Procedures Used by Federal Agencies to Prepare Budget Estimates for Construction (1987)

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4 COST ENGINEERING POLICIES AND PROCEDURES of the CORPS OF ENGINEERS John Reimer U.S. Army Corps of Engineers Washington, DC Cost estimates for Corps of Engineers construction projects are prepared at various stages in the planning, design, and construction process. Generally, these estimates are referred to as current working estimates (CWEs) to reflect the fact that the actual cost of a facility is never certain until all the work has been completed, the facility has been accepted by the government, and all outstanding claims have been settled. A CWE includes the estimated cost of construction plus allowances for contingencies, supervision and inspection, and government overhead. Of course, the accuracy of CWEs improves as more information is obtained in the course of the planning, design and construction process. To reflect this fact, the Corps of Engineers classifies CWEs as follows: Code A - Less than concept design completed Code B - Concept design only completed Code C - Final design - including drawings and specifications in progress or completed* Code D - Bids opened and lowest responsible bidder determined Code E - Construction contract awarded Code F - Construction 100% complete This paper will discuss the development and use of Code A and Code B CWEs. The Code B CWE is also referred to as the "budget estimate"; it is prepared when the design of a project is approximately 35 percent *Code C CWEs are commonly referred to as "government estimates." 15

complete. The budget estimate is very important because it is the estimate that is submitted to the Congress for appropriation and authorization. It should be noted that all Code A and Code B CWEs are of a parametric nature (e.g., in terms of dollars per square feet). CWEs for all projects over $200,000 ultimately are presented on Department of Defense Form DD 1391 (see Figure 2). The initial CWE for a project is prepared by the facility engineer at the installation on which the project will be carried out (the field activity). The initial CWE is developed only after the project has been authorized by the Department of the Army (DA). The development of this CWE is fully automated through the DD 1391 Processor. The Processor, which is available to Army installations world wide, is an interactive computer program that assists users in preparing, submitting, reviewing, correcting, printing, and archiving 1391 forms and associated data. The Processor was developed by Army's Construction Engineering Research Laboratory in 1976. It underwent initial field testing in 1979 by the Army's Huntsville Engineer Division and it has been available to the Army community at large since 1980. The Processor's main functions are to: 1. Provide interactive teleprocessing assistance in preparing and editing forms, as well as submitting and distributing them electronically; 2. Calculate space allowances, estimate the cost for primary facilities and verify project requirements using data files stored in the system; 3. Provide for on-line retrieval and updating of background data files; 4. Provide a single source of official forms for all concerned organizations from the installations to the staff and secretariat level of the Department of the Army; 5. Facilitate the preparation, submission, and review of the form throughout the Army. The Processor prompts users to insert information regarding the requirements and functional aspects of the facility to be constructed (i.e., number of persons, number of vehicles, category code, size, need for cranes, lifts, etc.). Empirical pricing data are inserted automatically once the category code, size, location, and program year is selected. The Processor then prompts the 16

»« 411-11 1 COUtOMNT ^V1»flSMILITA»YCONITRUCTIOWWOJKTOATA 1 iN|TA|.|.«"0«*MO LOCATION Fort 'sill Qfc I 'HOJCCT MUMMH O«T lift 01 > »OGIIAII ILWtNT • C» ri«MI« COOI 721 31 ITIH OUAIIT.T* «;;; PRIMARY FACILITY ENL Bfc* w/naft =.ai*mi.: Zona 1 (Add 1. OX 1 Enl Pari Dina Ad* % S«ji» Blda Bn A.jmin & Clr ir->var ad Ad4ri to SUPPORTING tUctric- Uatar Lvnat To ttl fro* Continuation »%•• -SUBTOTAL CONTINGENCY PCRCENT ( 5.OCX) TOTAL CONTRACT COST SUPERVISION INSP * OHEAD ( ?.OOX) TOTAL REOJEST INSTALLED EOiJlPMENT-OTHER APPROP 171,410 54.40 .44 2.4131 1 . CIO ) 1 . 3S3 ) 2. 1^0) 1 , OO4 i 4,47-° 33'' ) 134) !,«•*1 2S.C70 1.114 23.384 1. 14' 24,??3 ill 10 OCKMiPTiG* 0* «O^O«DCO»»ST«wf:TiOe( **t->r,r r C4nttr uction. Tha work- it r,ew c«n*tr ui;t i->r,. *ita *iJ*»tad froA two * imi I ar tui 14ir,«ft .in tha mftaI1atlon. Tha ttn. :tura it r, .-- r, c ./ffi b - 111 i b 1 a ho ui l rt» barra.:tt for 1100 tr%iriaas ftivj ?-6 ^nlifta4 »arionrial. In addltii>rii tha co*»1a- will tr,.;1,j.Je t'*ttali->n haa.1^u*r tar tI covarad tramina areat ar,d an addition t-> tha Cantr*1 «r,*r -» y »lant. Th4 cantr*l anara. pI*nt will ba C->*1 *irad >»r "viJin* hivh taM»ar atijr^ hot wa1ar he%tma t.ftAffi* *r,d 4«0 t->r,t chtMad watar air condition ina. Tha »r 4 ja,:t will »r r.tactior, *r,d *l*r« trttaflit. »avina. «MI I»-t. curb*. a*jttart* st-:rm drain*aa *r,d .tlta iift»rova»aritt. Not ffltad in * flood pl airi. Damol 11 ion of a 'i*t i n» bull dmat it not ramjirad for t 11a '" 1 * *r i*nca . A-; •- a f i i b i 1 11 - for tha h%n«j i c *'*'pa d will t,a »rovided* 11. REOUIREnENTi 8.3S3PN ADEOUATEi * 1100 tr4 SUBSTDl PRO.JECT i itr tj.;t loft 7-10 FOR OFFICIAL USE ONLY (WHEN DATA IS ENTERED) FIGURE 2 Sample of a DD Form 1391 Filled Out 17

