Attachment 14- ufc_3_740_05_2010_c1 Construction Cost Est.pdf

UFC 3-740-05

8 November 2010

APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED

HANDBOOK:

CONSTRUCTION COST ESTIMATING

UNIFIED FACILITIES CRITERIA (UFC)

Change 1, June 2011 ii

HANDBOOK: CONSTRUCTION COST ESTIMATING

Any copyrighted material included in this UFC is identified at its point of use.

Use of the copyrighted material apart from this UFC must have the permission of the copyright holder.

U.S. ARMY CORPS OF ENGINEERS (Preparing Activity)

NAVAL \1\FACILITIES ENGINEERING/1/ COMMAND

U.S. AIR FORCE CIVIL ENGINEER CENTER

Record of Changes (changes are indicated by \1\ ... /1/)

Change No. Date Location 1 June 2011 Above, 1, 11, 85

This UFC supersedes UFC 3-700-02A, dated 01 March 2005.

FOREWORD

The Unified Facilities Criteria (UFC) system is prescribed by MIL-STD 3007 and provides planning, design, construction, sustainment, restoration, and modernization criteria, and applies to the Military Departments, the Defense Agencies, and the DoD Field Activities in accordance with USD(AT&L) Memorandum dated 29 May 2002. UFC will be used for all DoD projects and work for other customers where appropriate. All construction outside of the United States is also governed by Status of Forces Agreements (SOFA), Host Nation Funded Construction Agreements (HNFA), and in some instances, Bilateral Infrastructure Agreements (BIA.) Therefore, the acquisition team must ensure compliance with the more stringent of the UFC, the SOFA, the HNFA, and the BIA, as applicable.

UFC are living documents and will be periodically reviewed, updated, and made available to users as part of the Services’ responsibility for providing technical criteria for military construction. Headquarters, U.S. Army Corps of Engineers (HQUSACE), Naval Facilities Engineering Command (NAVFAC), and Air Force Center for Engineering and the Environment (AFCEE) are responsible for administration of the UFC system.

Defense agencies should contact the preparing service for document interpretation and improvements. Technical content of UFC is the responsibility of the cognizant DoD working group. Recommended changes with supporting rationale should be sent to the respective service proponent office by the following electronic form: Criteria Change Request (CCR). The form is also accessible from the Internet sites listed below.

UFC are effective upon issuance and are distributed only in electronic media from the following source:

• Whole Building Design Guide web site http://dod.wbdg.org/.

Hard copies of UFC printed from electronic media should be checked against the current electronic version prior to use to ensure that they are current.

JAMES C. DALTON, P.E. JOSEPH E. GOTT, P.E.

Chief, Engineering and Construction Chief Engineer U.S. Army Corps of Engineers Naval Facilities Engineering Command

TERRY G. EDWARDS, P.E. MICHAEL McANDREW Director, Air Force Center for Engineering and the Environment

Director, Facility Investment and Management

Department of the Air Force Office of the Deputy Under Secretary of Defense (Installations and Environment) http://www.wbdg.org/pdfs/ufc_implementation.pdf http://www.wbdg.org/ccb/browse_cat.php?o=29&c=4 http://www.wbdg.org/ccb/browse_cat.php?o=29&c=4 http://www.wbdg.org/ccb/browse_cat.php?o=29&c=4 http://dod.wbdg.org/ iv

REVISION SUMMARY SHEET

Document: UFC 3-740-05 Superseding: UFC 3-700-02A, dated 1 Mar 05

Description of Changes:

This document is a complete update to UFC 3-700-02A, establishing uniform guidance to describe methods, procedures, and formats for the preparation of construction cost estimates and construction contract modification estimates. It addresses all phases of construction cost estimating from planning phases through modification estimates during construction. The term construction includes remedial action environmental projects, dredging and other construction type work often implemented as service contracts.

Reasons for Changes:

This UFC will provide guidance on the correct way for DOD personnel to prepare a project cost estimate.

Impact:

There are negligible cost impacts.

Non-Unification Issues: Due to differences in Services management structure and operational processes, not all criteria within this UFC are unified.

Independent Review of Construction Cost Estimate - The independent review processes vary among the Services due to differing organizational structures and operational processes, which are delineated in separate Service-specific directives.

The independent reviews of Army DD Form 1391 programming documents are performed by a specialized team of cost engineers residing in Huntsville District. The review is performed under the direction of HQUSACE and in coordination with the HQACSIM. For the Navy, independent reviews are performed by the Region/FEC and the Consistency Review Board at NAVFACHQ.

Format, Presentation of Government Estimate, and Productivity Adjustment Factors - The preliminary and intermediate steps in the preparation of the estimates vary among the Services, however, the final estimate product is essentially the same.

1) The design execution processes by which the Services produce cost estimates are also different. The Army manages this process by means of using design v codes, which are issued by HQDA (DAIM-FD). There are twelve distinct design codes. The USACE in turn issues these codes to their divisions and districts through the directive network (DIRNET) system within the Programming Administration and Execution System (PAX) processor (AR-420-1). The Navy manages this process by means of the MILCON Team Planning Programming Process. There are no design code directives as with the Army. The Navy process is an ongoing reiterative process from the initial planning by Installation/PWD to the Program Final DD Form 1391 to NAVFACHQ.

2) The Military Services utilizes the DoD Facilities Pricing Guide (UFC 3-701-01 for the current year) for preparation of the DD Form 1391 MILCON project estimates. However, the Army also produces a supplemental document (PAX Newsletter 3.2.2, Unit Costs for The Army Facilities – Military Construction Program) to provide additional unit cost guidance for non-standard facilities, which are not covered by UFC 3-701-01 for the current year. The Navy does not produce a supplemental unit cost guidance document for non-standard facilities, but can refer to the Army PAX Newsletter 3.2.2.

