1 Project Budget & Cost Management

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1Project Budget& CostManagementSeptember 15, 2008Hamid Omidvar, AIAChief, Office of Planning & DevelopmentDepartment of General ServicesMontgomery County Maryland

2Meet the scopedefined for the projectProject Cost and Budget ManagementScopeMeets and exceedsindustry standard ofqualityQualityBudgetScheduleIt is within theestablishedbudgetIt is designed andconstructedwithin theestablishedscheduleSustainability& SafetyMeets sustainabilityand safetyrequirementsCommunicationProject is well documentedand communicatedThe world of a successful projectHamid Omidvar, 9.2008

3Project Cost and Budget Management Low client satisfaction Scope Budget Schedule Quality High cost of project Delay in the use of the facilityIf changed Possible lower quality Additional draw on scarce publicresources Reduced support/confidence ofcommunity and elected officialsImpact of change on projectsHamid Omidvar, 9.2008

Project Cost and Budget Management4We have encountered significant challengesin recent years figuring out how much tobudget for projects and how to contain costsonce the project is launched.Our challengeHamid Omidvar, 9.2008

5IssueNumber of projects are experiencing cost overrun and delayDecisionProject Cost and Budget ManagementDecided to review process and identify issues impacting our projects’ deliveryActionReviewedour projectmanagementprocessAttendedseminars andclassesStudiedother jurisdictionsfor theirmethodologiesConsultedwith experts inthis fieldGatheredprojects’historical data &analyzed themResultIdentified Issues & Developed SolutionsImplementationFirst chance to implement solution was in summer of 2007 for our FY09-14 CIP cycleChallengeWe are facing new challenges and are continuously in search of better project delivery methods.2005-2006 project management studyHamid Omidvar, 9.2008

RequirementProject Cost and Budget Management6Solution1.Standardize Program of Requirements2.Create a project cost and budgetdevelopment system.3.Quantify risk factors and incorporate themas costGood project management skills4.Train project managers in systematicproject management5.Qualified AE with track record of designto budget is selected5.Look for track record in A/E selection6.Good design and constructiondocuments are produced6.Develop design quality control system7.Changes are minimum during designand construction7.Develop change tracking system8.Professional cost estimates are producedin all phases of the project & maintain acost data base system for projects9.Check with the local contractors andowners before bid1.Program of Requirements (POR) is wellwritten (Building program)2.Cost estimates are accurate, Schedule isrealistic3.Risk factors are recognized andsuccessfully assessed4.8.Project costs and schedule arecontrolled in all phases of project9.Market is analyzed at the bid time10. Qualified construction contractor withtrack record of construction to budget isselected11. Good construction management andadministration10. More RFP (qualification) than IFB (lowbid) for construction11. Develop construction quality controlsystem2005-2006 project management study - characteristics of a successful projectMay 2005Hamid Omidvar, 9.2008

Project Cost and Budget Management7How to develop an accurate and reliablecost estimate and project budgetHamid Omidvar, 9.2008

Project Cost and Budget Management88IdentifyCost(project)RisksCost EstimateProgram ofRequirementsCreate projectBudgetEstablishScopeProgram stmentsneededneededDevelopBudget Control &Close outBudget cesRiskManagementPlanBudget Management cycle in CIPHamid Omidvar, 9.2008

9Project Cost and Budget ManagementTypical Project ntNote:Operating budgets are not included inthis presentationProject Phases & BudgetingHamid Omidvar, 9.2008

10190%Long Branch Library180%Piccard DriveDPSProject Cost and Budget Management170%grey CourthouseGermantown Indoor Poolgermantown Library160%Rockville LibraryMCCFMCDC Reuse150%Strathmore HallGlen Echo park IIIGlen Echo Arcade140%Driver Training FacilityEOB GarageBrookville Service Park 1130%Brookville Service Park 2PSTA 1120%PSTA 26%MLK Pool17%110%Bethesda Outdoor Pool4th District Police StationTotal100%Planning10Travillah cumentsBidFinal2005-2006 study - Construction cost change per phase per selected projectsHamid Omidvar, 9.2008

11120RequestConstructionFundProject Cost and Budget Management100RequestDesignFund806040Reliability ofcost estimates200PlanningBudget Approval Schematic DesignHigh RiskDesignDevelopmentConstructionDocumentsModerate RiskLow RiskBidFinal2005-2006 Study - Risk management in request of design and construction fundsHamid Omidvar, 9.2008

