SOW Attachment 7.4 - P120 - Cost and Schedule Management Policy and Requirements.pdf

U.S. General Services Administration

U.S. General Services Administration

P120

Public Buildings Service

October 2022 i

TABLE OF CONTENTS

Introduction ................................................................................................................................... iii

1.0 PBS COST AND SCHEDULE GENERAL REQUIREMENTS AND POLICIES

1.1 Scope and Processes of Project Delivery Excellence

1.2 PBS Cost Management

1.3 PBS Schedule Management

1.4 PBS Value Management

1.5 Key Cost, Schedule, and Value Management Requirements Documents

2.0 FOUNDATIONS OF GSA INTEGRATED COST, SCHEDULE, AND VALUE MANAGEMENT

2.1 Master Delivery Table and Project Categories

2.2 Quality Management, Quality Assurance, and Quality Control

2.3 Scope, Cost and Schedule Interfaces

2.4 Qualification and Ethics

3.0 GSA COST MANAGEMENT REQUIREMENTS

3.1 Policies and Requirements

3.2 Activity Specific Requirements

3.3 Cost Management Core Principles

3.4 GSA Cost Management Requirements

3.5 GSA Cost Estimate Elements

3.6 Estimate Requirements for Specific Delivery Methods

3.7 Work Breakdown Structures (WBS)

3.8 Cost Breakdown Structures (CBS)

3.9 GSA Required Estimate Level of Detail

3.10 Cost Estimate Submittal Elements

3.11 Cost Estimate Submittal Requirements

3.12 Cost Management Tools

4.0 ADJUNCT PRACTICES

4.1 General

4.2 Market Study

4.3 Life Cycle Costing (LCC)

4.4 Risk Analysis

4.5 Sensitivity Analysis

5.0 PROCUREMENT AND CONSTRUCTION PHASE REQUIREMENTS

P120 Project Cost and Schedule Management Requirements for the Public Buildings Service ii

5.1 Procurement Phase Requirements

5.2 Construction & Close-Out Phase Requirements

6.0 SCHEDULE MANAGEMENT

6.1 Project Schedule Overview

6.2 General Scheduling Requirements

6.3 Scheduling Methods

6.4 Types of Schedules

6.5 GSA Master Schedule Minimum Requirements

6.6 Schedule Evaluation

7.0 VALUE MANAGEMENT

7.1 Guiding Principles

7.2 Value Management Requirements

7.3 Independent Value Engineering Studies

7.4 Value Engineering Change Proposal (VECP)

APPENDIX A. COST BREAKDOWN STRUCTURES (CBS)

ASTM Uniformat II

CSI MasterFormat (2020)

GSA IRIS

APPENDIX B. GLOSSARY AND ABBREVIATIONS

Glossary

Abbreviations

APPENDIX C. BIBLIOGRAPHY / REFERENCES

Bibliography

References

Tables

Table 1-1 GAO Twelve Best Practices and Four Characteristics of a Quality Cost Estimate

Table 1-2 GAO Ten Best Practices and Four Characteristics of a Quality Schedule

Table 2-1 Master Delivery Table

Table 2-2: Classifications by Project Definition

Table 3-1: Contingency Guidelines...……………………………………………………………………..………………19

Table 3-2: GSA Estimate Terminology

Table 3-3: Cost Breakdown Structure Hierarchies

Table 3-4: Levels of Detail by Estimate Stage……………… ……………………………….…………………………26 Table 3-5: Components of Cost Reports…………………………………………………………………………… iii

Introduction

As an independent agency of the United States Government, the U.S. General Services

Administration (GSA) has conducted the activities of the Public Buildings Service (PBS) since its creation in 1949. This Cost and Schedule management criteria document supports building construction programs within the PBS and presents the technical and administrative requirements for routine Cost and Schedule management across the project lifecycle.

Cost and schedule management are pillars of Project Delivery Excellence for PBS projects. They rely on sound:

• Cost management practices, including cost planning, cost estimating, cost control, and value management.

• Schedule management practices, including schedule planning, control, and monitoring.

• Quality management practices, including both quality assurance and quality control, which together confirm adherence to the cost and schedule management processes and check the cost and schedule management products for compliance.

As part of GSA’s effort to deliver projects efficiently, Cost and Schedule management resources should be considered part of an Integrated Project Delivery philosophy, through which deliverables are reviewed consistently, efficiently, and in a timely manner. Cost and Scheduling professionals must support projects at every lifecycle phase by managing risk, cost, and schedule, as well as by providing feedback to project teams that empowers sound and informed decisions leading to successful project delivery.

The PBS Cost and Schedule Management Policy Requirements (P120) (referred to throughout this document as policy or P120) practices and documentation criteria apply to all professional services activities, whether provided through contract or by GSA/PBS staff. The cost and schedule management tasks addressed in this document enable GSA to establish accurate project costs and schedules, ensure that these costs and schedules are based on programming requirements, keep costs within authorized limits, and collect agency cost data to refine business practices and future cost estimates. Because project delivery methods affect how, and to some degree when, cost and schedule management practices are applied, this document explains the basic requirements associated with each delivery method and establishes the framework to gather and compile this information to serve as a benchmark for future activities.

