USA Banner

Official US Government Icon

Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Secure Site Icon

Secure .gov websites use HTTPS
A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

U.S. Department of Transportation U.S. Department of Transportation Icon United States Department of Transportation United States Department of Transportation

Cost Estimation for FTA Funded Transit Projects

Establishing a reliable baseline cost estimate is a critical element for successful major capital transit project delivery. The Federal Transit Administration (FTA) requires that a project sponsor’s cost estimate be reasonably firm and reliable before commitment of federal funds for major capital projects, including Capital Investment Grant (CIG) projects. In this context, FTA defines a reliable project cost estimate as sufficiently detailed with supporting documentation that confirms the project budget is adequate at grant milestone decision points Entry to Engineering (for New Starts and Core Capacity projects), grant award, and construction. With assistance from Project Management Oversight Contractors (PMOCs), FTA evaluates the project scope, schedule, and cost to confirm the estimate’s reliability.

This website content does not impose new requirements or establish FTA policy in preparing cost estimates. Rather, this webpage content provides project sponsors information on cost estimating best practices, FTA’s oversight procedures and processes in reviewing the cost estimates.

Developing Cost Estimates

Project sponsors can consider applying the 12-step methodology found in GAO's Cost Estimating and Assessment Guide when developing a project cost estimate. GAO’s Cost Guide outlines best practices pertaining to cost estimation principles, presenting 12 steps to create high-quality estimates. These steps are generally applicable in a variety of circumstances and range from defining the purpose of the estimate to obtaining data to presenting the estimate to management for approval. Application of these principles should result in reliable and valid cost estimates that management can use to make informed decisions.

To ensure the cost estimates are of high quality, the FTA oversight approach is data driven, requires risk/opportunity assessment, confirms a shared understanding of the project scope and technical requirements with the project sponsor, and leverages FTA’s experience with major capital projects. When developing cost estimates for projects in the CIG program, project sponsors must use the New Starts Standard Cost Categories (SCC) Workbook issued by FTA to ensure a consistent format for the reporting, estimating, and managing of capital costs for CIG projects.

FTA Major Capital Project Oversight Processes and Procedures Relevant to Project Cost Estimation

By regulation, the project sponsor is required to develop a Project Management Plan (PMP) for FTA funded major capital projects. The PMP is a written document prepared by a project sponsor that explicitly defines all tasks necessary to implement a major capital project. Several elements of the PMP are directly relevant to the project cost estimate, including: recipient staff organization and qualifications, project budget, construction schedule, cost and schedule control procedures, periodic updates, and management of risks, contingencies, and insurance.

The project sponsor develops project cost estimates based on these key documents:

  • Planned project scope
  • Project timeline
  • Activity cost estimates
  • Vendor bids
  • Risk register
  • PMP

The table below lists several resources with text hyperlinks to help project sponsors identify information that may improve cost estimates throughout the Project lifecycle. Typical estimating methods include bottoms-up, analogous, parametric, sensitivity, and vendor bid analyses, and empirical costing methods drawn from previous project experience.

Cost estimating resource FTA Information Historical Data
for Transit Capital Projects
Cost Estimating
Best Practices
FTA New Starts Standard Cost Categories (SCC) workbook (required for CIG projects)    
FTA Project and Construction Management Guidelines Appendix A  
FTA Circular 5200.1A Full Funding Grant Agreements Guidance  
FTA Capital Cost Database  
FTA Market Conditions Research  
GAO’s Cost Estimating and Assessment Guide    
FRA Capital Cost Estimating Guidance    
Managing Capital Costs of Major Federally Funded Public Transportation Projects, Transit Cooperative Research Program (TCRP) Report No. 31    
Estimating Soft Costs for Major Public Transportation Fixed Guideway Projects, Transit Cooperative Research Program (TCRP) Report No. 138    

FTA, as part of its oversight, carefully reviews a project sponsor’s cost estimate and performs a thorough evaluation to confirm the estimate reliability and soundness. The FTA oversight review process starts when the project sponsor submits several key documents to FTA. Next, FTA  reviews the project sponsor submittals using several tools and techniques described in FTA’s Oversight Procedures (OPs). Specific to the cost estimate, FTA assesses the consistency of the cost estimating information provided by the project sponsor, evaluates the methodologies used, and confirms that the estimate adequately reflects the overall project scope, the estimated quantities shown on the design documents, the anticipated market conditions, the risk elements associated with the project, and the project schedule. The project cost estimate plays a prominent role in several of the 30 FTA OPs: OP 20 PMP Review, OP 21 Management Capacity & Capability Review, OP 32C Scope Review, OP 33 Project Cost Review, OP 34 Schedule Review, OP 40 Risk and Contingency Review, OP 51 Readiness to Enter Engineering, and OP 52 Readiness to Execute a Full Funding Grant Agreement (FFGA) or Small Starts Grant Agreement (SSGA), and OP 53 Readiness to Procure Construction Work.

Cost risks and uncertainties are assessed through project risk registers and the FTA cost-risk model, and quantified in four categories: requirements, design, market conditions, and construction. FTA uses the SCC format as a consistent means to organize and compare major capital project costs. FTA calculates risk-based project costs by SCCs and estimates the revenue service date, which become key terms of the grant agreement. A robust FTA risk process is specified in OP 40; risk workshops typically last 2 to 3 days. All FTA OP reviews, including the risk workshop results, provide input to the Readiness reviews (Readiness to advance to Engineering or Readiness for grant agreement). 

The table below summarizes the project sponsor documents submitted to FTA, the Tools & Techniques that FTA will apply during the FTA reviews, and the cost-risk outputs that inform FTA funding decisions for major capital projects.

Sponsor Documents
Submitted to FTA
(Used as Inputs
for the PMOC Reviews)
Tools & Techniques
(Applied During
FTA/PMOC Reviews)
Cost-Risk Outputs
(that inform
FTA Decisions)
  • Baseline cost in SCC format describing:
    • Estimating method
    • Assumptions
    • Limitations
  • Scope baseline
  • Project schedule
  • Cost and schedule contingency levels
  • PMP Updated risk register
  • Risk and contingency management plan
  • Inflation and market studies
  • P65 cost estimate
    • Base cost
    • Contingency
  • P65 schedule estimate
    • Base schedule
    • Contingency
  • Updated risk register of project risks and uncertainties that are monitored regularly by FTA/PMOC
  • Readiness Report, sent to FTA Leadership for approval to advance the project or award a grant