Cost Structure of the Highway Projects in the Czech Republic

Despite the general price decrease of construction projects the price of highway projects has tended to rise. Research has shown that building highways in the Czech Republic costs about 30% more than comparable projects abroad, for example in Germany and Austria. This paper will identify possible causes within the process of construction of highways. The paper will also identify the possibilities of cost optimization for the construction process.The total cost of highways consist of the construction cost (hard cost), the development cost (e.g. design fees, management fees), and the site cost (e.g. purchase of the land). This paper will present an analysis of the total costs of selected sections of the highways recently built in the Czech Republic. The elements that influence the total costs are design parameters of the road (category) and the topography. The output of this analysis is the average cost per one kilometer of a highway divided by the category of the road and the topography characteristics (urban/rural area, flat, hilly or mountainous area). The paper also analyses the additional costs associated with the overall project, especially the cost of the development of the project documents and the purchase of the land. These additional costs can significantly increase the total cost of a traffic project.The authors summarize the causes of the high costs and at the same time propose methods to reduce these costs. The public sector may use the results to identify ineffectiveness of construction processes in the area of traffic projects in the Czech Republic. The proposed optimization procedures should lead to cost reductions.