1.0 PBS Cost and Schedule General Requirements and

Policies

1.1 Scope and Processes of Project Delivery Excellence

Scope

This policy governs the preparation and reporting of costs and schedules, and considers aspects of scope management to ensure coordination with the schedule and cost management interfaces.

The policy applies through the total facility life cycle, which includes planning, design, procurement and award, and construction and maintenance phases, for both the GSA-controlled Federally owned and -leased portfolios. It establishes key cost and schedule management principles and basic processes that must be applied to all PBS projects. The policy is applicable to all cost or schedule activities, or products developed by or on behalf of

PBS. It does not apply to cost or schedule proposals prepared by lessors, design build contractors, construction managers as contractor (CMc), or construction contractors, except to the degree explicitly incorporated into their leases/contracts.

This policy uses the term “cost estimates” to refer generally to future or past estimates of dollar costs or savings—regardless of budgetary impact—and performance measurement, including calculation and reporting of organizational performance.

This policy also governs Value Management (VM) requirements for PBS. VM is mandated by the Office of Management and Budget’s OMB Circular A-131, and is required by statute. PBS incorporates VM principles into its business culture, applying VM throughout the planning and design process. This policy uses the term “value management” to refer to the process of applying the value methodology to improve the value of a project or process.

1.2 PBS Cost Management

Alignment with GAO Cost Estimating and Assessment Guide.

This policy will ensure that all cost estimate submittal packages prepared in PBS meet the following U.S. Government Accountability Office (GAO)’s Four Characteristics of a Reliable

Estimate:

• Well-documented. The estimate is thoroughly documented, including source data and significance, clearly detailed calculations and results, and explanations for choosing a particular method or reference.

• Comprehensive. The estimate’s level of detail ensures that cost elements are neither omitted nor double-counted.

• Accurate. The estimate is unbiased, not overly conservative or overly optimistic, and based on an assessment of most likely costs.

https://georgewbush-whitehouse.archives.gov/omb/circulars/a131/a131.html#:~:text=Inquiries-,1.,reduce%20program%20and%20acquisition%20costs.

https://www.gao.gov/products/gao-20-195g

• Credible. The estimate discusses any limitations of the analysis from uncertainty or biases surrounding data or assumptions.

The PBS cost estimating process is structured in accordance with the GAO 12 Cost Estimating

Best Practices. Careful execution of the 12 practices ensures that all PBS cost estimates are accurate, comprehensive, well documented, credible, and current.

GAO four characteristics of a reliable estimate

W e ll D o c u m e n te d

C o m p re h e n s iv

A c c u ra re d ib le

G

O T w e lv e B e s t

P ra c ti c s

1. Define the estimate’s purpose ●

2. Develop the estimating plan ●

3. Define the program ●

4. Determine the estimating approach. ●

5. Identify ground rules and assumptions ●

6. Obtain the data ●

7. Develop the point estimate and compare it to an independent cost estimate

8. Conduct sensitivity analysis ●

9. Conduct risk and uncertainty analysis. ●

10. Document the estimate ●

11. Present the estimate to management. ●

12. Update the estimate to reflect actual costs and changes ● Table 1-1: GAO Twelve Best Practices and Four Characteristics of a Quality Cost Estimate

Iterative Process.

Cost estimating is a continuous process over the life of a project. Within the progression of the project delivery, cost estimating must be considered as an iterative process with steps that may be accomplished in varying order or concurrently.

1. Initiation and Research. Initiation and Research marks the start of a project. It is critical to clearly identify the audience for the estimate and what is being estimated. The project goals, key deliverables, and milestones will identify purpose of the estimate.

2. Project Progression. Cost estimates must be brought up-to-date and refined as the project progresses through milestones or phases, as more and better data becomes available, and underlying assumptions change.

3. Cost Analysis. Cost Analysis steps help establish confidence in the estimate. It is crucial that decision-makers have accurate, comprehensive, credible and current estimates.

4. Presentation. Presentation is critical to making a cost estimating decision. A well-documented and presented estimate enables decision-makers.

Continuous updating and refinement of the cost estimate throughout life cycles, processes, or at regular intervals ensure that information used by GSA decision-makers satisfies all of the key requirements for cost estimates.

Overall Objectives of Cost Estimating.

The overall objective of cost estimating changes as the subject project matures.

Initial cost estimates form a baseline rationale for assessing the validity of a concept and for developing funding requests. They are the basis of a Cost Plan in support of project funding.

Valid cost estimates increase the validity of requested dollars, which greatly improves the defensibility of a budget request. Quality, risk, and sensitivity analyses—along with thorough documentation and a consistent briefing format—are all important factors when defending an estimate.

In later phases, estimates of cost, performance, and risks influence acquisition decisions and program or budget execution. Cost estimates support operational planning and tactical decision-making, as well as source selection for contracts.

During program execution, or after deployment of a project or investment, updated cost estimates ensure that benefits are being realized within projected costs. Cost estimating helps to identify variances from planned benefits and costs, and allows for the assessment and selection of potential mitigating actions.

1.3 PBS Schedule Management

Alignment with GAO Schedule Assessment Guide.

