construction cost estimation and safety quantification in
TRANSCRIPT
SARF/IRF 2014 | 2-4 September, South Africa
Construction cost estimation
and safety quantification in
international development
Uven Chong
Arizona State University
Millennium Challenge Corporation
1
SARF/IRF 2014 | 2-4 September, South Africa
• Project Purpose: Evaluate the Millennium
Challenge Corporation’s (MCC) approach to road construction by:
1. Improving Cost Estimation
2. Quantifying Safety Impacts
Purpose
2
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Millennium Challenge Corporation
o Constrained by a 5-year development timeline.
o High-performing, low-income countries.
o Road construction is a large part of MCC: 1/3.
o $2.5 billion in road construction since 2004.
o 1,200 km roads under contract.
o 14 countries across 4 continents.
Context
3
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
0
100
200
300
400
500
600
Ho
nd
ura
s
Ca
pe
Ver
de
Nic
ara
gua
Va
nu
atu
Geo
rgia
Gh
an
a
El S
alv
ad
or
Ma
li
Mo
zam
biq
ue
Mo
ngo
lia
Ta
nza
nia
Bu
rkin
a F
aso
Sen
ega
l
Ph
ilip
pin
es
Len
gth
at
Sig
nin
g (
km
)
CompactSigningDate 2005 2006 2007 2008 2010
2009
14 compacts63 contracts
4
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Literature Review
o Focused primarily on developed countries.
Availability of resources.
Currency fluctuations.
o Lack of methodological consistency.
Initial cost estimates.
Database standardization.
Cost Estimation Background
5
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Standardized Milestones and Database
Cost Estimation Methods
6
Compact
(Country)
Project Name
Activity Name
Sub-Activity
Task (Contract)
Project
Identification
Sector Name DAC Code
Sector
Identification
Phase
Identification
Funding
Authorization
Engineers’ Estimate
Contract
Award
Final
Cost
Cost Values
Cost $ Road TraitsLengthLanes
AADTMaterial
IRI
New/Rehab
Date
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Road Unit Costs (World Bank vs. MCC)
Cost Estimation Results
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0
2
4
6
8
10
12
14
0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25
Fre
qu
ency
$M / km / lane
MCC Summary:
n = 29Countries = 13Mean = $459,533
Median = $371,401Min = $95,427Max = $2,228,754
WB Summary:
n = 93Countries = 40Mean = $433,000
Median = $479,500Min = $71,000Max = $916,000
Source:
Archondo-Callao 2000
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Cost Changes (World Bank)
Cost Estimation Results
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0.0
0.5
1.0
1.5
2.0
2.5
Eng. Estimate Contract Award Final Cost
Mean
Min
Max
Source:
Alexeeva et al. 2008 and Alexeeva et al. 2011
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Economies of Scale (MCC)
Cost Estimation Results
9
y = 3.20x-0.58
R² = 0.51
0
1
2
3
0 50 100 150 200
Fin
al C
ost
($M
/ k
m /
lan
e)
Road Length Constructed (km)
n = 26countries = 9
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• International development institutions must adopt a
standardized metric to evaluate cost overruns.
• MCC road unit costs and cost variability are slightly better
than equivalent studies in international development
literature but not as good as developed country contexts.
• There is some evidence of underbidding in literature (Iimi
2013) that suggests incentives must be better aligned.
• Economies of scale could lower costs but at the expense of
disadvantaging smaller and local firms (Iimi et al. 2012).
Cost Estimation Discussion
10
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Global Context
Road Safety Background
11
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
Source: WHO 2013, World
Bank Database
Increased Motorization Lack of Road Safety
Consideration
Road Traffic Injuries and
Mortalities+ =
In low and middle income
countries:
• Motor vehicles per capita
increased 32% between
2004-2008.
• Road sector fuel
consumption per capita
increased 45% between
2000-2010.
• Paved roads increased 60%
between 2004-2009.
Only 7% of the global
population live in areas with
adequate road traffic laws
as judged by the WHO road
traffic risk factors
In low and middle income
countries:
• 1.13 million deaths occur
from road traffic.
• Road traffic deaths are
the 9th leading global
cause of death.
• Road traffic deaths are
estimated to be 1.9
million by 2020.
SARF/IRF 2014 | 2-4 September, South Africa
• Literature Review Design
Road Safety Background
12
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
External road
safety initiatives
Multilateral Unilateral
Name Date Primary Members
UN Road Safety
Collaboration
2004-Present UN, WHO, World
Bank
Multilateral
Development
Bank Initiative
2011-Present World Bank, AfDB,
ADB, EBRD, EIB,
IDB, ISDB
Organization Date Program
World Bank2006-Present
Global Road Safety
Facility
2008 HDM-4 Model
International
Finance
Corporation
2012Performance
Standards
2007
Environmental,
Health, and Safety
Guide
Inter-American
Development
Bank
2012Road Safety
Strategy
SARF/IRF 2014 | 2-4 September, South Africa
• Literature Review Findings
o Road safety policy is limited and lacking in
other development organizations.
o Environmental and health standards touch on
road safety but are not quantitatively specific.
o Road safety guidance is limited to design and
construction (post-construction is not detailed).
