Up to a quarter of a million vehicles pass through the corridor
That means cost projections must be spot-on. But it’s tough to predict everything from
material costs to labor rates five years out.
“The economy has made costing something of a rollercoaster ride,” Mr. Cloyed
admits. “The project has a firm, fixed
price but you have to maintain strong cost
controls and that requires good risk-assessment strategies.”
To minimize the risks of fluctuating fuel
prices, for example, Fluor hedged a fixed
rate. “That gives us some surety on the
budget impact,” Mr. Lester says.
Managing labor costs was more of a
gamble. “Workers may see a five or eight or
10 percent increase in pay over the duration
of the project,” Mr. Lester says.
To be sure that costs don’t creep out of
control, VDOT conducts monthly trend
reports to identify unexpected costs and to
offset them in other areas of the project.
“You need to be prepared to make up
for adjustments by trimming costs off the
back end,” advises Mr. Cloyed. “The key is
to be flexible while keeping your eye on
the bottom line.”
Virginia Department of Transportation (VDOT), the
U.S. state agency responsible for building, maintaining
and operating Virginia’s roads, bridges and tunnels.
Fluor-Lane LLC, a project-specific, limited liability
corporation between global construction giants, Fluor
Corp., Dallas, Texas, USA, and Lane Construction in
Cheshire, Connecticut, USA. Responsible for designing
and building the toll lanes infrastructure project.
ATCS CH2M Hill, a joint venture developed between
ATCS, an engineering and surveying firm based in
Dulles, Virginia, USA, and CH2M Hill, a Denver,
Colorado, USA-based engineering firm. Responsible
for managing VDOT megaprojects.
Transurban, a toll-road developer, investor and manager
based in Melbourne, Australia.
Along with keeping an eye on the bottom
line, the partners had to find enough skilled
workers to take on such a massive project.
The sheer number needed on site—500 at
the project’s peak—was a daunting proposition. But Mr. Lester admits that in this case,
the global slump has worked in his favor.
“With the economic downturn and home
building falling off, the risks are currently
not as great as we anticipated without
knowing the impacts of any pending stimulus plan,” he says.
Once workers are in place, Mr. Lester
has to keep them safe.
“Up to a quarter of a million vehicles
pass through the corridor daily, so we are
doing all of our work under traffic conditions,” he explains. “We have the ability to
exercise lane closures, but there are penalties if we don’t pick it up in time.”
That means a considerable chunk of the
construction operation is conducted during
off-hours, weekends and at night, which
adds costs and complexity to scheduling,
particularly when overpasses are taken
Fluor-Lane factored the added costs of
late shift and premium-time pay into the
budget, but it’s more art than science.
Costs and safety, while sometimes difficult
to manage, are predictable risk factors on
a project of this scale. But other unanticipated issues have popped up. Because
this is a public-private, design-build
project, the relationship and communication between the contractors and VDOT
is crucial. While VDOT is focused on
evaluating every contract package, the
Fluor-Lane team is anxious to get the
bids out, creating some tension early on
between the partners.
Mr. Cloyed notes that the design-build
format is new for the state, as is the public-private partnership model. “That led to
some surprises,” he admits, including how
much time it would take to review and
approve the contract packages.