Other Project Costs such as Supervision, Inspection, and Overhead (SIOH) - The Services set different SIOH percentage rates. SIOH is a cost allotment for the agencies field construction management of the construction projects.

vi

CONTENTS

CHAPTER 1 INTRODUCTION

Page

1-1 PURPOSE

1-2 APPLICABILITY

1-3 REFERENCES

1-4 SCOPE

1-4.1 Arrangement 1-4.2 Agency Specific Requirements 1-4.3 Military Programs

CHAPTER 2 BACKGROUND AND OBJECTIVES

2-1 ESTIMATING PHILOSOPHY

2-2 RESPONSIBILITY FOR PREPARATION AND REVIEW

2-2.1 Preparation 2-2.2 Review

2-3 ESTIMATE FORMAT STRUCTURE

2-4 COST ESTIMATING METHODOLOGY

2-4.1 Project Comparison Estimating 2-4.2 Square Foot/Square Meter Estimating 2-4.3 Parametric Cost Estimating 2-4.4 Quantity Take Off (QTO) Estimating

2-5 DEGREE OF DETAIL

2-5.1 Construction Tasks 2-5.2 Analyzing Construction Tasks 2-5.3 At the Most Detailed Level

2-6 ACCURACY AND COMPLETENESS

2-7 ROUNDING FIGURES

2-7.1 Total Distributed Cost (Markup) 2-7.2 Preliminary or Alternative Cost Estimates 2-7.3 Total Cost of the Project

2-8 SAFEGUARDING COST ESTIMATES

2-9 SECURITY AND DISCLOSURE OF GOVERNMENT ESTIMATE

2-9.1 Contents of the Government Estimate 2-9.2 Access to the Government Estimate 2-9.3 Marking the Government Estimate 2-9.4 Disclosure Outside of the Government 2-9.5 Bid Protests and Litigation

2-10 RELEASE OF GOVERNMENT ESTIMATES UNDER THE FREEDOM OF

INFORMATION ACT (FOIA)

2-10.1 Definitions 2-10.2 Requests for Government Estimates and Back-Up Data

2-11 TEAM INVOLVEMENT

2-12 LIFE CYCLE COST (LCC) STUDY SUPPORT

vii

2-13 WORK BREAKDOWN STRUCTURE

2-13.1 Military Programs

2-14 MILITARY PROGRAM SPECIFIC REQUIREMENTS

2-14.1 Programming Estimate 2-14.2 Design Estimate 2-14.3 Pre-Final Estimate 2-14.4 Independent Government Estimate

CHAPTER 3 BASICS FOR PREPARATION OF ESTIMATES

3-1 GENERAL

3-2 PLANNING THE WORK

3-3 QUANTITIES

3-4 TYPES OF COSTS

3-5 PRICE SOURCES

3-5.1 Cost Book 3-5.2 Historical Data 3-5.3 Parametric Database 3-5.4 Development of Specific Tasks

3-6 COSTS AND PRICING

3-6.1 Minor Direct Costs 3-6.2 Historical Pricing 3-6.3 Lump Sum Items 3-6.4 Detailed Backup of Cost 3-6.5 Predetermined Bid Items

3-7 COST ESTIMATE FORMAT AND SUPPORTING DOCUMENTATION

3-8 MILITARY CONSTRUCTION PROGRAM SPECIFIC REQUIREMENTS

CHAPTER 4 COMPOSITION OF GOVERNMENT ESTIMATES

4-1 GENERAL

4-2 GOVERNMENT ESTIMATE OF CONTRACT COST

4-2.1 Title Page 4-2.2 Signature Page 4-2.3 Pricing Schedule

4-3 NARRATIVE OF CONTRACT COSTS

4-3.1 Table of Contents 4-3.2 Project Narrative 4-3.3 Construction Schedule 4-3.4 Equipment and Materials Utilization 4-3.5 Labor Discussion and Utilization

4-4 GOVERNMENT ESTIMATE BACKUP DATA

4-5 MISCELLANEOUS SUPPORT DATA

4-6 REQUIREMENTS FOR REVISION TO GOVERNMENT ESTIMATE FOR

BIDDING

CHAPTER 5 LABOR

viii

5-1 GENERAL

5-1.1 Direct Labor Costs 5-1.2 Indirect Labor Costs

5-2 CREWS

5-3 WAGE RATES

5-3.1 Long Duration Projects

5-4 OVERTIME AND SHIFT DIFFERENTIAL

5-4.1 Overtime 5-4.2 Shift Operations 5-4.3 Tabulation of Overtime Percentages

5-5 TAXES AND INSURANCE

5-5.1 Rates 5-5.2 Workman's Compensation 5-5.3 Unemployment Compensation Taxes 5-5.4 Social Security Tax Rates 5-5.5 Total Percentage of Taxes and Insurance

5-6 FRINGE BENEFITS AND TRAVEL/SUBSISTENCE

5-6.1 Fringe Benefits 5-6.2 Travel and Subsistence

CHAPTER 6 LABOR PRODUCTIVITY

6-1 GENERAL

6-2 PRODUCTIVITY ADJUSTMENT CONSIDERATIONS

6-2.1 Labor Effort 6-2.2 Complexity of the Variable

CHAPTER 7 CONSTRUCTION EQUIPMENT AND PLANT

7-1 GENERAL

7-2 SELECTION OF EQUIPMENT

7-3 ESTIMATING METHODOLOGY

7-4 PRODUCTION RATE

7-5 MOBILIZATION AND DEMOBILIZATION

7-6 EQUIPMENT OWNERSHIP AND OPERATING EXPENSE COST RATES

7-7 PLANT COST

7-8 SMALL TOOLS

CHAPTER 8 MATERIALS AND SUPPLIES

8-1 GENERAL

8-1.1 Materials 8-1.2 Supplies

8-2 SOURCES OF PRICING DATA

8-2.1 General 8-2.2 Quotes from Manufacturers and Suppliers

8-3 WASTE ALLOWANCE

8-4 FORWARD PRICING

ix

8-5 FREIGHT

8-5.1 FOB Factory or Warehouse 8-5.2 Unloading and Transporting the Materials or Supplies 8-5.3 Large Quantity in Bulk

