Cost escalation is a critical issue that state departments of transportation (DOTs) face throughout project development from concept to completion. A variety of issues and risks impact budgeting and cost management and control activities, which affect adherence to approved project budgets. State DOTs need to utilize effective practices to avoid constant budget adjustments due to cost overruns. The objective of this study is to identify and analyze effective practices for controlling, updating, and maintaining the baseline budget and schedule for highway projects. Through comprehensive interviews with several state DOTs and an extensive content analysis of their guidebooks and manuals, we identify and analyze several effective practices, including those related to budget-based project development for controlling potential costs in the following areas of opportunity: (1) project scope and concept development; (2) concept-level risk identification and assessment; (3) preliminary and final design summary reporting; (4) value engineering and alternative analysis; and (5) cost estimate validation and review. Results of the analysis show that state DOTs struggle with identifying risk factors early in project development and mitigating them during preliminary and final design. The findings can help state DOTs improve their existing practices for highway project budgeting and cost management so that they can maintain initial baseline budgets and schedules while minimizing changes made to them during the project development process.
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