Appendix A Cost Estimate

131 Pages·2014·0.95 MB·English

by  Scott Wharton

Appendix A
Cost Estimate

Final
Anchorage Port Modernization Project
Concept A
Cost and Schedule Risk Analysis

Prepared for
Port of Anchorage
December 8, 2014

Contents
Section Page
Executive Summary ............................................................................................................................. ES-1
1.0 Purpose .................................................................................................................................... 1-1
2.0 Background .............................................................................................................................. 2-1
3.0 Report Scope ............................................................................................................................ 3-1
3.1 Project Scope ......................................................................................................................... 3-1
3.2 USACE Risk Analysis Process .................................................................................................. 3-1
4.0 Methodology and Process ......................................................................................................... 4-1
4.1 Identify and Assess Risk Factors ............................................................................................ 4-1
4.2 Quantify Risk Factor Impacts ................................................................................................. 4-1
4.3 Analyze Cost Estimate and Schedule Contingency ................................................................ 4-2
5.0 Key Assumptions ...................................................................................................................... 5-1
6.0 Risk Analysis Results ................................................................................................................. 6-1
6.1 Risk Register ........................................................................................................................... 6-1
6.2 Cost and Schedule Risk Analysis – Cost Contingency Results ................................................ 6-1
6.3 Schedule Risk Analysis - Schedule Contingency Results ........................................................ 6-3
7.0 Major Findings and Observations .............................................................................................. 7-1
8.0 Mitigation Recommendations ................................................................................................... 8-1
Attachments
A Detailed Risk Register
B Cost Estimate (Input to CSRA)
Tables
1 Executive Summary of Risk Analysis
2 Work Breakdown Structure by Feature
3 Cost Confidence
4 Schedule Confidence
5 Risk Mitigation Recommendations
Figures
1 Cost Sensitivity Chart
2 Schedule Sensitivity Chart

APPENDIX A CONCEPT A COST AND SCHEDULE RISK ANALYSIS FINAL 08DEC14 i

Executive Summary
This report informs the stakeholders of the cost and schedule risks and their resulting impacts on project
cost and duration. The project is considering three design concepts, developed to a 15 percent concept
design. The project includes Features 08 Roads, Railroads; 12 Navigation Ports and Harbors; 16 Bank
Stabilization; and 19 Buildings, Grounds, and Utilities. The contingency results are shown in Table 1 with the
relative confidence of cost under run. Recommended risk mitigation strategies are varied and summarized in
Section 8 of this report.
TABLE 1
Executive Summary of Risk Analysis
Confidence Level (percent) Value
60 $527,334,706
80 $554,893,934
100 $692,597,124

APPENDIX A CONCEPT A COST AND SCHEDULE RISK ANALYSIS FINAL 08DEC14 ES-1

1.0 Purpose
This report presents the cost and schedule forecasts for the Anchorage Port Modernization Project 15
Percent Concept Plan, Concept A. The purpose for a cost and schedule risk analysis (CSRA) is to study
elements related to cost and schedule to derive an outcome contingency calculation at the 80th percentile
confidence level, for both cost and schedule, which are measured in terms of dollars and months,
respectively.

2.0 Background
This project is at the 15 percent concept design based on the results of the charrette. The project currently is
considering three concepts, all of which have design developed to the 15 percent concept design. Each
concept is considered independently, and an estimate and CSRA have been developed for each.

3.0 Report Scope
The scope of the risk analysis report is to calculate and present the cost and schedule contingencies at the
80 percent confidence level using the risk analysis processes as mandated by U.S. Army Corps of Engineers
(USACE) Engineer Regulation (ER) 1110-2-1150, Engineering and Design for Civil Works; ER 1110-2-1302,
Civil Works Cost Engineering; and Engineer Technical Letter (ETL) 1110-2-573, Construction Cost Estimating
Guide for Civil Works. This report presents the contingency results for both cost and schedule risks for all
project features. The study and presentation can include or exclude consideration for operation and
maintenance or life-cycle costs, depending upon the program or decision document intended for funding.

