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Appendix E
Glossary of Estimating Terms Used by
Federal Agencies
Federal agencies use many different terms when
discussing- cost estimates for construction. The
following glossary of cost estimating terms was
taken from a Federal Construction Council report
prepared by the Consulting Committee on Planning
and Design Terminology (1988~. The initials in
parentheses after each definition indicate the agen-
cies that use that term essentially as defined. The
initials shown refer to the following agencies: AF
Air Force Directorate of Engineering and Services;
CE Army Corps of Engineers; DoE Department
of Energy (Real Property and Facilities Manage-
ment Division); NASA—National Aeronautics and
Space Administration (Facilities Engineering Divi-
sion); NAV Naval Facilities Engineering Com-
mand; USPS—U.S. Postal Service (Facilities De-
partment); and VA Veterans Administration
(Office of Facilities).
COST ESTIMATE—See ESTIMATE, COST
COST, ALLOWABLE CONSTRUCTION The
total estimated cost set forth in an authorization
act for a construction project plus a stated per-
centage, as specified in the authorization act
(historically 10 or 25 percent), is referred to as
the "allowable cost" for that project.
(AF,CE, DoE)
See also ESTIMATE, BUDGET
39
COST, DIRECT—Any cost that can be specifically
identified with a particular project or activity,
including salaries, travel, equipment, and sup-
plies directly benefiting the project or activity.
(AF, CE, DoE, NAV, USPS, VA)
COST, ESTIMATED TOTA~The cost of the
project, including the costs of land and land
rights, engineering, design and inspection costs,
direct and indirect construction costs, and initial
equipment necessary to place the plant or instal-
lation in operation whether funded out of operat-
ing or plant and capital equipment appropria-
tions.
(AF, CE, DoE, USPS)
COST, INDIRECT A cost incurred by an organi-
zation for common or joint objectives and which
cannot be identified specifically with a pariicu-
lar project or activity.
(AF, CE, DoE, NAV, USPS, VA)
COST, LIFE CYCLE The sum total of the direct,
indirect, recurring, nonrecurring, and other re-
lated costs incurred or estimated to be incurred
in the design, development, production, opera-
tion, maintenance, support, and final disposition
of a major system over its anticipated useful life
span. Where system or project planning antici-
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40
pates use of existing sites or facilities, restore-
lion and refurbishment costs should be included.
(AF, CE, DoE, NASA, NAV, USPS, VA)
COST, TOTAL PROJECT—All generic (research
and development) operating costs associated with
test and evaluation, and plant and capital equip-
ment costs specifically associated with a project.
It is the sum of the total estimated cost plus all
other costs identifiable to the project.
(AF, CE, DoE, USPS, VA)
See also ESTIMATE, PROGRAM COST
ESTIMATE, BUDGET An estimated fund re-
quirement for any element included in the budget.
Collectively all estimated fund requirements for
a particular operating agency or component or
consolidation thereof.
(NASA)
Or
The basis for project approval and initial fund-
ing request submitted to Congress for project
authorization and appropriation actions. Usu-
ally based on 35 percent design submittal.
(NAY)
ESTIMATE, CBCK~heck estimate is a vali-
dating estimate. Its development and use is
similar to an independent cost estimate except it
is developed by program/project or operations
office personnel or their supporting contractor.
A check estimate should be developed by some-
one who had no involvement in the original esti-
mate, but who may be an advocate of the proj-
ect.
(DoE, NASA)
ESTIMATE, COST A documented statement of
costs estimated to be incurred to complete the
project. Cost estimates provide baselines against
which cost comparisons are made during the
(life of a) project.
(AF, DoE, NASA, USPS, VA)
APPENDIX E
Or
A general term referring to any officially pre-
pared estimate whether in the planning, design,
or construction stage. Although in wide use,
this term requires further description to be mean-
ingful.
(NAY)
ESTIMATE, CURRENT COST—A calculated
anticipated amount which reflects the latest and
best professional estimate for a given project at
any given time during planning, design, or con-
s~uction. It is the amount which is anticipated
will be expended for labor, materials, and other
items and contractor services required to exe-
cute folly the planned facility project. It in-
cludes all amounts anticipated to be expended
for: land acquisition; site work; construction;
the purchase and/or installation of building-type
and built-in equipment or furnishings as well as
large substantially affixed equipment. It must
include a reasonable estimate for contingencies.
If the project is to be earned out for NASA by a
construction agent, the estimated cost also in-
cludes costs associated with the use of such an
agent.
