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A methodology has been developed to identify the cost-optimal earthworks cut slope design and establishment of appropriate earthworks contingency factors. The need for the methodology arises out of problems identified by New Zealand's national road controlling authority, Transit New Zealand, associated with cost overruns on roading physical works contracts.

The methodology uses probabilistic techniques in which there is allowance for uncertainty in various input parameters (including geotechnical and economic). Monte Carlo simulation allows analysis outputs to be expressed in terms of probability distributions.

To determine the cost-optimal cut slope design, a range of hypothetical cut slopes is considered. For each cut slope under consideration, the geotechnical slope model, the probabilities of failure, the construction costs, and the cost of consequences of failure are established. 

The cost-optimal cut slope design is that which offers the best tradeoff between construction cost and long-term maintenance cost due to potential cut slope failure. The exposure of road users to slope instability risk also needs to be taken into account, to ensure that the cost-optimal solution provides a solution that is within acceptable risk guidelines.

Keywords: benefit-cost, cost optimisation, earthworks, Monte Carlo simulation, risk assessment, slope instability, techniques