This policy will ensure that all schedule submittal packages prepared in PBS meet the following

GAO’s Four Characteristics of a Reliable Schedule:

• Comprehensive: A comprehensive schedule includes all necessary activities for both the government and its contractors to accomplish a project’s objectives as defined in the project’s work breakdown structure (WBS). It realistically reflects how long each activity will take and allows for discrete progress measurement.

• Well-constructed: A schedule is well constructed if all its activities are sequenced with straightforward logic. The schedule’s critical path represents a true model of the activities that drive the project’s earliest completion date.

• Credible: A schedule is credible if it reflects the order of events necessary to achieve aggregated products or outcomes. Activities in varying levels of the schedule map to one another, and key dates are in sync with the schedule. The level of necessary schedule contingency and high-priority risks and opportunities are identified by conducting a schedule risk analysis.

https://www.gao.gov/products/gao-16-89g

• Controlled: A schedule is controlled if it is updated periodically, using actual progress and logic to realistically forecast dates for program activities. It is compared against a designated baseline schedule to measure, monitor, and report the project’s progress.

The PBS scheduling process is structured in accordance with the GAO 10 Best Practices.

Careful execution of the 10 practices ensures that all PBS schedules are accurate, comprehensive, well documented, credible, and controlled.

GAO four characteristics of a reliable schedule m p re h e n s iv

W ll- C o n s tr u c re d ib le n tr o lle

G

O T e n B e s t

P ra c ti c

1. Capturing all activities ●

2. Sequencing all activities ●

3. Assigning resources to all activities ●

4. Establishing the durations of all activities ●

5. Verifying that the schedule is traceable horizontally and vertically

6. Confirming that the critical path is valid ●

7. Ensuring reasonable total float ●

8. Conducting a schedule risk analysis ●

9. Updating the schedule using actual progress and logic ●

10. Maintaining a baseline schedule ● Table 1-2: GAO Ten Best Practices and Four Characteristics of a Quality Schedule

On-Going Scheduling Process.

Planning and scheduling are continual processes throughout the life of the project. Project planning is the basis for controlling and managing project performance, including managing the relationship between cost and time. The schedule is essentially a model of the project plan.

Schedule Management is a distinct process that involves developing, maintaining, and communicating timetables for the project in the form of schedules. The schedule shows how the work will be accomplished within the constraints of time and resources. It evolves in detail as the project progresses.

Overall Objectives of Scheduling.

The overall objective of scheduling changes as the subject project matures.

• The Master Schedule (MS) forms the baseline documenting all work that must be accomplished. It includes all work necessary, from start to finish, from all parties for successful project execution. It may comprise many different schedules, representing portions of the program or project.

• A schedule is a fundamental management tool. It must be capable of supporting all levels of project management.

• As distinct phases of the effort progress, schedules comprising the MS become more detailed.

The scheduling effort by GSA must reflect the goals for time, cost, scope, and quality, as well as their relationship to each other. The goals help plan the overall approach to the project with the client, ultimately leading to preparation of the IPMS (Integrated Project Master Schedule).

The MS is a living tool that, although developed early in the project, can change dynamically as the project evolves, due to external and internal program/project revisions and change orders.

When used actively, the schedule will guide a project to a successful completion.

GSA also has responsibility to set requirements for detailed schedules prepared at each phase of the project life cycle by those responsible for planning, design, or construction, including the degree of tasks defined, their logical relationship, and external resources included. GSA also monitors any requirements for Earned Value Management (EVM) and monitoring the project during delivery.

1.4 PBS Value Management

Introduction.

Value management is one of the fundamental areas of focus for PBS cost management. The goal of a value management program is to deliver projects and programs at the lowest life cycle cost, while maintaining required functionality. The PBS process follows the ASTM E 1699

Standard Value Methodology Standard, to comply with OMB Circular A-131 and statute.

Overall Objectives of Value Management.

The primary objective of value management is to improve the value received to meet performance needs at a lower life cycle cost. This is achieved through evaluation of project functions. It is critical for PBS to use its resources efficiently, not only for capital expenditures, but for ownership costs through the life of the investment. Value improvement can take many forms, depending on the objectives and requirements of the project.

Value management has secondary objectives of building consensus; inserting additional expertise; and validating alignment of quality, performance, cost, and schedule with project requirements.

Value Management Responsibilities.

The Office of Design and Construction is responsible for reporting PBS VM results to the Office of Acquisition Management, so that the results of the GSA VM program can be reported to OMB https://www.astm.org/e1699-14r20.html https://www.astm.org/e1699-14r20.html annually. The PBS Central Office uses the Value Management process as a tool for cost and schedule management quality assurance.

The Regional Offices are responsible for ensuring that value management deliverables for a project or program are completed and submitted to the Regional Office Cost Advocate, who in turn must report results of the local VM program to PBS Central Office.

1.5 Key Cost, Schedule, and Value Management Requirements

Documents Sources of Federal Requirements.