AM 4U-1I FV1|P5»Mt.lTARV CONSTRUCTION WKWfCT DAT A 1. 0»T1 30 JUL 62 03 DEC 80 I IMITALLATION AND LOCATION Fort Sill Oklaho»a 4 raONCT TCTLI 9. CG'VT ESTIMATES (CONTINUED! UEH SUPPORTING FACILITY (TOTAL CONTINUED! Oa» Dittr tbution Sanitari Sawar Chillad Uatar Linat (8"l Hi*h Ta»* Uatar Linat Fual Storaae Roadt and Parkina Raiiroad UNIT U/HOOANTITV COST COST (*OX» LS LS LF 2.006 LS — EA 2 LS Lf 6.500 "59.23 — 62143. S»ta CoMiunicttlont D.aolition 88.31 I J 3.82 ( 9,o4oLgii.3i ( ( ( ( ( tfb4oJ=3fe3.34 3.956 9 S3 478 124 670 •74 44 102 142 533 410 491 47 REQUIREMENT I Thit projact iff raauirad to »»rovida tha third incra»ant of ada*uata hou»na and tu»»ort facilitio for Batic Co»bat Trainaat. Thit infftallation hat baan afftianad tha »ittion of trainina BCT co»*aniat which ttartad in 1975. Adavuata *ar*anant facilitiat ara not availabla to >upi*ort thit nnffion. CURRENT SITUATION 1 Traincat ara currantlr houaad in inadavuata var»anant and ta»»orarr World War II »obiI nation buildina*. Thaaa a«ittin* tan»orarr barrackt and >u»»ort buildinat lack tha »o»t BiniBal enitiat ffuch at adaauata li*htin*. haatin*. and »achanical vantilatian. Latrina facilitiat for aiora than ona*half of tha •xifftina barrack! ara locatad in aa»arata buildin*i. Tha phyffical condition of thata wood fraaia barrackt* which wara conttructad in 1941. hat datarioratad araatlv to that conttant d axcattiva Mintananca it raauirad. FOR ONLY twHtN DA TA a urrntDt FIGURE 2 Continued T-11 18

user to insert information regarding supporting facili- ties requirements (i.e., water, gas, sewer, electricity, roads, parking, demolition, site improvements, etc.). The Processor also prompts the user to insert empirical prices for these items. Users are provided pricing data for such items via newsletters. Finally, the user is prompted to insert justification data and an economic analysis. The CWE is electronically submitted to the major command and Corps of Engineers headquarters for review and approval. When the project review and approval process is complete, a directive is sent to the field activity authorizing the initiation of design work. When the design concept has been developed (at the 35 percent design point), the Code B CWE (budget estimate) is prepared and submitted to Corps of Engineers headquarters. This CWE is submitted on Corps of Engineers Form 3086 (see Figure 3). In the past, form 3086 was manually transmitted in hard copy. Beginning this year, field activities can access the DD 1391 Processor and input the CWE in the "ENG Form 3086" file and electronically transmit the cost estimate to Corps of Engineers headquarters. This step greatly decreases the time required for review and approval because all principal review agencies can instantaneously read the latest CWE. Comments can be written by all reviewers, and Corps of Engineers headquarters can authenticate the scope of work, current and forecast prices, and the justification for added requirements. When this review is completed, the ENG Form 3086 file is automatically transferred to the DD Form 1391 file. 19

