Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 1
Executive Summary
Cost is a major factor in most decisions regard-
ing construction, and cost estimates are prepared
throughout the planning, design, and construction
phases of a construction project. All of these esti-
mates are important because they invariably influ-
ence the expenditure of major sums. However,
estimates made in the early phases of a project are
particularly important because they affect the most
basic decisions about a project: whether it will be
undertaken at all; how large it will be; how elabo-
rate, sophisticated and durable it will be; and how
much it will cost (i.e., what the budget will be and,
in the case of federal agencies, what the congres-
sional appropriation will be).
Federal agencies, like most organizations win
large continuing construction programs, have long
recognized the importance of these early estimates,
and they have instituted various policies and proce-
dures to help ensure that such estimates are pre-
pared carefully and properly. Yet problems associ-
ated with inaccurate early estimates have persisted
and manifest themselves in various ways, includ-
ing: (1) failure to award a construction contract
because of excessively high bids, (2) receipt of
embarrassingly low bids, (3) design problems, (4)
project delays, and (5) facilities with marginal or
. . .
Impaired . operations.
Because Congress maintains fairly tight control
on federal expenditures, agencies have limited lee-
way to deal with problems caused by erroneous
early estimates. Consequently, agencies periodi-
cally look for ways to improve their early esti-
mates. In 1988 the agencies that sponsor the Fed-
1
eral Construction Council asked the Building Re-
search Board (BRB) to review their current prac-
tices and, if possible, recommend ways of improv-
ing those practices. The study was conducted by
the BRB Committee on Budget Estimating Tech-
n~ques.
PUTTING THE PROBLEM IN
PERSPECTIVE
As part of its study the committee investigated
the extent, nature, and root causes of the budget-
rela~1 problem experienced by federal agencies on
their construction projects. The committee found
that agencies do in fact encounter budget-related
problems on a significant percentage of their con-
struction projects (approximately 35 percent on
average). However, the committee also concluded
that, contrary to widespread belief, such problems
are not primarily the result of faulty estimating
techniques.
Although there is room for improvement in the
policies and practices of many agencies regarding
the preparation of early estimates, agencies need to
recognize that other factors besides estimates con-
~ibute to budget-related problems. The committee
believes that the keys to a successful project, other
than accurate estimates, are (1) accurate definition
of user needs, (2) effective management of the design
process, (3) well-prepared construction documents,
and (4) effective management of the construction
phase.
The committee urges agencies to seek ways to
OCR for page 2
2
improve their practices and procedures in these areas
as they continue to work to improve their estimat-
ing procedures.
COMMITTEE RECOMMENDATIONS
The procedures used by most of the federal agen-
cies to prepare early estimates are not necessarily
poor or inadequate; in fact, similar procedures are
used by many private organizations. The results
achieved, in terms of the extent of disparity be-
tween early estimates and contract awards, also are
in line with the experiences of private companies.
However, in view of the importance attached to
controlling federal expenditures and the amount of
critical attention estimates receive when budgets
are exceeded, the committee had expected to see
more evidence of emphasis on interagency coop-
eration and innovative approaches.
On the basis of its review of a variety of ideas
for improving the estimating procedures of federal
agencies, the committee recommends that agen-
cies:
1. Make a concerted effort to cooperate in the
following ways: by developing standard terminol-
ogy and formats for their budgets and estimates; by
cosponsoring cost engineering research and shar-
ing research results, especially research on auto-
mated estimating systems; and by pooling and shar-
ing cost data, especially on commonly constructed
facilities.
2. Take steps to ensure that the estimators used
EARLY COST ESTIMATES FOR FEDERAL CONSlRUCrlONPROJEcrs
by private architect-engineer (A-E) firms, as well
as the agencies' own estimators, are properly quali-
fied for conceptual estimating.
3. Expand the use of parametric and probabilis-
tic estimating during the early stages of a project.
In view of the fact that a majority of problems
associated with budget estimates can be traced to
problems other than estimating techniques, the com-
mittee urges agencies to seek ways to improve their
practices and procedures in the following areas:
1. Ensure that accurate definitions of user needs
are prepared and signed off by the responsible par-
ties prior to the development of budget estimates.
2. Place more emphasis on estimating and cost
management capability in the selection of A-E's
and ensure that sufficient fee allocations are in-
cluded and sufficient time is provided for adequately
performing the required estimating services.
3. Provide effective agency management of the
design process to ensure that the A-E's design is
within budget. Agencies should employ value en-
gineenng and other cost containment techniques
and ensure that a well-coordinated and comprehen-
sive set of construction documents are prepared.
4. Provide effective management of the con-
struction phase to maintain time and quality objec-
tives and cost limits.
5. Sponsor conceptual estimating training pro-
grams to improve estimating skills. Agencies should
ensure adequate salary levels to hire and retain
qualified staff.
Representative terms from entire chapter:
committee urges