Project Cost and Budget Management1212Create a project cost and budgetdevelopment systemGoalHamid Omidvar, 9.2008

13Cost of designCost of constructionGeneral condition of constructionLaborProject Cost and Budget ManagementMaterialContractor’s overheadContractor’s profitContractor’s Insurance and bondsContingenciesProject’s unknowns or risks contingencyCost estimating contingencyDesign contingencyBid contingencyConstruction contingencyCost Escalation to mid point of constructionCost of landCost of furniture, equipment, move, IT, telecommunication, etcCost of project management13Elements of project budgetHamid Omidvar, 9.2008

Project Cost and Budget Management1414Abb.Cost ElementsValueLMLabor & material cost /SF or /CSI divisionsOPBOverhead Profit Bond 18% of LMICInitial Construction Cost EstimateLM OPBLDLEED Contingency3-9% of IC Silver to GoldRFCost of unknowns-Risks0-30% of ICDCDesign Contingency10% of ICEEscalation to mid point of constructionx% of IC per year compound methodCCAPConstruction Contract Award PriceIC LD RF DC EBCBid contingency0-3% of CCAPCCConstruction Contingency10-15% of CCAP (New vs. Reno.)AEA/E and other needed consultants fee7-12% of CCAPPMProject management fee2-4% of CCAPOOther costs (Furniture, move, etc.)Project specificLLand costsProject specificPCTotal Project Cost (PDF)CCAP BC CC AE PM O LSummary of costs included in the project budget workbookHamid Omidvar, 9.2008

15Construction Escalation covers It is calculated by the county’s chosen indices provided byagencies such as ENR that monitor construction industryConstruction Escalationamount for a5 years 1,000,000project4 EscalationProject Cost and Budget Management Increase in cost of materials and labor from the date of the costestimate to the mid point of constructionYear tomidpoint ofconstruction32511Escalation Rate / Year15Construction Cost EscalationHamid Omidvar, 9.2008

16Selected CIP projects budget comparison chart FY09Project Cost and Budget ManagementLibraryAEPMOther AEConstructionUtilityFFEOtherLEEDRisksDesign ContingencyBid FYear to mid point ofconstructionEscalation rate16Cost 1000 % of total /SF 9697.3% 4403.3% 3983.0% 6,51248.8% 1901.4% 5003.7% 4603.4% 3742.8% 0.0% 7752255.8% 1.7% 774 1,733 13,3505.8% 13.0% 100.0% Community Center3717152507191814-Fire StationCost 1000 % of total /SF Cost 1000 % of total /SF 1,3426.8% 42 7867.0% 5362.7% 17 3933.5% 5462.7% 17 4664.2% 9,00645.3% 283 4,79142.8% 4402.2% 14 4303.8% 4002.0% 13 5004.5% 6303.2% 20 5805.2% 5422.7% 17 3092.8% 0.0% 0.0% 30 9 Bus depot31151818817202312-Office RenovationCost 1000 % of total /SFCost 1000 % of total /SF 3,4806.3% 29 2,9685.1% 7 8701.6% 7 8481.5% 2 8791.6% 7 4700.8% 1 34,50462.3% 283 37,36564.4% 92 2400.4% 2 1600.3% 0 6001.1% 5 2,5004.3% 6 4500.8% 4 2,5504.4% 6 1,0351.9% 8 8061.4% 2 0.0% 0.0% -1,0523145.3% 33 1.6% 10 6081115.4% 1.0% 24 4 3,6535846.6% 1.1% 30 5 3,1774565.5% 0.8% 8130 1,07667 3,980513 19,8645.4% 34 20.0% 125 100.0% 623 6781,53011,1826.1% 13.7% 100.0% 27 60 439 3,9685,09455,3577.2% 9.2% 100.0% 33 42 454 3,7073,03858,0456.4% 5.2% 100.0% 345%2.085%1.575%Share of cost elements in total project costHamid Omidvar, 9.2008

17Typical project budget elementsBid contingency, 1.7%48.8%Other AE, 3.0%50.0%Other, 3.4%Project Cost and Budget ManagementRisks0.0%LEED, 2.8%PM, 3.3%FFE, 3.7%ConstructionContingency,5.8%45.0%17Utility %20.0%Construction, %3.4%5.0%3.3%3.0%2.8%1.7%1.4%0.0%0.0%Share of cost elements in total project costHamid Omidvar, 9.2008