8-6 HANDLING AND STORAGE

8-7 TAXES

8-8 MATERIALS OR SUPPLIES MANUFACTURED OR PRODUCED AT THE

SITE

8-9 GOVERNMENT-FURNISHED MATERIALS (GFM) OR EQUIPMENT (GFE) ... 35

CHAPTER 9 SUBCONTRACTED WORK

9-1 GENERAL

9-1.1 Parts of Work to be Subcontracted 9-1.2 Cost of Subcontracted Work 9-1.3 Construction Contractual Methods

9-2 USE OF QUOTATIONS

CHAPTER 10 OVERHEAD COSTS

10-1 GENERAL

10-1.1 Duplication of Overhead Costs 10-1.2 Previously Determined Overhead Rates

10-2 JOB OFFICE OVERHEAD

10-2.1 Mobilization and Preparatory Work

10-3 GENERAL HOME OFFICE OVERHEAD (G&A)

10-4 DURATION OF OVERHEAD ITEMS

10-5 SOURCES FOR PRICING

10-6 DISTRIBUTION OF OVERHEAD

CHAPTER 11 PROFIT

11-1 GENERAL

11-2 WEIGHTED GUIDELINES METHOD

11-2.1 Weighted Guidelines Method 11-2.2 Weighted Guideline Factors 11-2.3 Separate Profit Calculation

CHAPTER 12 SURETY BONDS

12-1 GENERAL

12-2 PURPOSE OF BONDS

12-2.1 Bid Bonds or Bid Guarantee 12-2.2 Payment Bonds 12-2.3 Performance Bonds

12-3 AMOUNT OF REQUIRED SURETY BONDS

12-4 RULES GOVERNING THE APPLICATION OF BOND RATES

12-4.1 Separate Contracts x

12-4.2 Subcontracts 12-4.3 Non-Deviating States Exceeding 12 Months Stipulated Time 12-4.4 Non-Deviating States Exceeding 24 Months Stipulated Time 12-4.5 Deviating States Exceeding Stipulated Time 12-4.6 Consent of the Surety Not Required 12-4.7 Consent of the Surety Required

12-5 COST OF PERFORMANCE AND PAYMENT BONDS

12-5.1 Coverage Limit of Performance Bonds 12-5.2 SAA Issues Advisory Rates 12-5.3 Types and Classes of Bonds 12-5.4 Calculation of Bond Premium Cost

CHAPTER 13 OTHER COSTS

13-1 GENERAL

13-2 CONTRACTOR COMPETITION AND MARKET ANALYSIS

13-3 OTHER PROJECT COSTS

13-3.1 Military Projects

13-4 COST ESCALATION

13-4.1 Military Programs

13-5 CONTINGENCIES

13-5.1 Elements of Contingencies 13-5.2 Cost Risk Analysis

13-6 APPLICATION OF CONTINGENCIES

13-6.1 Military Programs

CHAPTER 14 CONTRACT MODIFICATIONS AND OTHER NEGOTIATED

PROCUREMENT

14-1 GENERAL

14-2 DIRECTIVES

14-3 NEGOTIATED PROCUREMENT AND CONTRACT MODIFICATIONS

14-3.1 Review of Available Documents 14-3.2 Determine Status of Construction 14-3.3 Contractor’s Existing Methods, Capabilities and Rates 14-3.4 Current Labor and Equipment Rates 14-3.5 Teaming with Negotiator

14-4 PREPARATION OF COST ESTIMATES AND NEGOTIATION

14-4.1 Additional Work 14-4.2 Changed Work 14-4.3 Deleted Work 14-4.4 Impact Related Costs 14-4.5 Detail of Estimate

14-5 COST CONSIDERATIONS

14-6 TIMELINESS OF PREPARATION

14-7 IMPACT COSTS

14-7.1 Acceleration and/or Delay 14-7.2 Comparative Review xi

14-7.3 Factual or Judgmental Costs 14-7.4 Cost of Impact 14-7.5 Impact Factors or Conditions

14-8 SUPPORT FOR THE NEGOTIATIONS

14-8.1 Review for Allowability 14-8.2 Settlement of Disputed Work Items 14-8.3 Revision of the Government Estimate

CHAPTER 15 PROTESTS OR LITIGATION CONCERNING THE GOVERNMENT

ESTIMATE

15-1 GENERAL

15-1.1 Bid Protests 15-1.2 Contract Modifications/Change Orders

15-2 PREPARATION OF TECHNICAL AND COST ANALYSIS BY COST

ENGINEER

15-3 REVIEW OF THE GOVERNMENT ESTIMATE

15-3.1 Bid Protests 15-3.2 Contract Modifications/Change Orders

15-4 SECURITY AND DISCLOSURE OF GOVERNMENT ESTIMATES

15-5 MISTAKE IN BIDS

15-5.1 Before Award in Sealed Bidding 15-5.2 Before Award in Negotiated Procurement

CHAPTER 16 STANDARD ESTIMATING FORMS

16-1 GENERAL

16-1.1 Completed Examples

16-2 FORMS

APPENDIX A GLOSSARY

APPENDIX B REFERENCES

APPENDIX C SAMPLE ESTIMATE PAGES

APPENDIX D ESTIMATE FORMAT STRUCTURE

D-1 WBS

D-2 UNIFORMAT II

APPENDIX E SAMPLE CHECKLIST FOR COST ESTIMATE PREPARATION OR

REVIEWER CHECKLIST

APPENDIX F AUTOMATION

xii

F-1 USE OF COST ENGINEERING AUTOMATED SYSTEMS

F-1.1 Software updates and new systems F-1.2 Limitations on the use of automation F-1.3 Automation proponent

F-2 OVERVIEW OF TRI-SERVICE AUTOMATED COST ENGINEERING SYSTEM

(TRACES)

