Preparing Independent Government Estimates – IGEs is fundamental to achieving best value outcomes. Unfortunately, the process is largely done inappropriately and without cost transparency or visibility, and rarely is verifiable.
The usefulness of an IGE to a contracting officer and other Government interest depends largely upon its supporting documentation. Most IGEs do not use appropriate data sources and this is particularly true for CONTRUCTION activities (repair, renovation, maintenance, new builds).
The best source of information for “construction” IGEs is a locally researched detailed unit price book. Unfortunately, most Government agencies use “historical information”, “parametric modeling”, or national average cost data and associated construction cost indexes and/or area cost factors. In fact, the United States Army Corps of Engineers (USACE) has been using the later archaic and ineffective methods for decades, and continues to this day.
The net result is that without verifiable, current, and local detailed cost data, contracting offices and facilities sustainment and/or management teams are at a significant disadvantage. This has lead to the vast major of construction cost estimates (80% or more) being inaccurate. The associated lack of detail has results in change orders and errors and omissions that cause 90% of a ALL construction projects to be late, over budget, or completed to the dissatisfaction of one or more participants or stakeholders.
All of the tools and support services are readily available to resolve the above and virtually assure that 90% of all projects are well documented and completed on-time, on-budget, and in a quality manner.
The Federal Acquisition Regulation requires independent government estimates of construction costs for contracts exceeding the simplified acquisition threshold.
FAR 36.203.
Agencies may use simplified acquisition procedures to purchase goods and services where the aggregate amount does not exceed $150,000.
FAR 2.101 and 13.000.
“An independent Government estimate of construction costs shall 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 shall be prepared in as much detail as though the Government were competing for award.”
“Access to information concerning the Government estimate shall 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 Government’s estimate shall not be disclosed except as permitted by agency regulations.”
Preparing an Owner’s Estimate
Real property owners must develop a detailed written scope of work. Estimating the right project cost is should not be a challenge if appropriate source information and tools are used.
Any professional estimator should be able to read and interpret the owner’s scope of work in sufficient details to select appropriate material, equipment and labor and associated quantities.
A joint site visit with critical to the above, with all potential participants and stakeholders. Costs should be based upon local market prices and associated regulatory requirements.
GAO, Cost Estimating and Assessment Guide Best Practices for Developing and Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: Mar. 2009) and Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: Sept. 2014)
The IGCE can be part of a broader cost estimating process for programs, which sums individual cost elements to establish future program costs. GAO-09-3SP