Federal laws and policies affecting the way PBS conducts its business generally flow from:

• The Federal Acquisition Regulation (FAR), the source of Federal contract requirements for government estimates, cost and price analyses, and contract changes

• Office of Management and Budget (OMB), which issues circulars for budgeting, discount rates for life cycle costing, and value engineering

• GAO Cost Estimating and Assessment Guide

• GAO Schedule Assessment Guide

• The Code of Federal Regulations (CFR) provides requirements for alternative considerations and life-cycle cost analyses

• Other Federal Laws

Cost Management Legislation and Policies.

Congress has enacted legislation and Federal Agencies have promulgated policies to change the way Federal agencies address common cost management problems. Key legislation, regulation and policy framework for the practice of integrated cost management include:

• GPRA Modernization Act of 2010, P.L. 111-352. Updated the Government

Performance and Results Act (GPRA) of 1993 which established strategic planning, performance planning, and reporting as a framework for agencies to report progress in achieving their goals. It requires a return on investment that equals or exceeds those of alternatives. The update established reporting on a central website and a central program inventory.

• Budget Enforcement Act of 1990.This act enforces the deficit reduction of the

Omnibus Budget Reconciliation Act of 1990 and revises the budget control process.

• 18 United States Code 1001, False Statements Act. This code states, in part:

"…whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully -

1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

2) makes any materially false, fictitious, or fraudulent statement or representation; or https://www.acquisition.gov/browse/index/far https://www.whitehouse.gov/omb/ https://www.gao.gov/products/gao-20-195g https://www.gao.gov/products/gao-16-89g https://www.govinfo.gov/help/cfr https://www.govinfo.gov/app/details/PLAW-111publ352#:~:text=Full%20Title,and%20the%20Performance%20Improvement%20Council.

https://www.govinfo.gov/app/details/HMAN-112/HMAN-112-pg1099 https://www.justice.gov/archives/jm/criminal-resource-manual-903-false-statements-concealment-18-usc-1001

3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both."

• OMB Circular A-11, Preparation and Submission of Budget Estimates (Clinger-

Cohen Act of 1996). Establishes the framework for Federal agencies to formulate a cost-benefit analysis for the budget submission for Federal agency projects and programs. Part 7 establishes “policy for planning, budgeting, acquisition and management of Federal capital assets.”

• OMB Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of

Federal Programs. The circular “provides general guidance for conducting benefit-cost and cost-effectiveness analyses. It also provides specific guidance on the discount rates to be used in evaluating Federal programs whose benefits and costs are distributed over time.”

• OMB Circular A-131 – Value Engineering. “Provides guidance to support the sustained use of value engineering (VE) by Federal Departments and Agencies to reduce program and acquisition costs, improve performance, enhance quality, and foster the use of innovation.”

• 10 CFR 436, Subpart A, Methodology and Procedures for Life-Cycle Cost

Analyses. “Establishes a methodology and procedures for estimating and comparing the life cycle costs of Federal buildings, for determining the life cycle cost effectiveness of energy conservation measures and water conservation measures, and for rank ordering life cycle cost effective measures in order to design a new Federal building or to retrofit an existing Federal building. It also establishes the method by which efficiency must be considered when entering into or renewing leases of Federal building space.”

• FAR, Part 4.802 – Contract Files

• FAR, Part 5.4 – Release of Information

• FAR, Part 7.103 – Agency-Head Responsibilities

• FAR, Part 10.002 – Market Research, Procedures

• FAR, Part 15 – Contracting by Negotiation

• FAR, Part 16.104 – Factors in Selecting Contract Types

• FAR, Part 17.106 – Multi-year Contracting

• FAR, Part 19.807 – Small Business Programs, Competitive 8(a), Estimating Fair

Market Price

• FAR, Part 32.503 – Post award Matters

• FAR, Part 36 – Construction and Architect-Engineering Contracts

• FAR, Part 48 – Value Engineering

• FAR, Part 52 – Solicitation Provisions and Contract Clauses https://www.whitehouse.gov/wp-content/uploads/2018/06/a11.pdf https://www.wbdg.org/ffc/fed/omb-circulars/a94 https://www.wbdg.org/ffc/fed/omb-circulars/a94 https://www.wbdg.org/ffc/fed/omb-circulars/a131 https://www.ecfr.gov/current/title-10/chapter-II/subchapter-D/part-436/subpart-A?toc=1 https://www.ecfr.gov/current/title-10/chapter-II/subchapter-D/part-436/subpart-A?toc=1

2.0 Foundations of GSA Integrated Cost, Schedule, and Value

Management

2.1 Master Delivery Table and Project Categories

Overview.

Project cost and schedule deliverable requirements vary according to project cost and overall risk. Projects are assigned to Project Categories based on budget and other factors. Category ranges are documented in the Master Delivery Table (MDT).

The P120 Master Delivery Table for cost and schedule management is a single table used to determine the proper oversight approach, cost and schedule approach, and level of resources required. It establishes a uniform approach across all projects, allowing PBS to set the level of effort for a project based on factors such as magnitude, complexity, and risk.

In the MDT, projects are categorized from 1-4, based on their budget threshold. The table also provides guidance as to which deliverables are required, and which are recommended.

Table 2-1 P120 Master Delivery Table

2.2 Quality Management, Quality Assurance, and Quality Control Quality Management (QM) is the comprehensive system that ensures that all practices and deliverables consistently deliver excellence. It starts with the originator of any document, who is responsible for ensuring that their work is planned and executed in accordance with best practices and the established QM policies and procedures; it includes Quality Control checks that the work and the product meet the quality standards, and ends with verification from Quality

Assurance that all procedures have been completed.