F-2.1 Other Systems F-2.2 Micro Computer-Aided Cost Engineering System (MCACES/MII) F-2.3 Parametric Cost Engineering System (PACES) F-2.4 Historical Cost Analysis Generator (HAG/HII) F-2.5 Area Cost Factor (ACF) F-2.6 Life Cycle Cost (LCC) module F-2.7 Risk Analysis Systems (CostRisk) F-2.8 Other TRACES system/module F-2.8.1 PC-Cost F-2.8.2 DD Form 1391 Estimate Generator F-2.8.3 Success© F-2.8.4 Electronic Project Procurement Generator

F-3 OVERVIEW OF TRACES DATABASES AND FILES

F-3.1 Cost Book database F-3.2 Models database F-3.3 Assemblies database F-3.4 Other databases F-3.5 Work Breakdown Structure F-3.6 Cost escalation index F-3.7 Area Cost Factor (ACF) index F-3.8 Department of Defense Facilities Pricing Guide F-3.9 Army Facilities Pricing Guide ($/SF)

F-4 ASSIGNED AGENCY

LIST OF FIGURES

Figure 4-1 Example Composition of an estimate Figure 16-1 Example Construction Estimate Figure 16-2 Example Construction Estimate Detail Summary Sheet Figure 16-3 Example Construction Estimate Worksheet Summary Figure 16-4 Example Construction Estimate Worksheet (Sheet 1 of 2) Figure 16-5 Example Construction Estimate Worksheet (Sheet 2 of 2) Figure 16-6 Example Construction Estimate Detail Worksheet A Figure 16-7 Example Construction Estimate Detail Worksheet B Figure 16-9 Example Telephone Quotation Sheet Figure 16-10 Example Wage Rate Calculations Figure 16-11 Example Estimate Detail Summary Sheet Figure 16-12 Example Cost Estimate Analysis Figure 16-13 Example Construction Cost Estimate Worksheet Figure 16-14 Example Crew And Productivity Worksheet xiii

Figure C-1 Sample control record for Government estimates Figure C-2 Sample signature page for Government estimate Figure C-3 Sample price schedule Figure C-4 Sample construction schedule Figure C-5 Sample telephone quotation sheet

LIST OF TABLES

Table 5-1 Overtime and shift differential Table 11-1 Guidelines for Weighted Factors Profit Determination Table 12-1 Bond Rates Table 12-2 Contract Bonds Rate Classifications Table D-1 Military Programs Work Breakdown Structure Table D-2 Uniformat II Structure

CHAPTER 1

INTRODUCTION

1-1 PURPOSE

This document establishes uniform guidance to describe methods, procedures, and formats for the preparation of construction cost estimates and construction contract modification estimates. This guidance represents where services have common requirements, however, for instances where there are differences, use the cognizant design agencies policies and procedures.

1-2 APPLICABILITY

This UFC applies to all military construction projects.

1-3 REFERENCES

References cited in this manual are listed in appendix B.

1-4 SCOPE

This document addresses all phases of construction cost estimating from the initial start of design through modification estimates during construction. \1\UFC 3-730-01/1/ PROGRAMMING COST ESTIMATES FOR MILITARY CONSTRUCTION provides guidance for cost estimating during the initial planning, programming, and budget review phases. The term construction includes remedial action environmental projects, dredging and other construction type work often implemented as service contracts. For the purposes of this document, the term cost engineer applies to all individuals, whether employed by the Government or under contract to the Government, who are engaged in the preparation or review of government cost estimates.

1-4.1 Arrangement

The information in this document is arranged by chapters. Contents in each chapter contain information and instructions common to all programs. Appendix C contains examples of estimate pages. Appendix D contains the work breakdown structure for military programs. Appendix E contains a checklist for cost estimate preparation.

Appendix F contains an overview of automation systems used for developing cost estimates.

1-4.2 Agency Specific Requirements

Agency program specific cost engineering policy, guidance, and procedures for the preparation of cost estimates for military projects are provided in the cognizant design agency policies and procedures.

1-4.3 Military Programs

For Army projects, the appropriate guidance is provided in ER 1110-3-1300. Further guidance is provided in Army Regulation (AR) 420-1. For Air Force projects, the appropriate guidance is per the cognizant design agency procedures. For Navy projects, the appropriate guidance is provided in http://www.uscost.net/costengineering/about.htm.

Change 1, June 2011 http://140.194.76.129/publications/eng-regs/er1110-3-1300/entire.pdf� http://www.apd.army.mil/pdffiles/r420_1.pdf� http://www.uscost.net/costengineering/about.htm�

CHAPTER 2

BACKGROUND AND OBJECTIVES

2-1 ESTIMATING PHILOSOPHY

Government cost estimates should be prepared as though the Government were a prudent and well-equipped contractor estimating the project. Therefore, all costs, which a prudent, experienced contractor would expect to incur, should be included in the cost estimate. This philosophy prevails throughout the entire project cycle -- from programming through completion of construction. Each estimate should be developed as accurately as possible, in as much detail as can be assumed, and be based upon the best information available. This objective is to be maintained so that, at all stages of the project programming, design, and during construction, the cost estimate will in all aspects represent the "fair and reasonable" cost to the Government. Refer to cognizant design agency directive requirements for cost engineers to the use of automation tools.

The complete Tri-Service Automated Cost Engineering System (TRACES) automation tools are discussed in appendix F.

2-2 RESPONSIBILITY FOR PREPARATION AND REVIEW

2-2.1 Preparation

Preparation and review of construction cost estimates through contract project completion is the responsibility of the Cost Engineering Office or as designated by the cognizant design agency. In concert with this responsibility, the cost engineer must be accountable for the completeness, quality, accuracy and the reasonableness of the cost estimate.

When it is necessary to contract services for the preparation of quantities and/or cost estimates, such services will be provided by competent firms experienced in cost engineering. In all cases, the procedures and requirements of this manual will apply.

