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CAPITAL PROGRAM DELIVERY: MEASURING COST EFFICIENCY AND INTEGRATING BEST PRACTICES

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Abstract:

Are costs for design, preliminary engineering, planning costs, and construction management considered hard costs or soft costs in the capital delivery program? What is the best ratio of soft costs to hard costs for various types of projects and how do project development processes relate to these costs? It is easy to point to the hard costs of pipes in the ground, functioning facilities, and other tangible assets as effective and efficient uses of tax-payer dollars and enterprise funds. Soft costs for the processes and resources to deliver these tangible assets are necessary, but need to be carefully managed to ensure that they add value to the project. Seattle Public Utilities tackled the issue of defining and documenting hard and soft costs in its capital improvement program to determine what level of soft costs are appropriate to deliver projects and meet customer needs efficiently and effectively. To do so, SPU benchmarked its progress against eight similar public water and wastewater utilities and private electric/gas utilities from throughout the country. The findings include a range of best practice processes and procedures in which soft costs can be reduced. Folding this information into a continuous improvement program has ensured that Seattle Public Utilities is providing services efficiently and cost effectively, and may offer insight for other publicutilities.

Document Type: Research Article

DOI: https://doi.org/10.2175/193864704784342307

Publication date: 2004-01-01

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