Quality Control can be defined as the part of quality management focused on fulfilling quality requirements.

Quality Assurance can be defined as part of quality management focused on providing confidence that quality requirements have been fulfilled.

Quality Management efforts involve all levels of PBS.

Quality Management Processes.

Originators: The project team is responsible for completion of the cost, schedule, and value management deliverables for projects, as required by policy. Each party producing a deliverable is responsible for quality in the preparation of their deliverable.

https://docs.google.com/spreadsheets/d/1bg2MSAWDh81vhuVlsfFKIXxJUw96xZ6raMnL1B2Gahc/edit#gid=1887152435 https://docs.google.com/spreadsheets/d/1bg2MSAWDh81vhuVlsfFKIXxJUw96xZ6raMnL1B2Gahc/edit#gid=1887152435 https://docs.google.com/spreadsheets/d/1bg2MSAWDh81vhuVlsfFKIXxJUw96xZ6raMnL1B2Gahc/edit#gid=1887152435

Quality Control can take many forms, depending on the type and complexity of the project, but it must include a review and validation of the initial work and work product by a person independent of the origination. This may be someone who is fully independent of the project team, or may be someone on the project team who was not involved in the development of the work product. The GSA Regional Offices and Service Centers are responsible for quality control to ensure that the scope, cost, schedule, and value management deliverables for all projects are completed in accordance with this document.

Quality Assurance must be performed for all projects. Regional Offices and Service Centers must establish Quality Assurance protocols for projects below prospectus. Central Office will provide the Quality Assurance for projects above prospectus, as well as for special projects as identified.

2.3 Scope, Cost and Schedule Interfaces

Guiding Principles.

Project scope is the work that must be performed to meet a client's program goals for space, function, features, impact, and level of quality. Scope management sets the boundaries for the project and is the foundation on which the other project elements are built. From the beginning, scope helps identify the work tasks and their requirements for completion. Cost and schedule respond to scope requirements, but may set some limits. Assuming they are properly aligned during the planning phase, the baseline scope, budget, and schedule are achievable goals of project execution.

Effective scope management requires accurate definition of a client's requirements in the

Planning and Development stage. It also requires a systematic process for monitoring and managing all the factors that may affect or change the program requirements throughout the project design and construction phases through delivery of the finished project.

Scope management is the responsibility of the Project Manager.

Project definition is the level of detail to which a project is described. Scope starts with some basic functionality to meet a need and increases to the development of detailed plans and specifications that enable procuring the construction of the project.

The cost estimate classifications in ASTM Standard E2516 defines five classes of estimate definition based on a percentage of project definition. The classes recognize that an estimate’s accuracy is directly related to the level of scope definition.

https://www.astm.org/e2516-11r19.html

Project definition-based cost estimate classification from ASTM E2516, and schedule classification from

AACE 27R-03

Estimate class

Degree of project definition

Primary project life cycle Typical purpose of estimate

Schedule methods used

Class 5 0% - 2% Project Initiation Screening or Feasibility

Top-down planning using high level milestones and key project events

Class 4 1% - 15% Feasibility Studies/PDS Concept Study or Feasibility

As above, but semi detailed

Class 3 10% - 40% Concept Design Design Development

Budget authorization or control

“Package” top-down planning using key events, semi-detailed

Class 2 30% - 70% Design Development Construction Documents

Control or bid/tender

Bottom-up planning, detailed

Class 1 70% - 100% Construction Documents Check estimate or bid/tender

Bottom-up planning, detailed

Table 2-2: Classifications by Project Definition

The deliverables for schedule and cost management work from the same information and degree of project definition. The deliverables from these activities should correlate in the level of detail provided.

Any proposed change to project scope is evaluated for its impact to cost and schedule. The evaluation must also consider other implications driven by the change. No change is approved without these evaluations and appropriate approvals. The process also should assure that any conflicting interests among stakeholders are raised and vetted.

Schedule Related Requirements.

Using the baseline schedule together with the Cost/Schedule, the Project Manager will determine if the schedule is realistic and achievable. There will always be the necessity to continually align scope, schedule, and cost during the design process to ensure that the project objectives can be achieved.

2.4 Qualification and Ethics

All professional staff providing cost, schedule, value management, or any related service must be capable of providing the services in accordance with the degree of professional skill, quality, and care ordinarily exercised by members of the same profession currently practicing in the same locality under comparable circumstances, and as expeditiously as is consistent with professional skill and the orderly progress of the work.

Work must be performed under the direction and supervision of qualified individuals as noted below, and all senior staff must have demonstrated experience in the type of work and location of the project.

Estimators:

• Requirements. Estimators who are not GSA employees or contracted employees must have certification as a Certified Cost Professional (CCP) or a Certified

Estimating Professional (CEP) by AACE International, or as a Certified

Professional Estimator by the American Society of Professional Estimators

(ASPE: https://www.aspenational.org/), or equivalent.

