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February 15, 2018 the Honorable Paul Torkelson, Chair House Transportation Finance Committee 381 State Office Building Saint P This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp 395 John Ireland Boulevard Saint Paul, Minnesota 55155 February 15, 2018 The Honorable Paul Torkelson, Chair The Honorable Scott Newman, Chair House Transportation Finance Committee Senate Transportation Finance & Policy Committee 381 State Office Building 3105 Minnesota Senate Building Saint Paul, MN 55155 Saint Paul, MN 55155 The Honorable Linda Runbeck, Chair The Honorable Scott Dibble House Transportation & Regional Governance Policy Ranking Minority Member Committee Senate Transportation Finance & Policy Committee 417 State Office Building 2213 Minnesota Senate Building Saint Paul, MN 55155 Saint Paul, MN 55155 The Honorable Frank Hornstein, DFL Lead The Honorable Connie Bernardy, DFL Lead House Transportation Policy & Finance Committee House Transportation & Regional Governance Policy 243 State Office Building Committee Saint Paul, MN 55155 253 State Office Building Saint Paul, MN 55155 RE: 2018 Project Cost Comparison Report Dear Legislators: In accordance with Laws of Minnesota 2017, 1st Spec. Sess., Chapter 3, Section 133, Subdivision 2, the Minnesota Department of Transportation is submitting the Project Cost Comparison Report. This report compares the estimated cost of projects with the actuals from July 1, 2012 through July 1, 2017. Examples of how any savings between the estimated cost and the actual cost at original encumbrance are used is provided. Lastly, a spreadsheet is included listing all the projects and detailing the cost information requested by the law. Please contact me with any questions you may have, or you may contact Mark Gieseke, Office of Transportation System Management Director, at [email protected] or (651) 366-3770. Sincerely, Charles A. Zelle Commissioner 2018 Project Cost Comparison Report February 15, 2018 Report on Project Cost Comparisons February 2018 Prepared by: The Minnesota Department of Transportation 395 John Ireland Boulevard Saint Paul, Minnesota 55155-1899 Phone: 651-296-3000 Toll-Free: 1-800-657-3774 TTY, Voice or ASCII: 1-800-627-3529 To request this document in an alternative format, call 651-366-4718 or 1-800-657-3774 (Greater Minnesota). You may also send an email to [email protected] 2018 Project Cost Comparisons Report 2 Contents Legislative Request ........................................................................................................................................4 Purpose and Scope of the Report ...................................................................................................................5 Project Cost Comparison ........................................................................................................................................5 Project Savings Categories ......................................................................................................................................7 Examples of Project Savings....................................................................................................................................8 References .....................................................................................................................................................9 Appendix A: Project Format Guide ................................................................................................................ 10 Appendix B: Project Description Smart Codes ............................................................................................... 11 Appendix C: Program Codes ......................................................................................................................... 12 Appendix D: State Road Construction and Trunk Highway Bond Projects ....................................................... 13 2018 Project Cost Comparisons Report 3 Legislative Request This report is issued to comply with language in Laws of Minnesota 2017, 1st Spec. Sess., Chapter 3, Section 133, Subdivision 2 of the Omnibus Transportation Finance Bill signed into law on May 30, 2017. PROJECT COST COMPARISON REPORT. Subd. 2. Project cost comparison report. By February 15, 2018, the commissioner of transportation must report to the chairs, ranking minority members, and staff of the senate and house of representatives committees and divisions with jurisdiction over transportation policy and finance comparing the estimated cost of projects and the actual cost of projects. The report must include all projects completed in whole or in part by MnDOT from July 1, 2012, to July 1, 2017. For each project, the report must list the estimated cost of the project prior to starting the project and the total actual cost for the project after completion. For each project, if the actual cost was less than the estimated cost, the report must explain how the excess funds were expended. Report cost The cost of preparing the report elements required in law is approximately $50,000. 