18Project expenditure & withholdings during various phasesProject Cost and Budget ManagementCommitment to budget18Withholding of contingenciesExpenditureProject cost .Expenditure .ContingenciesHamid Omidvar, 9.2008

Project Cost and Budget Management1919Project Cost & Budget Development WorkbookProject Budgeting ToolsHamid Omidvar, 9.2008

20Sample ProjectProject Cost and Budget ManagementProject Cost & Budget WorkbookDRAFTFY 09-14Project InformationOffice of Planning & Development - OPDDepartment of General Services - DGSProject #Last updated on:September 15, 2008Printed on:August 22, 2008Version 2008.8Table of contents01-Cover Sheet02-Construction Cost Estimate03-Permit fee04-Risk Factors05-DCD Best Cost Estimate06-Cost Summary07-Project Schedule and Expenditure08-Expenditure and Appropriation Per FY09-PDF Form10-PDF Change ComparisonIndex Codeproject addressCouncil DistrictCouncil RepresentativeCustomer/ Using AgencyPlanning AreaProject CategoryThis CIP cycleThis CIP FYLast CIP FYExecutive ManagerDesign ManagerProject ManagerA/E ConsultantConstruction ContractorProperty Size - AcresProgrammable New- SF from PORProgram to Gross FactorEstimated Gross New- SFRenovation Gross - SFTotal project Gross - SFIs this a renovation project? (Y or N)523456731004567101 Rockviile pike2NameUsing DepartmentPlanning AreaCategoryFY 09-14FY08FY07Hamid OmidvarRassa DavoodpourRandall HawkinsTBDTBD510,0001.6016,0005,00021,000YProject Budgeting Tools – PDF Preparation WorkbookHamid Omidvar, 9.2008

Project Cost and Budget Management21Sample ProjectProject #This ProgramInitial Cost EstimateCost Estimating Inc.August 15, 3233TC123456789101112131415161718195234567FY 09-14Version 2008.8DIVISION ACTIVITYExisting ConditionsConcreteMasonryMetalWood, Plastics, and compositesThermal and Moisture ProtectionOpenings (Doors & cial ConstructionConveying EquipmentFire SuppressionPlumbingHVACIntegrated AutomationElectricalCommunicationsElectronic Safety and SecurityEarthworkExterior ImprovementSite Utilities- SWMTotal Initial Construction CostInitial Construction cost w/o siteControl values for cost per S2S3DRAFT10.0%8%5%2%5%CostGen. Req.GC profitPerf. 1,4943,9373,93711,81031,49411,810393,670GC 9,344343,693 13Est. 249,375Cost / GSF calculation chartGSF /SFMajor construction elementsStructures10,000 200New Construction-OfficeRonovation-Office5,000 100Parking Structure1,500 60 -Total StructuresExterior elementsPaved surface16,500 3605,000 75,00043,000 7734 /SF MethodTotal ExteriorTotal Initial ,744157,7795,259,2974,522,996% of %1.00%3.00%8.00%3.00%100.00% 509.56318.75274.125,250,000 Total 2,000,000500,00090,0002,590,000 35,00035,0005,250,000Project Budgeting Tools – PDF Preparation Workbook – Initial Construction Cost EstimateHamid Omidvar, 9.2008

194.2Building operation hoursList of staff with their grades and positions organized perorganization chartIf growth is anticipated, it should be projected for 20 years at 5years incrementsSigningOutdoor furniture and equipmentFencingSecurityA site map showing various elementsIs this a MNCPP property?Is the site close to CSX track or related to CSX?TopographyGeotechnical informationUnsuitable soilWetland and streamsWooded areasHistorical aspectsAvailability of utilities: 0.10100000%construction cost1%Site cost1%Utility cost0%acquisition1%Survey0%Cost estimate1%Geotechnical1%Printing1%Permit fee0%A/E feeStaffRisk FactorsProject Cost and Budget Management12Sample Projectenter 1 for riskERIs Risk defined in thePOR? Y or .10.11117lineitemsProject Budgeting Tools – PDF Preparation Workbook – Risk Factors AnalysisHamid Omidvar, 9.2008