• Ethics. The standards of practice described in the Canons of Ethics published by the AACE and the ASPE, and available on both their Web sites, apply to all estimating services defined in the P-120.

Schedulers

• Requirements. Schedulers who are not GSA employees or contracted employees must have certification by a recognized professional organization, such as

Planning and Scheduling Professional (PSP) by AACE or PMI Scheduling

Professional (PMI-SP: pmi.org)®, or equivalent.

• Ethics. The standards of practice described in the Canons of Ethics published by the AACE and the Code of Ethics and Professional Conduct published by PMI, and available on both their Web sites, apply to all scheduling services defined in the P-120.

Value Engineering Team Facilitators

• Requirements. Certification as a Certified Value Specialist (CVS) as designated by SAVE International® (https://www.value-eng.org/) or an equivalent certification by a recognized value analysis professional body is required to lead a value study.

• Ethics. The Standards of Conduct available on the SAVE International® Web site applies to all value management services.

https://web.aacei.org/ https://www.aspenational.org/ https://www.pmi.org/?s_kwcid=AL!8620!3!352268357275!e!!g!!pmi&utm_job_number=36&utm_campaign_name=branded_sem&utm_region_name=north_america&utm_program_origin=planned_campaign&utm_program_type=continuous_campaign&utm_campaign_intent=acquisition&utm_funnel_stage=customer_acquisition&utm_initiative=brand&utm_product=none&utm_marketing_channel=paid_media&utm_marketing_subchannel=search_ppc_branded&utm_start_date=05012019&utm_end_date=12312030&utm_source=google&utm_custom_field_one=pmi_branded_north_america&utm_custom_field_two=branded_brand&utm_custom_field_three=352268357275&utm_custom_field_four=pmi&utm_custom_field_five=e&gclid=CjwKCAjw4JWZBhApEiwAtJUN0FrC2Sd_fFvdM1GRZP_ccFVREemw_f1nIsy8vBBJEYjUT2LKz8Di1hoC_IEQAvD_BwE https://www.pmi.org/?s_kwcid=AL!8620!3!352268357275!e!!g!!pmi&utm_job_number=36&utm_campaign_name=branded_sem&utm_region_name=north_america&utm_program_origin=planned_campaign&utm_program_type=continuous_campaign&utm_campaign_intent=acquisition&utm_funnel_stage=customer_acquisition&utm_initiative=brand&utm_product=none&utm_marketing_channel=paid_media&utm_marketing_subchannel=search_ppc_branded&utm_start_date=05012019&utm_end_date=12312030&utm_source=google&utm_custom_field_one=pmi_branded_north_america&utm_custom_field_two=branded_brand&utm_custom_field_three=352268357275&utm_custom_field_four=pmi&utm_custom_field_five=e&gclid=CjwKCAjw4JWZBhApEiwAtJUN0FrC2Sd_fFvdM1GRZP_ccFVREemw_f1nIsy8vBBJEYjUT2LKz8Di1hoC_IEQAvD_BwE https://www.value-eng.org/page/ValueStandards https://www.value-eng.org/

3.0 GSA Cost Management Requirements

3.1 Policies and Requirements

Cost Management Requirements.

An estimate must be prepared for any capital or non-capital expenditure. Every Government estimate must be prepared as though the Government were competing for the award (Federal

Acquisition Regulation (FAR 36.203). Therefore, all estimates, regardless of the life-stage, must reflect costs that a prudent and experienced contractor would incur.

The P-120 establishes format, structure, frequency, and required supporting analyses for the cost management submittals.

Within GSA, cost management has many different purposes:

• Screening, Selecting, Vetting. As GSA assesses various approaches, high level estimates support narrowing the possible approaches as costs and benefits of each option are evaluated. (Initiation Phase)

• Feasibility. Estimating supports the analysis of alternatives related to the selected approach. (Project Planning and Development Phase)

• Budget Authorization. Based on the selected alternative, prepare estimates to support budget requests and authorizations. The budget requested should be tightly aligned with the scope and schedule developed from the planning and development activities. The budget approved may be less than the budget requested.

• Control. Create a cost plan based on the approved budget. Estimating at key milestones provides checks against the budget and opportunity for corrective action. (Design Phase, Procurement Phase and Construction Phase)

Independent Government Estimates (IGE).

The FAR requires that an IGE be prepared for all contracts and requires a detailed IGE as defined in FAR Part 36 for all projects exceeding the Simplified Acquisition Threshold.

• An Independent Government Estimate is defined as an unbiased cost estimate based upon the specifications and without the influence of a potential contractor’s marketing efforts or input. The IGE is generally prepared by either the

Government’s own representatives, the Architectural and Engineering firm that prepared the design, or the Construction Manager as Advisor.

An IGE is required prior to:

• Commitment of funds (for project funding)

• Contract Solicitation (for contract award)

FAR 36.203 requirements for the estimate used for construction contract award are:

• An IGE of construction costs must be prepared and furnished to the contracting officer at the earliest practicable time for each proposed contract and for each contract modification anticipated to exceed the simplified acquisition threshold.

The contracting officer may require an estimate when the cost of required work is not anticipated to exceed the simplified acquisition threshold. The estimate must be prepared in as much detail as though the Government were competing for award.

