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9 SUMMATION The committee's workshop on budget estimating revealed that the construction project budgets that agencies submit to Congress usually are prepared after a significant amount of design work has been performed; consequently, they are fairly accurate. The military agencies, for example, ordinarily do not prepare a budget estimate until the design of a proposed facility is approximately 35 percent complete, at which point moderately firm decisions have been made regarding the nature and size of the facility to be constructed and the types of systems to be used. The designs of most DoE, NASA, and VA facilities are at a comparable point when budget estimates for their projects are prepared. Generally, estimates prepared after some preliminary design work has been completed are based on published data on the cost of the systems to be used, which are quite accurate. Several of the agencies indicated that the really troublesome budget estimates are those prepared early in the preliminary planning process. Such estimates, which are sometimes referred to as preliminary estimates or planning estimates, are used for such purposes as preparing an agency's overall construction program budget, establishing the scope of a project, and performing economic analyses to determine the feasibility of a project, or to select a general design concept. Preliminary/planning estimates, therefore, can have a major impact on the overall construction program of an agency and on the viability and success of individual projects. Thus, even though they do not go to Congress, such estimates need to be as accurate as possible. 41
However, because they are prepared early in the planning process, a high degree of accuracy is difficult to achieve. The presentations to the committee revealed both similarities and differences in the way agencies develop preliminary/planning estimates. The main similarity was that all agencies generally base such estimates on either unit costs (e.g., dollars per square foot) or parametric costs (e.g., dollars per bed for hospitals) using mostly historical data (i.e., information from previous projects for similar facilities). Among the differences found were the following: ⢠Agencies with small construction programs generally rely on published cost manuals for historical cost data, whereas agencies with large programs generally develop and use their own historical data; however, agencies with large programs also use the published manuals from time to time to develop estimates for facilities they do not regularly construct or as a check on their own data. ⢠The military agencies follow a highly structured procedure for developing preliminary/planning estimates; for example, their estimates must be reconciled with cost guidelines published by the Department of Defense. Other agencies do not have detailed procedures. ⢠In some agencies field organizations and/or user organizations have primary responsibility for the preparation of preliminary/planning estimates; in other agencies, responsibility is centralized in headquarters. ⢠Some agencies (notably the military agencies) use computers to help prepare preliminary/planning estimates; other agencies do not. ⢠One agency (DoE) sometimes uses a private estimating service to help prepare preliminary/planning estimates; other agencies do not. However, one agency (PHS) uses a cost guide that was prepared by a private firm. ⢠One agency (VA) sometimes presents preliminary/ planning estimates in the form of a cost range; other agencies provide single value estimates. Only one agency (the Air Force) reported on the results of any studies on the accuracy of estimating procedures. It is not known if the agencies failed to report on such studies because they had not undertaken any studies or because they were reticent to discuss the results. 42