Other specific needs, submittals, and requirements should also be provided to insure a complete understanding of the cost engineering requirements. These supplementary requirements should be included as part of a comprehensive contract scope of work.

Architect-Engineer (A-E) contracts should provide that each final estimate submitted to the Government be accompanied by a letter of transmittal that includes the following statement: “To the best of my knowledge the confidential nature of this estimate has been maintained.” This statement should be signed, dated, and maintained until the official markings have been removed.

2-2.2 Review

All construction cost estimates, whether prepared in-house or by contract, will be given an independent review by government cost engineers as prescribed by the cognizant agency review procedures. The estimate should be reviewed for the purpose of confirming the validity of the assumptions and the logic used in estimating the cost of construction tasks. The review should always include a check of the quantities, unit prices, and arithmetic. It is important that the reviewer develops and uses a uniform checklist procedure in the review process to better assure that important considerations have not been overlooked (see sample checklist in appendix E).

2-3 ESTIMATE FORMAT STRUCTURE

It is important that the format of all estimates be as consistent as possible. Two formats have been established for this purpose, Work Breakdown Structure (WBS) and Uniformat II (ASTM Standard E1557-97). They are a hierarchical presentation of the scope of work. They provide a common, ordered hierarchy framework for summarizing information and for quantitative reporting to customers and management. The purpose of the formats are to: (1) provide an organized manner of collecting project cost data in a standard format for cost reporting and cost tracking; (2) provide a checklist for categorizing costs; and (3) provide a basis to maintain historical cost data in a standard format. The appropriate format is to be used in accordance with the cognizant design agency requirement.

A unique WBS has been developed for military programs and the WBS is provided in hard copy or electronically within Microcomputer Aided Cost Engineering System (MCACES/MII) for Army projects, SUCCESS© for Navy projects, and PACES for Air Force projects.

Uniformat II was established for military construction design-build projects using the Whole Building Design Guide, located at http://www.wbdg.org/references/pa_dod.php.

Uniformat II is provided electronically within SUCCESS© for Navy projects.

2-4 COST ESTIMATING METHODOLOGY

The Association for the Advancement of Cost Engineering (AACE) International publishes cost engineering community recommended practices. AACE publishes matrixes of acceptable levels of cost accuracy for various stages of project definition.

The matrixes show both positive and negative values. For a given project scope and project definition, this range represents the amount of uncertainty that the prepared estimate can be either higher or lower than determined in the market place at the time of contract award. This does not mean that any given estimate is too high and can be reduced. Rather it represents an acceptable variability in cost estimating given various levels of design information, assumptions on the contractor’s means and methods to execute the project, and other assumptions about bid competition and market conditions.

There are four general methods used to estimate construction costs, described below in order from least- to most-accurate. Increased accuracy provides a greater level of confidence in the estimate but requires more information about specific project requirements and local conditions. Use the most accurate method for the amount of information known when preparing the estimate.

http://www.wbdg.org/references/pa_dod.php�

2-4.1 Project Comparison Estimating

Project Comparison Estimating is used in early planning stages when little information is known about the project other than overall project parameters. Project comparison estimating uses historical information on total costs from past projects of similar building types. For example, the number of beds in a hospital, or number of spaces in a parking garage, or number personnel in an administration building can form the basis of a project comparison estimate by comparing them to recent projects of similar scope in the same geographic region. Supporting facilities are estimated as a percentage of total facilities cost. This method is considered "preliminary" and is accurate only from -25% to +40% notwithstanding abnormal market conditions (i.e. natural disasters, market volatility, etc).

2-4.2 Square Foot/Square Meter Estimating

Square Foot/Square Meter Estimating is another method of developing both preliminary and intermediate budgets based on historical data. This method is effective in preparing fairly accurate estimates if the design is developed enough to allow measurement and calculation of floor areas and volumes of the proposed spaces. There are several historical databases such as UFC 3-701-01 for the current year, RSMeans, Tri-Service Parametric adjusted models (PACES) available to support this method of estimating providing unit costs ($/SF). More accurate estimates made with this method make adjustments and additions for regional cost indices, escalation rates, and size adjustment cost tables. Further adjustments may be made to account for other unique aspects of the design such as special site conditions or design features being planned.

In addition, the estimate can develop overall "core and shell" costs along with build-out costs of different space types, allowing for relative ease of determining the impact of changes to the program. Estimates made with this method can be expected to be accurate between -15% to +25% notwithstanding abnormal market conditions (i.e.

natural disasters, market volatility, etc).

The Unit Cost table (Table 2A, UFC 3-701-01 for the current year) supports a Square Foot /Square Meter Estimating method, and is generally applicable during the planning phase of a project. The unit costs in the table are national average historical costs with a known standard deviation for each facility type. When additional information allows a more detailed estimate using the Parametric or Quantity-Take-Off methods, the unit costs in Table 2A should not govern the estimate

2-4.3 Parametric Cost Estimating

Parametric Cost Estimating is an intermediate-level estimate performed when design drawings are typically between 10% and 35% complete. Parametric costs are based on assemblies or systems grouping the work of several trades, disciplines and/or work items into a single unit for estimating purposes. For example, a foundation usually requires excavation, formwork, reinforcing, concrete, including placement, finish and backfill. A parametric cost estimate prices all of these elements together by applying engineered values developed in assemblies cost data databases. These databases are based on historical data, typically organized in Uniformat II™. Estimates made with this method can be expected to be accurate between -10% to +15% notwithstanding abnormal market conditions (i.e. natural disasters, market volatility, etc).