• When two-step sealed bidding is used, the IGE must be prepared when the contract requirements are definitized.

• Access to information concerning the IGE must be limited to Government personnel whose official duties require knowledge of the estimate. An exception to this rule may be made during contract negotiations to allow the contracting officer to identify a specialized task and disclose the associated cost breakdown figures in the Government estimate, but only to the extent deemed necessary to arrive at a fair and reasonable price. The overall amount of the IGE must not be disclosed except as permitted by agency regulations.

The cost estimate submitted before planned construction contract action is used as the basis for the IGE, which the contracting officer uses to determine whether an offeror’s proposed price is fair and reasonable and reflects an understanding of the project requirements. When a Third-

Party Estimate (TPE) is available, this may be deemed to be the IGE if the TPE meets the level of detail and clarification that a government generated IGE would have, based on scope, project phase, and the requirements of the Master Deliverable Table.

Quality Control will be performed by a qualified government employee, as defined by the

Region.

Third Party Estimates.

The Third-Party Estimates (TPE) are estimates prepared by an independent professional cost estimator unaffiliated with the design firm and the Construction Manager as Constructor (CMc).

A Third-Party Estimate may be performed by the Construction Manager as Advisor (CMa) for the Regional execution team.

The Government requires:

• TPEs for projects with Project Category rating of 4.

• TPE Review of the A-E estimate for construction projects with Project Category rating of 3.

The Third-Party estimator may perform a cost estimate review or a cost estimate.

• A cost estimate review gives an expert opinion on the quality and accuracy of the A-E estimate. The focus of this quality control effort includes approach, completeness, assessing validity of assumptions and risk and reasonableness.

• A cost estimate must use the same Work Breakdown Structure (WBS) and estimate detail requirements of the A-E cost estimator. The focus of this quality control effort is similar to the cost estimate review, but has a greater focus on accuracy of the items quantified and priced.

The GSA Third Party estimators must have a thorough understanding of the marketplace in which the project is located, research market prices for general construction items, and specialty items to prepare a cost review or cost estimate.

Professional Services Fee Estimate Preparation.

The FAR requires an Independent Government Estimate of the cost of professional services, such as architect/engineer, construction management, project management, or other specialty consultant services be furnished. (e.g. FAR 36.605, Estimate for A-E contracts; FAR 36.203, Government estimate of construction costs)

All A-E cost proposals and IGEs must include the GSA Forms 2630-14 and 2631-14. The reference instructions associated with 2630-14 and 2631-14 the forms must be followed.

3.2 Activity Specific Requirements

Prospectus Specific Core Requirements.

In accordance with the Public Buildings Act of 1959 (PL 86-249), as amended, the U.S.

Congress must authorize the scope and budget of each major capital construction project before design begins. Once Congress has approved a project’s construction budget, it cannot be increased, so the design team must approach prospectus funding as an absolute limit.

Construction bids may be solicited only if the Estimated Cost of Construction (ECC) amount at final construction documents is within congressionally authorized prospectus limits. The ECC is equal to the sum of the Estimated Cost of Construction at Award (ECCA), the Construction

Contingency, and the allowance for Art in Architecture. The construction bids should be no greater than the design to limit of the A-E contract (ECCA amount).

Under-Prospectus Specific Core Requirements.

Budget estimates must be based on defined scope and include stipulated amounts based on percentages directed by policy for design contingency and construction contingency. Budget estimates also include cost for professional services, which may include design services, CMa services, and commissioning services.

Control estimates are required during the design phase to ensure projects are delivered within budget to an agreed-upon scope. Cost management submissions must be prepared meeting the requirements stipulated in this policy.

Construction bids may be solicited only if: (1) the Estimated Total Project Cost (ETPC) is less than the prospectus level for any given year or (2) the IGE is less than or equal to the Design-to

Cost budget. ETPC includes the ECC plus estimated design and review costs plus estimated management and inspection costs.

The IGE for procurement must be in compliance with the applicable guidance found in the FAR.

Leasing Specific Core Requirements.

https://www.gsa.gov/forms-library/architect-engineer-cost-estimate https://www.gsa.gov/forms-library/architect-engineer-cost-estimate-summary

Leasing Requirements are established in the GSA Leasing Desk Guide, including requirements for estimates. In the event of conflicting requirements, The Leasing Desk Guide Requirements take precedence over the P-120. Specifically, the P-100 does not govern lease proposals from lessors. These are governed by the lease language. Estimates prepared by GSA in support of leasing actions must follow the P-120 requirements.

For additional procedural guidance, see the Leasing Desk Guide.

Alternative Project delivery.

Alternative Project delivery includes delivery methods such as Design Build, CM as Constructor

(CMc), CM as Advisor (CMa), among others. The P-120 does not govern cost proposals or bids from alternative delivery contractors. These are governed by the contract language. Estimates prepared by a CMa for GSA, as in CMa or in pre-construction consulting services, or by GSA in support of alternative delivery actions follow the P-120 requirements.

3.3 Cost Management Core Principles

Cost Control Due Diligence.

A Cost Plan is a key first cost management step after receiving budget approval. The Cost Plan allocates the overall budget to the various elements of the Work Breakdown Structure. Cost management establishes a system that tracks the current estimate against the cost plan for each Project Structure element.

