Transportation Project Management

3 Budgets and Estimates

“Engineer (noun): A person who does precision guesswork based on unreliable data provided by those of questionable knowledge. See also: Wizard, Magician, Magic 8 Ball.”

– Anonymous

3.1 Overview

“Follow the money.”

– Anonymous

3.1.1 Purpose

The big picture in Transportation Program and Portfolio Management is that your organization should strive to ensure the right amounts of the right type of money are in the right place at the right time to keep the projects moving forward. In order to effectively do this at the program and portfolio levels, you need accurate project schedules and estimates. This requires consistent attention throughout the project development process.

Coexisting with this objective is the reality that transportation owner-operator organizations (e.g., DOTs, local governments, etc.) are not banks. Beyond planned reserves, surpluses and shortfalls pose complications. Shortfalls can be challenging when you don’t have enough money to advance and construct projects as planned. Surpluses are to be avoided in part due to the moral obligation of public agencies to be responsible stewards of public funds. The public money is to be used for public good. These realities effectively make transportation owner-operators funding organizations. Money comes in, and money should go out in a similar fashion. In order to do this well, more mature organizations embrace the cyclical process shown in Figure 3.1 of selecting the projects, programming ...