DoD Construction / Sustainment Cost Management

Granular, transparent, verifiable, and localized construction cost estimates are fundamental to best value outcomes. The DOD has struggled to implement reliable construction cost estimating processed for decades. This is even though all the tools and support services are readily available to assure financial visibility and transparency.

Until there are requisite levels of leadership, competency, and commitment across all DOD departments and agencies, including Air Force, Army (USACE), and Navy, proper stewardship of the built environment and accountability to taxpayer will remain and elusive goal.

Issues associated with DOD construction cost estimating have been well-defined by the GAO and others. Major issues exist with respect to construction planning, procurement, and project delivery as well.

Below are just a few of the issues noted:

Overwhelming statistical significance that the cost estimates used to decide whether important infrastructure should be built are highly and systematically misleading.

Independent Government Estimates (IGEs), required by Federal Acquisition Regulation (FAR) Government Estimate of Construction Costs and Government Cost Estimate for Architect-Engineer Work for construction contracts, service and supply contracts, A-E contracts, and contract modifications, are critical to the planning, procurement, and project delivery phases. They assist the government in determining a fair and reasonable price. Due to the lack of robust processes, however, IGE's have traditionally failed to reasonably define schedule, viability of a program, reprogramming (schedule & costs), and thus created issues with respect to reputation and trust with stakeholders. For example, IGEs generally have exceeded the Programmed Amount (DD 1391), and the variance between IGE's and bid exceed established contract cost limitations.

Just a few of the common causal factors include...

1. Lack of training,

2. lack of time to develop a detailed IGE,

3. Lack of site visits,

4. Lack of technical mentorship

5. lack of early and ongoing collaboration of cost engineer with other participants/stakeholders, including amendments not sent to cost engineer, scope changes w/out cost engineer knowledge.,

6. Lack of peer reviews, quality control and other best practices, 6. Lack of proper market research, including lack or a granular locally researched detailed unit price book (excessive reliance upon localization factors, area cost factors, ...),

7. Poorly defined and/or poorly communicated SOW (statement of work),

8. Latency of existing cost data ....

As noted, robust processes, workflows, and information environments exist to assure...

1. appropriate cost estimation quality control,

2. consistent team participation in site visits and design/scope of work review meetings,

3. collaborative, documented, and detailed proposal evaluations, discussions, and negotiations, and

4. continuous improvement by leveraging learnings.

The DOD should be capable of consistently developing repair, renovation, maintenance, sustainment, and new build estimates with sufficient supporting documentation to be defensible and ensure an executable project. The fact that is has yet to deploy and manage methods to do so should not be acceptable to its leadership or the public.

Learn more about Objective, Verifiable, Current, Granular, Local Market Cost Data.... https://4bt.us/unit-price-book/