S I 3s • J i f / t « I — — I I i i I > N 1 I 1 i I 1 i j I i •i 4 * I - „ | 1 -i *- I * v4 ti ] i 3 [| 1 1 ^ * 1 j B 3 |: t 3 i ji \ ? ** I ?n g 5 * ? 1 en ^ 00 • u « j - N .ft S * 5 2 R ia s 5 < I || O 00 ^H *H r4 2 -a " S s Es o -" J J a u -< K t ll *u 1 H 1 r* I a S S S . s 0 ^ ^ ^ ^ J^ 4 oo co ao co in 3 | £S i 9 (• t s is^s " o e 5; g u-i " ***^S NT WORKING ESTIMATES t [DESCRIPTION Oj: FACILIT !! § 2^ I • utr ol mit lorm. we ( 22 5 i n | Machine Shop v -? 1 • 1 a! S H Q, "O »J M 1 If « 5" " •« H s 5 B § i 5 8 • | f • • U O O ^) X « » * w o v e -H o h cj 3 «• y "] -» » "> w -» >v U f~ i % CD. w*n 1 M £ .4 r: O M • O 41 W e v> n b C -Si1 Sw ww-oS1 o I * £\S 1 t * 0^40) o oj t^ecc ~H -i S S- £ 5 S3 S 2" I -i* u "^ -C05^3 x 1 1-1 i! 2 -4o> ww i J P P fl ^ BS C Q. grtwrtoenui-t-. " 5 I s II H !i .3 E - Q. •« • 1 4JWU 1 H T D -«44J«H4Jhl«mM O « 1 J f « O u-^ tfiOJSiXQoOOO U J :/: _; U(JCAUUOUU(J y O " O a) a -- U O u w c ^ U j « « o S U-H ^.oje-.^.rt U SO Z - N m FIGURE 3 Example of a Form 3086 20

I s ss — 2"2 22 ^ ^H r^ (M n (^ ^. a c * S S -0 £»0 ^-1 i»y^SSSo • s S 1. ffi 00 m u-i (N O f -a rvi r-j rH ^ J£ s sa----s — - f 1 i- ^ - j I I i O ^ O -» O O .-i s ii.iiir 1 4 * 5 8 1 5 I Bid Experience I fl 4 MO) 1 ?g3g j| I B • ASIC OF ESTIMATE II* 1 1 1 •! A 1_| r-l t. O ~J XI s- j i I 3 SS SS ^ i-5 E 4J E z 4 1: I « u c c S E'Sx'Sx - ' ' ' ' Z 4J M » -H -H U tl U 41 J J U) 11" II £33 2331 4 >b « a. «j c e « o ti-H n:: (q::iQ f •0 J -a' ^ 00 -* i B E 3 i i I |S = 38 «"5 252222S as a I 5 H ^Or^m^HaO OOOO «O-»>^O OOOOQ Mu-i^Hsa'S-H OO O II ! j! SS22 w ""S"!". 8S S 5 Z z u CO rH 4 00 ^ X E -7 ^O i «(0^^iU^ (U-^n a S- §o o o ^» o i-i -H O -» ul OO 1? M i CO 00 00 CO 00 Wj- ~ 2 S WOHKING ESTIMATES FO i DESCRIPTION Of FACILITV 1 j Or 1 OCT 71 MAY BE USED Machine Shop i i i M -e -33 f f .3 B 9 w 5 8 1 9 • p B C « SCOw o •** i a Si * ^ V 0 0 g 1 w ^ w H « « « J a ';^ ^ - i -a « w to ~URHI NT OtJ -i M 2 O V - 2 o i ii o. "e -H ai m Clio, (onc-ok. o B -H 1 5- is s. c n w c 41 o) " UOV >H U « « « -r l« M-HCO - u 3 si I 1 I -all 3 I "s 2 r jc'a.oS^'c 72!" i O 3 « 3 B. O oCHW ?J H \ 2 Sti^uS 3-^-5" S' NAME ANC id^gsiifi* 1 ;2 13 ii Annlst 1 Jl a is 0 0 FIGURE 3 Continued 21