3.1 Project Scope
This report includes the project technical scope, estimates, and schedules as developed and presented by
CH2M HILL. Consequently, these documents serve as the basis for the risk analysis. In general terms, the
construction scope consists of the following:
• 08 – Roads, Railroads, and Bridges (15 Percent Concept Design Stage)
• 12 – Navigation Ports and Harbors (15 Percent Concept Design Stage)
• 16 – Bank Stabilization (15 Percent Concept Design Stage)
• 19 – Buildings, Grounds, and Utilities (15 Percent Concept Design Stage)

3.2 USACE Risk Analysis Process
The risk analysis process followed the same process that was conducted for the previous analysis for the
Port Intermodal Expansion Project (PIEP). The risk analysis process reflected within the risk analysis report
uses probabilistic cost and schedule risk analysis methods within the framework of the Oracle Crystal Ball
software. The risk analysis results are intended to serve several functions, one being establishing reasonable
contingencies reflective of an 80 percent confidence level to successfully accomplish the project work within
that established contingency amount. Furthermore, the scope of the report involves identifying and
communicating important steps, logic, key assumptions, limitations, and decisions to help ensure that risk
analysis results can be appropriately interpreted.
Risk analysis results are also intended to provide project leadership with contingency information for
scheduling, budgeting, and project control purposes, as well as provide tools to support decision-making and
risk management as the project progresses through planning and implementation. To fully recognize its
benefits, a cost and schedule risk analysis should be considered as an ongoing process conducted concurrent
APPENDIX A CONCEPT A COST AND SCHEDULE RISK ANALYSIS FINAL 08DEC14 ES-1
SECTION 4.0 METHODOLOGY AND PROCESS
to, and iteratively with, other important project processes, such as scope and execution plan development,
resource planning, procurement planning, cost estimating, budgeting, and scheduling.
In addition to broadly defined risk analysis standards and recommended practices, the risk analysis is
performed to meet the requirements and recommendations of the following documents and sources:
• ER 1110-2-1150, Engineering and Design for Civil Works
• ER 1110-2-1302, Civil Works Cost Engineering
• ETL 1110-2-573, Construction Cost Estimating Guide for Civil Works
• Cost and Schedule Risk Analysis Process guidance prepared by the USACE Cost Engineering DX for the
PIEP

4.0 Methodology and Process
The Project Delivery Team (PDT) comprised members of Concept Planning Charrette, as well as CH2M HILL
personnel later executing the estimate and risk analysis.
The Cost Engineering DX guidance for cost and schedule risk analysis generally focuses on the 80-percent
level of confidence (P80) for cost contingency calculation. It should be noted that use of P80 as a decision
criteria is a risk adverse approach.
The risk analysis process uses Monte Carlo techniques to determine probabilities and contingency. The
Monte Carlo techniques are facilitated computationally by a commercially available risk analysis software
package (Oracle Crystal Ball) that is an add-in to Microsoft Excel. Cost estimates are packaged into an Excel
format and used directly for cost risk analysis purposes. Because Crystal Ball is an Excel add-in, the schedules
for each concept are recreated in an Excel format from their native format. The level of detail recreated in
the Excel-format schedule is sufficient for risk analysis purposes that reflect the established risk register but
generally less than that of the native format.
The primary steps, in functional terms, of the risk analysis process are described in the following
subsections. Risk analysis results would be provided in section 6.

4.1 Identify and Assess Risk Factors
Identifying the risk factors via the PDT is considered a qualitative process that results in establishing a risk
register that serves as the document for the further study using the Crystal Ball risk software. Risk factors
are events and conditions that may influence or drive uncertainty in project performance. They may be
inherent characteristics or conditions of the project or external influences, events, or conditions, such as
weather or economic conditions. Risk factors may have either favorable or unfavorable impacts on project
cost and schedule.
Checklists or historical databases of common risk factors are sometimes used identify risk factors. However,
key risk factors are often unique to a project and not readily derivable from historical information.
Therefore, input from the entire PDT is obtained using creative processes such as brainstorming or other
facilitated risk assessment meetings. In practice, a combination of professional judgment from the PDT and
empirical data from similar projects is desirable and is considered.
Formal PDT meetings were held as a part of the Concept Planning Charrette identify and assess risk factors.
The meetings held included capable and qualified representatives from multiple project team disciplines and
functions, including the following:
• Project and program managers
• Environmental
4-2 APPENDIX A CONCEPT A COST AND SCHEDULE RISK ANALYSIS FINAL 08DEC14