1 July 1998
COST ENGINEERING REQUIREMENTS
12-1. MANDATORY DESIGN CRITERIA AND STANDARDS. Although not all-inclusive, this
paragraph contains Federal requirements that are established by executive orders, public laws,
local requirements and other directives. These requirements and all other Federal
requirements must be reviewed and included, as applicable, in the RFP for each new project.
a. FAR 36.203 requires that an independent Government estimate of construction
costs be prepared for each proposed contract and for each contract modification anticipated to
cost 0,000 or more. The Government estimate is the formal, approved construction cost
estimate prepared to support contract award. The Government estimates are used to evaluate
reasonableness of proposals, to analyze Design-Build contractor's proposals during
negotiations, and to serve as a guide in estimating a schedule of payments.
b. The authority, directives, and procedures for preparing construction cost estimates
throughout all phases of project development including planning, program-ming, and design
are provided in ER 1110-1-1300, ER 1110-3-1300, and ER 1110-3-1301. Technical guidance
and procedures for preparation and review of cost estimates are contained in Engineering
Instruction (EI) 01D010, Construction Cost Estimates.
12-2. LESSONS LEARNED. The following paragraph contains recommended information that
should be considered in future RFP's in order to avoid past problems, define engineering
requirements, define design submittal requirements, and ensure a level of quality. These
lessons learned should be reviewed and incorporated as appropriate in each new project.
a. Review scope of work and Programmed Amount (PA). Verify that the cost estimate
is based on the approved scope of work and the project can be designed and constructed
within the PA.
b. The construction cost estimate should be prepared in accordance with the approved
scope, latest design criteria, and construction requirements, and must include the design costs
to be incurred by the D-B contractor. The construction cost estimate should be developed as
accurately as possible, in as much detail as can be assumed, and be based upon the latest
c. The cost estimate should be developed using the latest required and approved work
breakdown structure as described in cost engineering regulations and technical manuals.
d. The project cost estimate includes all costs to complete the project regardless of
funding source or fund type. Allowances such as inflation, construction contingencies, and
supervision and administration are included.
e. Government cost engineers should perform independent review of all the cost
estimate, whether prepared in-house or by outside private Architect Engineer contract.