2018 Project Cost Comparisons Report 4 Purpose and Scope of the Report The following report was prepared in accordance with Laws of Minnesota 2017, 1st Spec. Sess., Chapter 3, Section 133, Subdivision 2 of the Omnibus Transportation Finance Bill signed into law on May 30, 2017. The report has five sections that represent the nature of the Minnesota Department of Transportation’s business model. Project Cost Comparison Table 1 summarizes the comparison between estimated project costs and actual encumbrance costs from projects completed in whole, or in part, by MnDOT from July 1, 2012, to July 1, 2017. Table 1: Project Cost Estimates Compared to Actual Encumbrance at Award Estimated Project Cost Compared to Actual Encumbrance Cost (in Millions*) within State Road Construction and Trunk Highway Bonds State Fiscal Year 2013 2014 2015 2016 2017 Project - Estimates Prior to Letting 1,113 887 946 758 808 Project - Actual Encumbrances at Award 1,020 824 1,019 751 744 Section 1 Net Project Savings/(Shortfall) 93 63 (73) 7 64 Project - Savings 155 158 106 91 127 Project - Shortfalls 62 95 179 84 63 Section 2 Net Project Savings/(Shortfalls) 93 63 (73) 7 64 Estimates of Supplemental Agreements and Cost Overruns 48 33 45 43 44 Actual of Supplemental Agreements and Cost Overruns 85 51 62 46 56 Section 3 Net Savings/(Shortfalls) (37) (18) (17) (3) (12) Estimates of System Support 41 110 146 92 91 Actual of System Support 74 161 142 136 111 Section 4 Net Savings/(Shortfalls) (33) (50) 5 (43) (20) 5 . Grand Total, Savings/(Shortfalls) 23 (5) (86) (38) 33 Sec *Difference due to rounding 2018 Project Cost Comparisons Report 5 Section 1 – Regular Capital Program The first section provides a programmatic overview for projects that generally are awarded through a competitive bid process. During the reported five-year period, State Fiscal Years 2013 through 2017, approximately 88 percent of the construction budget is used to begin new construction projects. This section compares the project cost estimate before the project is advertised and awarded. It compares the amount shown in the State Transportation Improvement Program and in MnDOT’s Program and Project Management System database with the amount encumbered in the state’s financial and procurement system for the same set of projects. For each year, this is the summation of all the projects. Section 2 – Comparison of Savings and Shortfalls for Regular Capital Program The second section details projects that generally are awarded through a competitive bid process. This section is an alternative way of looking at Section 1. It compares the savings realized on projects (estimates higher than award) or shortfalls realized (estimates less than award). In some instances the estimates equal award. This applies to projects that are awarded through negotiated contracts and to those using Indefinite Delivery, Indefinite Quantity, also known as IDIQ contracts. The amount encumbered at award does not represent the total project cost at close out. Section 3 – Supplemental Agreements and Cost Overruns The third section details cost changes to projects that are either currently under construction or completed projects that are financially closed out during the reported fiscal year. These changes are referred to as supplemental agreements and cost overruns. Transactions reported here may increase or decrease the cost of individual projects. This section compares the estimate of supplemental agreements and cost overruns in the STIP with actual expenditures from the reporting system known as the statewide integrated financial tool and more commonly referred to as SWIFT. It is estimated that approximately 4 percent of the construction budget is needed each year for supplemental agreements and cost overruns. This section compares the estimate of supplemental agreements and cost overruns in the STIP with actual expenditures from SWIFT. Section 4 – System Support (Safety, Right of Way, Preventive Maintenance, Seasonal Response, Project Delivery) The fourth section identifies costs associated with capital improvements to the state highway system. Items such as right of way acquisition, use of consultants for design or inspection services, signing, lighting, signaling, detours, ADA improvements, bridge improvements, low cost safety improvements and other benefits to the trunk highway system are reported here. While these items improve the system and generally are awarded through a competitive bid process,
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