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BUDGET ESTIMATE DEVELOPMENT IN THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION James Vitagliano Facilities Engineering Division National Aeronautics and Space Administration In the National Aeronautics and Space Administration (NASA), a preliminary engineering report (PER) provides the basis for the development of budget estimates for construction of facilities projects that are included in the agency's annual budget request to the Congress for fiscal year authorization and appropriation. OBJECTIVES AND POLICY Preliminary engineering reports have a three fold objective: ⢠To develop, early in the budget cycle, a project that embodies the most economical and technically sound method of fulfilling a functional requirement ⢠To provide data, including cost estimates, to support budget submissions ⢠To be the basis of final design and detailed specification if the project is approved. NASA field installations are encouraged to use in-house personnel to prepare PERs; however, if necessary, installations can employ various other organizations to prepare them, including other government agencies, engineering consultants, architect-engineer (A-E) firms, and support contractors. PERs prepared by others are checked and validated by NASA personnel. When an A-E firm is used to prepare a PER, the cost generally does not exceed 1.5 to 2.0 percent of NASA's initial estimate of the cost of construction. If a higher fee is required, a special justification defining 23
the major elements of work and an explanation of the basis of the costs must be submitted to NASA Headquarters for approval. SCOPE AND CONTENT The PER is the product of a detailed analysis of user requirements. It evaluates alternative solutions and determines the basis for design that will result in the lowest possible life-cycle cost for the facility work proposed. The PER also includes the basis for the requirements (project justification), an analysis that describes the functions of the facility, an evaluation of different approaches for the proposed work, and a description and justification of the solution. Included is a detailed cost estimate with reasonable escalation and contingency factors; a detailed construction schedule that takes into account program requirements, the availability of funds, construction seasons, etc; and, as applicable, plot plan drawings, schematics and equipment lists, real estate requirements, foundation requirements, erosion and pollution control and other environmental concerns, fire and safety requirements and other similar requirements. The PER is formatted as follows: Section I, Requirement Statement and Justification Section II, Descriptive Analysis Section III, Budget Estimates Section IV, Design and Construction Schedule Section V, Appendices to the Report Including Implementation Plan BUDGET ESTIMATES The budget estimate in the PER is obtained by applying appropriate factors to the engineering estimate. It is computed from the following formula: Budget Estimate - EE (1.00+CA) (1.00+C) (1.00+SIES) where: EE - An engineering estimate that represents the cost for materials, labor, services coupled with contractor overhead, profits, taxes, 24
insurance, etc. It is based on cost experience at a specific given point in time. Costs are developed from the drawings and draft specification prepared for the PER. Estimates cover all labor and material costs for each item in the project, including building-type collateral equipment that would usually be furnished by a contractor and installed as a permanent part of the building. The cost for processing and installing government-furnished equipment also is included in the cost estimates. All other collateral equipment is listed or grouped and the costs made part of the facilities project or work package. Estimates are based on current prices applicable to the site and preferably the latest price experience. Allowances for premium costs of an accelerated program, or for delays resulting from weather or strikes, are made when applicable. Not included in the engineering estimate are amounts for escala- tion, contingencies, and supervision, inspec- tion and engineering services (SIES). These factors are included separately as discussed below. Units of measure, quantities, and unit cost data are shown for each significant item that can be identified and quantified. CA â Cost adjustment factor, which is a percentage factor to provide for anticipated cost escalation from the date of the estimate to the projected mid-point of the construction period. NASA headquarters provides field offices with cost adjustment factors to be used in estimating (see discussion of guidance and criteria below); however, field offices can use other escalation factors with justification. C â Construction contingency percentage factor. SIES - Supervision, Inspection and Engineering Services percentage factor. 25
GUIDANCE AND CRITERIA NASA field installations are provided with the publications listed below to assist them in the preparation of budget estimates. These publications are intended to provide basic guidance and criteria for the various phases of the building process, which include planning, budgeting, design, and construction. Budgeting Administration Manual (BAM). NHB 7400.1C. This manual, prepared by the NASA Comptroller, provides general guidance on budget formulation and execution. It is a compilation of instructions, procedures, and forms pertaining to the performance of the budget functions. The manual requires that project cost estimates be prepared on NASA Form 1510 which is used for the development of budgetary estimates. Facility Project Implementation Handbook (FPIH). NHB 8220.2. This handbook, prepared by the NASA Facilities Engineering Division, provides a ready reference to pertinent policy and guidance for the management of the building process which includes facility planning, budgeting, design, and construction. It is used by facility project managers who have direct responsibility for organizing, managing, and directing the project work to ensure that the needed facility is completed on schedule and within the approved funds. Facilities Engineering Handbook (FEH). NHB 7320.IB. This handbook, prepared by the Facilities Engineering Division, provides guidance, policy, criteria, and standards to be used by the designers of NASA facilities. It is intended to achieve a reasonable degree of uniformity for the essential features of all facilities. Annual Cost Guidance. Each year NASA Facilities Engineering Division provides guidance to the NASA field installations on the cost escalation factor that is to be used in the development of their budget estimates of the forthcoming budget for submission to the Congress for authorization and appropriation. 26