The initial Cost Plan is prepared by PBS prior to procurement of design or construction services.

The cost is tracked throughout the life of the project, from inception to final project close out.

Internal estimate reviews, third party estimates and IGEs are essential elements of the GSA project Quality Control.

3.4 GSA Cost Management Requirements

Estimate Scope.

The estimate must include all elements of the proposed project work (including all professional services contract modifications, such as design), regardless of the phase. It is the estimator’s responsibility to ensure that all project costs are fully addressed, and that the scope boundaries are well defined. Even where estimates for portions of the work, such as owner furnished equipment, land acquisition, or entitlements, are provided by others, the estimator is responsible for establishing the total project cost. Not all cost categories will be needed for all estimates.

Where costs are included for details not indicated on the drawings and specifications, the estimator must include and document design assumptions to complete the scope.

https://www.gsa.gov/real-estate/real-estate-services/leasing/leasing-policy https://www.gsa.gov/real-estate/real-estate-services/leasing/leasing-policy

The estimator must check all cost-estimate calculations for accuracy and completeness, including assessing whether estimates completely and accurately represent design features and quantities.

The estimate must be structured and formatted to clearly present the key information for decisions that must be made.

The estimate must reflect the planned delivery method, and allocate costs accordingly. See

Glossary for specifics related to commonly used delivery methods.

Pricing of Work Items.

GSA requires that work items be measured and priced at a level of detail that is commensurate with the level of design, as noted in the P120 Master Deliverables Table.

Pricing must reflect the conditions of construction and address all premium factors such as

• Logistic complexity (phasing, constrained site conditions, difficulty of accessing the equipment, etc.)

• Existing conditions, including hazardous materials

• Non-standard working hours, overtime, shift premiums

Where quantities can be measured with sufficient confidence, work item pricing must be based on measured quantities. Parametrically derived quantities or assumptions may be made in the absence of measurable detail.

Individual work items must have unit-price cost estimates unless otherwise stated. The basis for these unit costs must be well documented and included in the supporting data of the estimate.

For construction estimates, add applicable indirect costs, such as overhead and profit at a subcontractor level, to these direct costs to reflect the in-place construction cost per unit of work required.

• Lump-sum pricing is not acceptable without description and quantification.

• For estimates prepared during Project Initiation and Project Planning and

Development phases, it is acceptable to use unit prices combining labor, materials, and equipment costs in a single figure.

• For concept design and schematic estimates, it is acceptable to use unit prices combining labor, materials, and equipment costs in a single figure.

• Other Design Phase estimates and Procurement, Construction, and Closeout

Phase estimates require separate labor, material, and equipment unit pricing.

Items that are a significant percentage of the total project’s cost require the greatest estimating effort. For such items, indirect costs and other markups associated with each task or work item must be separately identified and considered.

On a project-by-project basis, GSA may require quotes from suppliers or specialty contractors to document the costs of such major items, and the estimator must be prepared to discuss them with GSA. Documentation of unit-price data for smaller items could include price quotes, audits, catalog cuts, and historical costs to clarify price bases and assumptions made when other information is not available. The estimator provides a general statement describing the sources of unit costs and quantities used for each cost division or category, but individual source references for each itemized cost element are not required.

Allowances, Contingencies and Reserves.

In preparing budgets and estimates for construction projects and programs it is necessary to include a provision for monies to cover unknown or unforeseen circumstances and risks. PBS cost management practices follow the guidance set forth in ASTM E2168 Standard

Classification for Allowance, Contingency, and Reserve Sums in Building Construction

Estimating.

Key principles are:

• Allowances are used for planned project items until they can be better defined.

They are part of the construction estimate.

• Contingencies are used for unintended, not directly controllable project occurrences. They are part of the project estimate.

• Reserves are held by management for unforeseen changes in project requirements. They are part of the program estimate.

Within the ASTM definitions, the Design (or Estimating) Contingency is technically an

Allowance for completion of the defined planned project scope.

Allowances and Contingencies must always be separately identified, so that the magnitude of a contingency’s impact is clear. For example, the estimator may never add an allowance or contingency by concealing it within unit pricing or quantity estimates or takeoffs. For any allowance, a comprehensive list of assumptions should be included within the summary. Costs for assumptions should be quantitative and not based on lump sum, percentage-based, or inclusive-based on a single unit cost.

Contingency is not to be used to avoid making an accurate assessment of expected cost. GSA may choose to set aside separate contingencies for major schedule changes, unknown design factors, unanticipated regulatory standards or changes, additions to project scope, force majeure situations, or congressional budget cuts.

Bid Options / Alternates.

Where indicated by the Master Delivery Table, the A-E is required to propose Bid Options /

Alternates. The proposed Bid Options / Alternates must reduce the ECCA to 10 percent below the budget limitation. When Bid Options / Alternates are used in the project, separate cost estimates for the base bid and for each individual option or alternate are required. The estimates must follow the required project WBS.

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Reviewing and Reconciling Estimates.

GSA requires a thorough review and acceptance of the cost management submittal of an A-E deliverable as part of a Quality Control process.