2-4.4 Quantity Take Off (QTO) Estimating

In Quantity Take Off (QTO) Estimating, the work is divided into the smallest possible work increments, and a "unit price" is established for each piece. These work increments are typically organized by MasterFormat™. The unit price is then multiplied by the required quantity to find the cost for the increment of work. All costs are summed to obtain the total estimated cost. For example, the cost to erect a masonry wall can be accurately determined by finding the number of bricks required and estimating all costs related to delivering, storing, staging, cutting, installing, and cleaning the brick along with related units of accessories such as reinforcing ties, weep-holes, flashings, and the like. Accuracy is more likely to be affected by supply and demand forces in the current market. A QTO can be based on a site adapt design cost estimate or using a 35% or more design. This method provides the most accurate estimate, which is typically between -7.5% to +10% of construction costs notwithstanding abnormal market conditions (i.e. natural disasters, market volatility, etc).

2-5 DEGREE OF DETAIL

2-5.1 Construction Tasks

All cost estimates within the scope of this manual will be prepared on the basis of calculated quantities and unit prices that are commensurate with the degree of detail of the design known or assumed. This is accomplished by separating construction into its incremental parts. These parts are commonly referred to as construction tasks and are the line-by-line listings of every estimate. Each task is then defined and priced as accurately as possible. Tasks are seldom spelled out in the contract documents, but are necessary for evaluating the requirements and developing their cost.

2-5.2 Analyzing Construction Tasks

When analyzing construction tasks in an estimate, the cost engineer should identify the tasks that account for the major costs in the estimate. These tasks can be identified by applying the 80/20 rule, which states that approximately 80% of the project cost is contained in 20% of the tasks. Because these significant tasks account for most of the project cost, they should receive prime emphasis and effort in both preparation and review.

2-5.3 At the Most Detailed Level

At the most detailed level; each task is usually related to and performed by a crew. The cost engineer develops or selects the task description by defining the type of effort or item to be constructed. Task descriptions should be as complete and accurate as possible to lend credibility to the estimate and aid in later review and analysis. An example of a manually prepared construction cost estimate is provided in Chapter 16, Figure 16-1 thru Figure 16-13. Whenever a significant amount of design assumptions are necessary such as in design-build process, the cost engineer should use historical cost data from previous similarly designed projects and/or use parametric estimating models.

2-6 ACCURACY AND COMPLETENESS

Accuracy and completeness are critical factors in all cost estimates. An accurate and complete estimate establishes accountability with the cost engineer and enables management to place greater confidence in the cost estimate.

2-7 ROUNDING FIGURES

2-7.1 Total Distributed Cost (Markup)

For cost estimates prepared manually, rounding of costs is desirable to avoid the use of decimals when allocating the total distributed cost (markup) to the direct subtotal costs for each work item.

2-7.2 Preliminary or Alternative Cost Estimates

Cost estimates prepared manually to determine preliminary or alternative cost estimates when design details are limited may be rounded based on the experience of the cost engineer, whereby the end cost is not significantly affected.

2-7.3 Total Cost of the Project

Rounding the total cost of military construction projects to the nearest thousand dollars for design estimates and Independent Government Estimates (IGE) is acceptable for reporting purposes.

2-8 SAFEGUARDING COST ESTIMATES

Although not required by regulations, estimates based on less than completed design should be handled in a discretionary manner. Access to each estimate and its contents will be limited to those persons whose duties require knowledge of the estimate.

Estimates prepared by A-E’s will also be similarly handled. Any request by the public for information and pricing in the estimate will not be provided until coordination, verification of data, and approvals have been given by the commander or designated authority.

2-9 SECURITY AND DISCLOSURE OF GOVERNMENT ESTIMATE

2-9.1 Contents of the Government Estimate

The Government estimate normally consists of a title page, signature page, and price schedule. Supporting documents that are publicly available as parts of the solicitation (such as plans, specifications, and project descriptions) are not part of the Government estimate. Government estimates for contract awards and contract modifications are treated the same.

2-9.2 Access to the Government Estimate

Access to the estimate and its contents will be limited to personnel whose duties require they have knowledge of the subject. When an A-E is responsible for preparing any such estimate, the A-E submittal should include a list of individual's names that have had access to the total amount of the estimate. Government personnel also should sign the same or a similar list. A list similar to Figure C-1, in appendix C should be filed with the Government estimate.

2-9.3 Marking the Government Estimate

The Government estimate will be marked in accordance with AR 25-55 or cognizant design agency requirement. The Government estimate will ensure that the protective marking "For Official Use Only" (FOUO) is properly applied to all pertinent documents, computer files, compact discs (CDs), printouts, and other documents prepared manually or electronically for incorporation into the Government estimate.

2-9.4 Disclosure Outside of the Government

After contract award, ordinarily, only the title page, signature page, and price schedule are disclosed outside the Government. The Government estimate back-up data should not be released since it contains sensitive cost data (e.g., contractor quotes, crews and productivity) that are proprietary or might compromise cost estimates for future similar procurement.

2-9.5 Bid Protests and Litigation

During bid protests and litigation, if appropriate and to the extent possible, Counsel should have the Government estimate and/or the Government estimate back-up data placed under a “protective order.” There are valid reasons for not releasing the Government back-up data supporting the Government estimate to the contractors. In the case of a bid protest, there is a possibility that the contract could be re-advertised or converted to a negotiated procurement. Release of the Government back-up data would provide bidders with the detailed cost data that supports the Government estimate. If, however, the apparent low bidder protests the details of the Government estimate, the Command may provide the Government estimate and Government back-up data, to the protestor only, upon receipt of complete details of the protestor’s estimate. If the protest is not sustained and the proposal is re-advertised, all bidders are entitled to have the same information as the protestor.

2-10 RELEASE OF GOVERNMENT ESTIMATES UNDER THE FREEDOM OF

INFORMATION ACT (FOIA)

The Government estimate and Government estimate back-up data, prepared for construction contracts and modifications, are sensitive procurement information and should in many cases be withheld under the FOIA.

2-10.1 Definitions

• The Government estimate consists of a title page, signature page, and price schedule.

