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Improving the Accuracy of Early Cost Estimates for Federal Construction Projects (1990)

Chapter: Appendix E Glossary of Estimating Terms Used by Federal Agencies

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Suggested Citation:"Appendix E Glossary of Estimating Terms Used by Federal Agencies ." National Research Council. 1990. Improving the Accuracy of Early Cost Estimates for Federal Construction Projects. Washington, DC: The National Academies Press. doi: 10.17226/1693.
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Page 39
Suggested Citation:"Appendix E Glossary of Estimating Terms Used by Federal Agencies ." National Research Council. 1990. Improving the Accuracy of Early Cost Estimates for Federal Construction Projects. Washington, DC: The National Academies Press. doi: 10.17226/1693.
×
Page 40
Suggested Citation:"Appendix E Glossary of Estimating Terms Used by Federal Agencies ." National Research Council. 1990. Improving the Accuracy of Early Cost Estimates for Federal Construction Projects. Washington, DC: The National Academies Press. doi: 10.17226/1693.
×
Page 41
Suggested Citation:"Appendix E Glossary of Estimating Terms Used by Federal Agencies ." National Research Council. 1990. Improving the Accuracy of Early Cost Estimates for Federal Construction Projects. Washington, DC: The National Academies Press. doi: 10.17226/1693.
×
Page 42

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APPENDIX E 39 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 agencies 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 Management Division); NASA—National Aeronautics and Space Administration (Facilities Engineering Division); NAV—Naval Facilities Engineering Command; USPS— U.S. Postal Service (Facilities Department); 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 percentage, 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 COST, DIRECT—Any cost that can be specifically identified with a particular project or activity, including salaries, travel, equipment, and supplies directly benefiting the project or activity. (AF, CE, DoE, NAV, USPS, VA) COST, ESTIMATED TOTAL—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 installation in operation whether funded out of operating or plant and capital equipment appropriations. (AF, CE, DoE, USPS) COST, INDIRECT—A cost incurred by an organization for common or joint objectives and which cannot be identified specifically with a particular project or activity. (AF, CE, DoE, NAV, USPS, VA) COST, LIFE CYCLE—The sum total of the direct, indirect, recurring, nonrecurring, and other related costs incurred or estimated to be incurred in the design, development, production, operation, maintenance, support, and final disposition of a major system over its anticipated useful life span. Where system or project planning antici

APPENDIX E 40 pates use of existing sites or facilities, restoration 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 equipment 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 requirement 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 funding request submitted to Congress for project authorization and appropriation actions. Usually based on 35 percent design submittal. (NAV) ESTIMATE, CHECK—Check estimate is a validating 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 someone who had no involvement in the original estimate, but who may be an advocate of the project. (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) Or A general term referring to any officially prepared estimate whether in the planning, design, or construction stage. Although in wide use, this term requires further description to be meaningful. (NAV) 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 construction. It is the amount which is anticipated will be expended for labor, materials, and other items and contractor services required to execute fully the planned facility project. It includes 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 carried out for NASA by a construction agent, the estimated cost also includes costs associated with the use of such an agent. (NASA) ESTIMATE, CURRENT WORKING—Current estimated cost of a project based on best available information including estimated or actual contract cost; contingencies; supervision and administration; inspection and overhead; engineering and design after contract award; other direct costs; pending costs; and government furnished materials and purchase orders. (AF, CE) Or The sum of the construction cost estimate plus any other allowable contract project costs. Normally prepared at each stage of design accomplishment to monitor funding and to control design alternatives which will affect overall project costs. (NAV)

APPENDIX E 41 ESTIMATE, ENGINEERING—Most projects require first (preliminary or 35 percent completion), second (90 percent completion) and final (100 percent completion) submittals. The engineering estimates for these submittals include all labor and material costs for each item, including built-in equipment which would usually be furnished by a contractor and permanently built in or attached to the structure and items with fixed utility connections. Overhead and profit are added separately. Such costs are based on current prices. A factor for cost growth projection (escalation) is added as a percentage cost, so that the cost can easily be updated if the contract 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 formally advertised construction contracts, and serve as a control in evaluating costs and pricing data in negotiated contracts. Normally, the (Title 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 respect to subcontractors), or construction manager may be used as appropriate to prepare, review, or revise the government estimate prior to government approval. The specifics of a government estimate vary with the size and type of contract. (AF, CE, DoE, NASA, USPS, VA) Or A formal, approved construction cost estimate prepared for contract purposes. This estimate is required for all contracts of $25,000 or more (FAR 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. (NAV) ESTIMATE, INDEPENDENT—A documented cost estimate that has the express purpose of serving as an analytical tool to validate, cross-check, or analyze estimates developed by proponents of a project. An independent cost estimate also serves as a basis for verifying risk assessments. (DoE, NASA, VA) ESTIMATE, MAGNITUDE (VA)-See ESTIMATE, PLANNING ESTIMATE, MODIFICATION—A government estimate prepared for specific contract change order, incorporating a specific scope, methodology, 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 settlement. (NAV) ESTIMATE, ORIGINAL—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 magnitude 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 current and accurate cost analysis which identifies the source and basis for each major cost ele

APPENDIX E 42 ment. It is provided in support of military construction 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) YEAR, BUDGET—The fiscal year of the construction program under review by Congress. (AF, CE, DoE, NASA, NAV) YEAR, ESTIMATE—The fiscal year for which cost estimates are developed. Example: a cost estimate developed in February 1979 for Program Year 1980 would be identified as Estimate Year 1980. (NAV)

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