Planning-Level Cost Estimation

Project cost estimation at the planning stage may be hampered either because the
project has not yet been well-defined or because a significant amount of time has
passed since the project�s cost was estimated, rendering the older estimate out of
date.
To address the first problem, many transportation agencies maintain a set of unit
costs
which allows for a quick determination in the absence of more detailed data. These
unit costs may be stratified by area type (rural or urban), number of lanes, and
roadway design. For example, one state�s unit costs are $5 million/mi of a four-
lane
divided highway in an urban area with a flat median compared with a cost of about
$1 million/mile for a two-lane rural undivided highway. To address the second
problem of costs being out of date, cost indices may be used which convert costs
from
a historical year to a current year by accounting for inflation. The Consumer Price
Index (CPI) provides an average rate of inflation for all goods and services.
Indices
specific to the transportation field are the Federal Aid Highway Index (compiled by
the Federal Aid Highway Administration for highway construction projects) and the
Railroad Index (compiled by the American Association of Railroads for railroad
projects). If more detailed project cost data are available (e.g., highway labor
costs
separated from materials costs), then the two previously mentioned sources may be
consulted for indices that represent changes for particular goods and services,
such as
concrete, steel, and labor costs.