Technical Note: Deterministic and Probabilistic Engineering Cost Estimating Approaches for Complex Urban Drainage Infrastructure Capital Improvement (CIP) Programs

Thewodros K. Geberemariam

Abstract: Accurate and reliable project cost estimates are fundamental to achieve successful municipal capital improvement (CIP) programs. Engineering cost estimates typically represent critical information for key decision makers to authorize and efficiently allocate the necessary funds for construction, budgeting, to generate a request for proposals, contract negotiations, scheduling, etc. for these reasons, cost estimators are using different estimating methods and approaches that allow for required levels of accuracy. As the project?s scope becomes more detailed and the potential risks are identified and/or the project design stage progresses these cost estimates are revised and updated. In this paper, the most common project cost estimation methods and approaches were collected and categorized into two main groups of (1) probabilistic and (2) deterministic methods. Under these groups overall ten different methods were identified and discussed addressing their requirements, advantages, and shortcomings, including the potential risk that can positively or negatively affect the project?s cost outcome. This paper will be a good resource for professionals who are in budget development and/or are seeking to a better understanding of different methods in determining an appropriate base cost margin and produce a meaningful and reliable project cost estimate.

Keywords: risk management, Deterministic, Probabilistic, Engineering Cost Estimating, Uncertainty, Cost Estimating Methods, Urban Drainage Infrastructure, Capital Improvement (CIP) Programs