• The Government estimate back-up data is the detailed cost data, which includes production and crew development methodology, labor, equipment and crew back-up files, subcontractor quotes and all other data identified on agency approved estimating software as detail sheets.

http://www.apd.army.mil/pdffiles/r25_55.pdf�

• Fair market price determinations, under the Small Business Program, Federal Acquisition Regulations (FAR) 19.202.6, will be treated as Government estimates for purposes of this guidance.

• Supporting documents that are publicly available as part of the solicitation, such as plans, specifications and project description, or that contains no cost information, such as sketches, soil borings and material classifications, are not part of the Government estimate or back-up.

2-10.2 Requests for Government Estimates and Back-Up Data

Government estimates and Government estimate back-up data are intra-agency memoranda, which may be withheld under FOIA Exemption 5, “confidential commercial information” and “deliberative process” privileges. Proper use of Exemption 5, however, requires a showing that release of information will harm the Government’s interests.

Therefore, requests for Government estimates and back-up data will be reviewed on a case-by-case basis, based on the following guidance, to determine whether release will harm the interests of the Government. In reviewing requests, the FOIA Officer will seek the assistance of the cost engineer. If the FOIA Officer determines that release will harm the interests of the Government, the information will be withheld.

2-10.2.1 Sealed Bid Procurement

When sealed bidding is used, neither the Government estimate nor the Government estimate back-up data should be released prior to bid opening. See FAR 36-203(c),

36.204. It is well established that release of Government estimates and back-up data before contract award would harm the interests of the Government. FAR 36.203, Federal Open Market Committee v. Merrill, 443 U.S. 340 (1979), Morrison-Knudson v.

Department of the Army, 595 F. Supp. 352 (D.D.C. 1984), aff’d 762 F.2d 138 (D.C. Cir 1985).

2-10.2.2 Post Bid

The Government estimate will normally be released when bids are opened. In some instances, however, the Government estimate will not be released at that time, such as when all bids received are non-responsive and a re-procurement is envisioned.

2-10.2.3 Negotiated Procurement

In negotiated procurement for construction under FAR Parts 15 and 36, the Government estimate should not be released prior to contract award, except that Government negotiators may disclose portions of the Government estimate in negotiating a fair and reasonable price, see FAR 36-203(c).

2-10.2.4 Back-Up Data

The Government estimate back-up data should not be released. Release of Government estimate back-up data after contract award and before completion of a construction contract may also result in harm to the Government. The Government estimate back-up data is used to develop cost estimates for modifications and claims.

Release of the backup data prior to contract completion provides the contractor with the details of the Government’s position and would allow the contractor to develop a biased price proposal. This could harm the Government’s ability to negotiate a fair and reasonable price for the modification or claim, putting the Government at a serious commercial disadvantage. Moreover, knowledge of the construction methods contemplated by the Government might reduce the contractor’s incentive to discover less expensive methods. This could also reduce the contractor’s incentive to locate and charge out materials at a lower cost, or to achieve project goals using less labor and equipment. See Quarles v. Department of the Navy, 983 F.2d 390, (D.C. Cir 1990).

Taylor Woodrow International, Ltd. V. Department of the Navy, No. 88-429R, (W.D.

Wash. Apr 6, 1989).

2-11 TEAM INVOLVEMENT

Cost engineers are an important member of the project delivery team. The cost engineer is expected to have a clear understanding of those responsibilities and areas where contributions can be made. It is imperative that the team concept be enhanced and supported by each member. As such, the cost engineer is encouraged to lead in cost issues and provide ideas for cost control and sharing measures.

2-12 LIFE CYCLE COST (LCC) STUDY SUPPORT

Quality management policy requires LCC studies to be performed to evaluate system alternatives. These analyses are the responsibility of the design team. The cost engineer may be called upon to support the analysis by providing cost input. As preparation to such responsibility, the cost engineer should be familiar with the LCC procedures.

2-13 WORK BREAKDOWN STRUCTURE

2-13.1 Military Programs.

The Military Work Breakdown Structure (MWBS) provides a common framework for preparing cost estimates, developing models, and collecting cost data for Department of Defense (DOD) military construction projects. It is to be used for categorizing facility costs and associated supporting facility costs for all conventional military construction projects. This MWBS is comprised of 15 primary facility systems and four supporting facility systems. Each system is divided into one or more subsystems, which are further divided into assemblies made up of construction line items. An example of MWBS levels numbering is as follows:

Level 1 Scope

Level 2 Facility (Building)

Level 3 (System) 02 – Superstructure

Level 4 (Subsystem) 01 – Floor Construction

Level 5 (Assembly Category)

03 – Floor Decks and Slabs

Level 6 (Assembly) 03 – Precast Concrete Slab

Level 7 (Detail Line Item)

03412 1105 Erection 03412 1901 100 mm Precast Slab

2-13.1.1 Measure

A unit of measure is associated with each level of the MWBS and should be followed in all estimates to facilitate the estimating review process. This will allow estimates to be compared to other similar project estimates.

2-13.1.2 Numbering Structure

The standard numbering structure and description manual is available and referred to as “Data Dictionary.” The dictionary includes description of building functional components and associated supporting facilities. A sample MWBS to level 2 is provided in appendix D. The complete MWBS is provided at http://www.usace.army.mil/CaEI/Pages/Guidance.aspx and is also supplied with each copy of SUCCESS© for Navy projects.

2-14 MILITARY PROGRAM SPECIFIC REQUIREMENTS

In the Military Construction (MILCON) program, construction cost estimates are prepared throughout the planning, design, and construction phases of a construction project. These construction cost estimates may be categorized as follows: programming estimate, concept estimate, final estimate, and Government estimate.

2-14.1 Programming Estimate

In the planning phase, the cost estimate is called programming estimate and is prepared on a Department of Defense form, DD Form 1391. Develop this programming estimate based on preliminary project scope or mission requirements. Refer to \1\UFC 3-730-01/1/ for criteria and standards for development and preparation of programming cost estimates for constructing military facilities.

