dcd15fcae4f9b46bc7890ea772bf81
• Download URL:
  https://rosap.ntl.bts.gov/view/dot/86966/dot_86966_DS1.pdf
• File Type:
  [PDF - 7.70 MB ]