23Sample ProjectThis FYFirst year of new CIP cycleTime / Cost Schedule TablePrinted:StartDate08/22/082007EndDateTime ScheduleProject Cost and Budget ManagementFROMProject Start / PlanningPreparation of RFPA/E Advertisement / Selection / ContractConcept Plan, Schematic DesignDesign DevelopmentConstruction DocumentsPermitsPreparation of IFBAdvertising / Review / ContractLand Cost (ALARF)EarthworkExisting ConditionsExterior ImprovementSite Utilities- SWMInitial Construction cost w/o siteUTILITY (WSSC, GAS, PEPCO)Telephone, Computers, Security, FibernetSurvey, Cost Est., Geotech, Test'g, Commis'gReproduction, Advertising, Other PDSFurniture, Equipment, Signs & other costsMove and OccupancyPDS -Design StaffPDS -Design OtherPDS -Construction StaffPDS -Construction 0MonthsDRAFTSeptember 15, 2008FY 09-142122221121245333236212109030Version 2008.8Number of months in progress 20082009FY0 CJANFEBMARAPRMAYJUN1.00 1.001.00 1.001.00 1.001.00 1.001.00 1.00 1.001.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 2.00 2.00 4.00 2.00 3.00 2.00 2.00 4.00 3.00 5.00 6.00 7.00 7.00 8.00 4.00 3.00 0.00 0.00 0.001.0012.001.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00From cost date to mid point of constructionNotes:123456Project Budgeting Tools – PDF Preparation Workbook – Expenditure ScheduleHamid Omidvar, 9.2008

Sample project24 DCD Best Cost EstimatePROJECT TASKSFirst costRiskCost nCOSTbefore FY06Staff fee %4.0000%3.00%%1.4%Project Cost and Budget 88610000000000000000000000U1U2U3U4U5U6UWSSC Connection feeElectrical connection feeGas connection feeFibernet infrastructureOtherOtherUTILITIES %81,651482,3236,140,715Total ConstructionDesign %0%111111111111111DCDVersion 7GRAND ,971 CCAP - Design contg.CCAP5,582,46811111111111110SITE IMPROVEMENTEarthworkExterior ImprovementSite Utilities- SWMOtherOtherOtherSITE IMPROVEMENTS 5.60%SU SITE IMPROVEMENTS & UTILITIES ,8861111170,818CONSTRUCTIONExisting ConditionsGeneral constructionOtherOtherOtherOtherCONSTRUCTION 11111OTHERT500726FY08-Off 3OProject #This ProgramSilverL1 Land Cost (ALARF)L2 OtherL Subtotal LandC1C2C4C5C6C7CYears to midconstruction0.8811.0000%A/E FeeDesign and Construction Management StaffPermitsSurveyCost EstimateGeotechnical ServicesPrintingAdvertisingTestingCommissioning feeTraffic StudyOtherOtherOtherOtherLAND Raw Const. CostA/E fee %Planning, Design, Supervision 8,412Data updated on: February 22, 20075.60%FurnitureEquipmentMoveTelephone systemSecurity systemFibernetComputers and ITSigns/wayfindingOtherOtherOtherOtherOtherOTHER SubtotalTOTAL PROJECT COSTProject Budget Panel 00106,111Const. Contingency111111111111Project Budgeting Tools – PDF Preparation Workbook – Total Project Cost EstimateHamid Omidvar, 9.2008

Project Cost and Budget Management25Project XYZDCD5045671CategoryProject categoryPrevious PDF Page Number7-34 (FY04)AgencyDepartment NamePlanning AreaPlanning areaCost ElementPDSLandSite UtilitiesConstructionOtherTotalG.O.BondsCR GeneralFederal AidState AidMonths in design or t SavingsOffset RevenueNet ImpactWork yearsTotal2,0341,2033,03610,3221,58518,180Before and 720000905000905APPROPRIATION AND EXPENDITURE DATADate First AppropriationFY01Initial Cost EstimateFirst Cost EstimateFY05Current ScopeFY05Last FY's Cost EstimateFY07Present Cost opriation RequestApprp Request EstimateSupplemental Approp -013110000106215102FY-014Beyond6 MAP00N18,180Cumulative AppropriationExpenditures/EncumbrancesUnencumbered BalancePartial Closeout ThroughNew Partial CloseoutTotal Partial CloseoutEXPENDITURE SCHED

11. Good construction management and administration 2005-2006 project management study-characteristics of a successful project May 2005 1. Standardize Program of Requirements 2. Create a project cost and budget development system. 3. Quantify risk factors and incorporate them as cost 4. Train project managers in systematic project management 5.

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