2-14.2 Design Estimate

Design estimates for Design-Bid-Build (DBB) projects may be categorized as 15%, 35%, or 65% stages of design. The estimates are refined more during these phases since the design criteria and project requirements have been further defined. The 15% design estimate may be prepared by a variety of methods, such as conducting a Design Charrette utilizing parametric estimating procedures, detailed quantities take-off, or a combination of detailed quantities take-off with parametric estimating procedures.

There may be instances when a 35% and a 65% design estimate would be prepared, which would be a further refinement of the project cost at this phase to be as a guide in comparison to the programmed amount. Design estimates for Design-Build (DB) projects are based upon draft RFP performance and prescriptive specifications.

http://www.usace.army.mil/CaEI/Pages/Guidance.aspx�

2-14.3 Pre-Final Estimate

The next stage of development is the pre-final estimate. DBB and DB projects are each developed differently due to these two project delivery methods.

2-14.3.1 Design Build

Pre-final estimates for DB projects are based upon the 100% RFP performance and prescriptive specifications stage.

2-14.3.2 Design Bid Build

Pre-final estimates for DBB projects are based on the 90% design phase. This estimate is the detailed bottoms-up cost estimate based on the final plans and specifications.

2-14.4 Independent Government Estimate

The last stage of development is the IGE. For DBB projects the IGE is based on the 100% design phase of the plans and specifications. For DB projects the estimate is based upon the final RFP performance and prescriptive specifications. The estimate that is provided to the Contracting Officer serves as the IGE.

CHAPTER 3

BASICS FOR PREPARATION OF ESTIMATES

3-1 GENERAL

This chapter establishes uniform guidance to be used prior to estimate preparation. In the normal sequence of events toward the preparation of any estimate, it is of utmost importance to understand basic fundamental principles and responsibilities.

Construction cost estimates consist of:

• Descriptions of work elements to be accomplished (tasks).

• A quantity of work required for each task.

• A cost for each task quantity.

A unit cost for each task is developed to increase the accuracy of the estimating procedure and should provide a reference comparison to historic experience.

Lump sum estimating when used at the task level must be fully documented to show the intent and extent of the item.

3-2 PLANNING THE WORK

The cost engineer must thoroughly understand the project scope of work, the biddability, constructibility, operability, environmental (BCOE) and aspects of the project being estimated. The cost engineer must also review drawings, specifications, and construction sequences and durations to determine total construction costs. A site visit is strongly recommended to enable the cost engineer to relate the physical characteristics of the project to the available design parameters and details. This is particularly important on projects with difficult site conditions, major maintenance and repair projects, and alteration/addition projects. The construction sequence must be developed as soon as possible and should be used to provide a checklist of construction requirements throughout the cost estimating process. The overall format of major cost elements in an estimate must be compatible with current standards, management needs, the anticipated bidding schedule, and the appropriate WBS.

3-3 QUANTITIES

The quantity “take-off” is an important part of the cost estimate. It must be as accurate as possible, and should be based on all available engineering and design data, and use of appropriate automation tools as available.

• After the scope has been analyzed and broken down into the construction tasks, each task must be quantified prior to pricing. Equal emphasis should be placed on both accurate quantity calculation and accurate pricing. Quantities should be shown in standard units of measure and should be consistent with design units. Assistance for preparing “take-off's” may be provided by others within the organization in support of cost engineering or by A-E contracts; however, the responsibility for the accuracy of the quantities remains with the cost engineer.

• The detail to which the quantities are prepared for each task is dependent on the level of design detail. Quantity calculations beyond design details are often necessary to determine a reasonable price to complete the overall scope of work for the cost estimate. Project notes will be added at the appropriate level in the estimate to explain the basis for the quantity calculations, to clearly show contingencies, and to note quantities determined by cost engineering judgment that will be reconciled upon design refinement.

3-4 TYPES OF COSTS

Various types of cost elements must be evaluated in detail.

• Direct costs are those costs, which can be attributed to a single task of construction work. These costs are usually associated with a construction labor crew performing a task using specific equipment and materials for the task. Labor foreman cost should normally be considered as a direct cost. Subcontracted costs should be considered as direct costs to the prime contractor in estimates.

• Indirect costs are those costs, which cannot be attributed to a single task of construction work. These costs include overhead, profit, and bond.

Indirect costs are also referred to as distributed costs.

• Estimates based on detailed design will be developed from separate direct cost pricing of labor, material, construction equipment, and supplies.

Applicable indirect costs will be added to reflect the total construction cost.

Other costs, including escalation, design contingencies, design-build design costs, building commissioning, sustainment, construction contingencies, construction supervision, inspections and overhead (SIOH), and Operation and Maintenance (O&M) Manuals, may be added to the construction costs to determine the total project cost as required by program specific requirements.

3-5 PRICE SOURCES

Various pricing sources should be obtained and be available to the cost engineer. In pricing from any source, experience and ability to relate data in hand to a specific circumstance is important. The following discussion is provided on commonly used sources and source development.

3-5.1 Cost Book

The Cost Book is the common name for the Tri-Services construction direct costs database. It contains repetitive construction tasks with direct cost pricing (labor, equipment, material) based on a typical crew and production rate for new construction.

Some Cost Book line items may include quotes for work that is fully provided and installed by subcontractor. All quotes for work fully priced by subcontractor shall be shown in the appropriate column. Each office is encouraged to use this pricing source and to refine the database by obtaining quotes to more accurately reflect local costs at the project site.

3-5.2 Historical Data

Historical costs from past similar work are excellent pricing sources when adequate details have been saved and adjustment to project specifics can be defined. Portions of other estimates having similar work can be retrieved and repriced to the current project rates. Automated historical databases are discussed in appendix F.

3-5.3 Parametric Database

A parametric database of predefined assemblies for buildings and sitework has been developed and is discussed in appendix F.

3-5.4 Development of Specific Tasks

When standard tasks do not meet project needs, specific new tasks may need to be developed. Such development requires experience.