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103 <br /> The following table summarizes the cost reduction strategies described in detail in parts B, C, and D <br /> below: <br /> Cost-Reduction Strategies (YOE) <br /> Strategies Under GoTriangle Control <br /> Value Engineering (part B) $50 million <br /> Further Cost Cutting(part B) $30 million <br /> Strategies Requiring Cooperation from Project Partners <br /> Savings Associated with Property Donations (part C) $40 million <br /> Cost Transfer to Project Partners (part D) $55 million <br /> Total Potential Cost Reductions Identified To Date <br /> Total $175 million <br /> A) Contingency in the D-O LRT Project Budget–Including appropriate contingency in a project's <br /> budget means planning for a conservative estimate of project costs.Ten years ago, the FTA <br /> instituted a robust risk management oversight process, designed to reduce cost overruns on <br /> New Starts and Small Starts projects. In 2016,the FTA reported that of the 18 projects approved <br /> to enter the New Starts Engineering phase (or comparable phase of the Small Starts program) in <br /> 2007 or later that have since been completed, 17 projects (94%)were completed within budget. <br /> As part of its current risk management oversight process, the FTA recommends, based on <br /> historic project information from around the country,that New Starts project cost estimates <br /> include a minimum of 25%total contingency at entry to Engineering. For the D-O LRT Project, <br /> the amount of all contingency—allocated and unallocated—is approximately 30%of the base <br /> cost, which is more than the FTA's recommended minimum of 25%. In January 2017,the FTA's <br /> Project Management Oversight Contractor assigned to the D-O LRT Project reviewed the project <br /> cost estimate and concluded that it contains an appropriate level of contingency for entry to <br /> Engineering. <br /> Allocated Contingency(20%)–The FTA cost estimate reporting format requires that for each <br /> line item, a base estimated cost is reported, and an allocated contingency is assigned separately <br /> based on the level of certainty in the base cost estimate for that particular item. For the D-O LRT <br /> Project,the total allocated contingency across all line items is approximately 20%of the total <br /> base cost, approximately$350 million YOE. "Allocated contingency" is the additional cost <br /> included due to existing uncertainties related to the quantity of the construction items for <br /> known project elements. Examples of items that would be covered by the allocated contingency <br /> include: encountering deeper or lower quality bed rock, requiring more costly foundation design <br /> than anticipated; encountering unanticipated subsurface conditions, causing more rock <br /> excavation or more improvement of poor soils; and increased material quantities, such as <br /> concrete and reinforcing steel. <br /> Unallocated Contingency(10%)–The FTA cost estimate reporting format also requires an <br /> additional amount of unallocated contingency reported separately; for the D-O LRT Project, the <br /> unallocated contingency is approximately 10%of the base cost, approximately$170 million YOE. <br /> "Unallocated contingency" covers what are often referred to as "unknown unknowns"– <br /> construction items that are not determined until they are unexpectedly encountered on a <br /> 6 <br />