Road Safety Background
13
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Scenario Analysis
Road Safety Modeling
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Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
Baseline vs. Road Construction Scenarios
or
Road Construction vs. Road Safety Intervention Scenarios
A = Indicators (fatalities, injury, property)
V = Value of indicators
i = Number of factors evaluated
SARF/IRF 2014 | 2-4 September, South Africa
• Example: Road Safety Intervention
Road Safety Modeling
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A = Indicators (fatalities, injury, property)
V = Value of indicators
i = Number of factors evaluated
Adding speed bumps or other speed management tools:
1. Average speed is lowered by 15%.
2. Correlate the speed change with indicator change.
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
• Example: Road Safety Intervention
Road Safety Modeling
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-75%
-50%
-25%
0%
25%
50%
-16% -12% -8% -4% 0% 4% 8%
Ch
an
ge
in
Cra
sh R
ate
Change in Mean Speed
Fatal
Property Damage Only
Injury
Source:
US FHWA 2014
SARF/IRF 2014 | 2-4 September, South Africa
• Example: Road Safety Intervention
o An accident rate of 200 per year on a selected road segment.
o Calculate ΔAi:
Mean speed decreases by 15%.
Correlated to 15% decrease in property damage accidents.
Accidents decrease to 30 per year (ΔAi = 0.15 * 200).
Assume that the average property cost per accident is $3,073 (RMI 2014).
Δ Cost Saved = $3,073 * 30 = $92,190 per year.
Road Safety Modeling
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A = Indicators (fatalities, injury, property)
V = Value of indicators
i = Number of factors evaluated
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Data Challenges
o Incomplete accident rate data.
o Controversial valuation data.
o Application across geographic regions.
Road Safety Modeling
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Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
Road Safety Discussion
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• Road safety is a health epidemic that is disproportionately
suffered by low and middle income countries.
• Road construction is important to economic growth.
• Development institutions are inconsistent in their
application of road safety policies.
• A quantitative model that compares intervention scenarios
can provide deliberate clarity to address safety.
• Data collection and maintenance is vital to the accuracy of
scenario-based analysis.
Purpose Context
Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
General Conclusions
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• Roads are an integral factor in economic development.
• To fully achieve roads benefits, investment and safety
costs must be accurately tracked.
• Tracking is hindered by incomplete and inconsistent data.
• Our analysis revealed a norm of cost escalation, the
existence of underbidding, and economies of scale.
• Data analysis can identify trade-offs and inform policy.
Purpose Context Cost
Background
Cost
Methods Cost Results
Cost
Discussion
Safety
Background
Safety
Modeling
Safety
Discussion
SARF/IRF 2014 | 2-4 September, South Africa
• Alexeeva, V., Padam, G., & Queiroz, C. (2008). Monitoring Road Works Contracts and Unit Costs for Enhanced
Governance in Sub-Saharan Africa. Washington DC: World Bank.
• Alexeeva, V., Queiroz, C., & & Ishihara, S. (2011). Monitoring Road Works Contracts and Unit Costs for Enhanced
Governance in Europe and Central Asia. Washington DC: World Bank.
• Archondo-Callao, R. (2000). Roads Works Costs per Km. Retrieved from
http://www.worldbank.org/transport/roads/c&m_docs/kmcosts.pdf
• Harris, G.T.; Olukoga, I.A. (2005) A cost benefit analysis of an enhanced seat belt enforcement program in South
Africa, Injury Prevention, 11, 102-105.
• Iimi, A. (2013) Testing Low-Balling Strategy in Rural Road Procurement, Review of Industrial Organization, 43, 243-
261.
• Iimi, A.; Benamghar, R. (2012) Optimizing the Size of Public Road Contracts, Policy Research Working Paper, World
Bank Paper 6028.
• Kumaraswamy, M.M. (1998) Industry development through creative project packaging and integrated management,
Engineering, Construction, and Architectural Management, 5, 228-237.
• RMI (2014) Costs of Auto Crashes & Statistics [online] http://www.rmiia.org/auto/traffic_safety/Cost_of_crashes.asp
• US FHWA (2014) Crash Modification Factors Clearinghouse [online]: http://www.cmfclearinghouse.org/
• World Bank (2014) Data [online] http://data.worldbank.org/
• World Health Organization (2013) Global Health Observatory [online] http://www.who.int/gho/road_safety/en/
References
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