Cost Engineering

Mission: Cost Engineering supports agency and stakeholder credibility; contributes to mission success; provides independence, upholding agency and project sponsor integrity; allows for bid protest and audit success; and ensures non-competed awards are not overpaid.

The objective of cost engineering is to focus USACE leadership on the effective development, management, and control of cost estimates to ensure funds are adequately programmed, authorized, and appropriated in all phases of the project. The ability to provide quality project estimates is an essential element of our support to our customers and partners for the successful accomplishment of the project.

The primary products of the cost engineer are budget estimates and Independent Government Estimates (IGEs) for construction projects.  Budget estimates support funding requests; IGEs support construction contract award, which includes contract modification.  'Independent' signifies freedom from influence.

These products are required by Office of Management and Budget Circular A-11, Preparation, Submission, and Execution of the Budget and Federal Acquisition Regulation (FAR) Parts 13.106-3, 15.404, 15.406 and 36.203.

Following the FAR, the IGE is prepared as though the Government were competing for the award, and therefore includes all costs a prudent and well-equipped contractor would be expected to incur.

The quality standard for a cost estimate is defined by the Government Accountability Office using the term 'reliable', meaning well-documented, comprehensive, credible, and accurate.  Accuracy is achieved through the cost estimate consisting of two components, the base cost estimate (the cost estimate reflecting the design deliverables at hand) and the contingency developed using Monte Carlo-based cost and schedule risk analysis.

Example cost engineering products:
•Budget cost estimate for alternatives analysis
•Construction schedule
•Cost and schedule risk analysis
     •Risk brainstorming session
     •Risk register
     •Risk model inputs
     •Risk model outputs (Contingency chart, S-curve, sensitivity chart)
     •Risk report
•Budget cost estimate for project authorization
•Independent Government Estimate for construction contract bidding
•Cost and price analysis
•Independent Government Estimate for contract modification
     •Delay impact analysis
•Critical input to team on all aspects of planning, design, construction

Functions: The USACE Cost Engineering Community of Practice consists of those centralized HQUSACE, major subordinate command (MSC), district, laboratory, and field operating activity (FOA) elements staffed with trained personnel and sufficient manpower and computing tools and software programs to accomplish cost engineering functions.  These elements are both responsible for and accountable for the cost estimates they prepare.

Cost engineering functions include the development, preparation, review, and approval of all cost estimates for projects assigned to USACE, including quantities; knowledge in cost estimating systems, life cycle costs analysis, cost analysis, cost risk analysis, and parametric techniques; familiarity with the construction, operations, design, and project management fields, including construction issues, field conditions, and construction and design processes and technologies.