Probable Cost Estimating and Risk Management

Costs of complex/underground projects have been consistently underestimated and delivery on time and on budget has been problematic. This has been attributed, to inadequate cost estimates and unidentified and/or insufficiently managed risk. Use of probabilistic cost estimates like the Washington State Department of Transportation?s CEVP® process (developed by the author and others) has produced more realistic cost estimates, explicitly identified and quantified risk (as input to risk management plans) and early awareness of key project issues. This paper updates previous work (NAT 2004), adds implementation detail for probalistic cost estimating as used by WSDOT, FHWA and other agencies and will address key issues in risk management, as related to probalistic cost estimates.