(NASA3
ESTIMATE, CURRENT WORKING Current
estimated cost of a project based on best avail-
able information including estimated or actual
contract cost; contingencies; supervision and
adrninistrat~on; inspection and overhead; engi-
neering and design after contract award; other
direct costs; pending costs; and government fur-
nished materials and purchase orders.
(AF, CE)
Or
The sum of the construction cost estimate plus
any other allowable contract project costs. Nor-
mally prepared at each stage of design accom-
plishment to monitor funding and to control
design alternatives which will affect overall
project costs.
(NAY)
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APPENDIX E
41
ESTIMATE, ENGINEERING Most projects re- ESTIMATE,lNDEPENDENT A documented cost
quire first (preliminary or 35 percent comple- estimate that has the express purpose of serving
tion), second (90 percent completion) and final as an analytical tool to validate, cross-check, or
(100 percent completion) submittals. The engi- analyze estimates developed by proponents of a
peering estimates for these submittals include project. Anindependent cost estimate also serves
all labor and material costs for each item, in- as a basis for verifying risk assessments.
eluding built-in equipment which would usually
be furnished by a contractor and permanently
built in or attached to the stricture and items
with fixed utility connections. Overhead and
profit are added separately. Such costs are based
on current prices. A factor for cost growth pro-
jection (escalation) is added as a percentage cost,
so Mat the cost can easily be updated if the
contact award data is changed.
(AF, CE, NAV, NASA)
ESTIMATE, GOVERNMENT A government
estimate is used to determine the reasonableness
of competitive bids received in connection with
fonnally advertised construction contracts, and
serve as a control in evaluating costs and pricing
data in negotiated contracts. Normally, the CTitle
II) design estimate, after being reviewed and
approved by the government, is the basis for the
government estimate. However, the services of
an operating contractor, architect-engineer, cost-
plus-fixed-fee construction contractor (with re-
spect to subcontractors), or construction man-
ager may be used as appropriate to prepare, re-
view, or revise the government estimate prior to
government approval. The specifics of a gov-
emment estimate vary with the size and type of
contract.
(AF, CE, DoE, NASA, USPS, VA)
Or
A formal, approved construction cost estimate
prepared for conuact purposes. This estimate is
required for all contracts of $25,000 or more
MAR 36.203~. It is used to evaluate bids, to
protect against erroneous or unbalanced prices,
and to serve as a guide in establishing a schedule
for partial payments. The government estimate
is based on the final design. Contingencies and
supervision, inspection and overhead are not
included in a government estimate.
WAVE
(DoE, NASA, VA)
ES IIMATE, MAGNITUDE (VA)-See ESTIMATE,
PLANNING
ESTIMATE, MODIFICATION A government
estimate prepared for specific contract change
order, incorporating a specific scope, methodol-
ogy, and circumstances. In addition to cost of
the changes work, the modification estimate must
also include any cost the contractor incurs from
impact on the unchanged work. The estimate is
used to assist negotiations and to protect the
government's interests toward a fair price settle-
ment.
(NAY)
ESTIMATE, ORIGINA~The first total estimated
cost that is shown: (1) in a project data sheet
submitted to the Congress for line item projects;
or (2) in a project data sheet submitted to OMB
for contingency type projects; or (3) in the initial
authorization for general plant, operating-funded,
equipment-funded, or other contingency-type
projects.
(CE, DoE)
ESTIMATE, PLANNING—Planning estimates are
developed for each project at the time of project
identification. Since these are developed prior
to conceptual design, they are order of magni-
tude only and have the least amount of accuracy
and lowest confidence level. Care should be
exercised in these estimates to assure that the
order of magnitude is correct, since a tendency
exists to avoid changing, particularly upward,
this estimate once established.
(CE, DoE, NAV)
ESTIMATE, PROGRAM COST Provides a cur-
rent and accurate cost analysis which identifies
the source and basis for each major cost ele-
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42
-meet. It is provided in support of military con-
struction program submittals, including DO form
1391.
(AF)
ESTIMATE, TITLE I DESIGN—Prepared upon
completion of Title I design. Through use of
plant engineering and design funds, Title I may
be completed prior to inclusion of the project in
the budget. If this should occur, the Title I
design estimate becomes synonymous with the
budget estimate.
(DoE)
APPENDIX E
YEAR, BUDGET The fiscal year of the construc-
tion program under review by Congress.
(AF, CE, DoE, NASA, NAV)
YEAR, ESTIMATE The fiscal year for which cost
estimates are developed. Example: a costesti-
mate developed in February 1979 for Program
Year 1980 would be identified as Estimate Year
l9XO.
(NAY)
Representative terms from entire chapter:
government estimate
