DOE G 430.1-1, Cost Estimating Guide

I I DOE G 430.1-1 03-28-97 COST ESTIMATING GUIDE U.S. DEPARTMENT OF ENERGY Associate Deputy Secretary for Field Management Distribution: Initiated By: All Departmental Elements Associate Deputy Secretary for Field Management i DOE G 430.1-1 03-28-97 CONTENTS LIST OF FIGURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviii ACRONYMS AND ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi CHAPTER 1 - INTRODUCTION 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 2. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 3. COST ESTIMATING AND THE PROGRAM/PROJECT MANAGEMENT SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2 CHAPTER 2 - COST ESTIMATION PACKAGE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 2. BEGINNING THE PACKAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 3. TECHNICAL SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 4. COST ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 5. SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 6. DOCUMENTING THE COST ESTIMATION PACKAGE . . . . . . . . . . . . . . . . . 2-3 CHAPTER 3 - STAGES OF PROJECT DEVELOPMENT 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 2. RELATIONSHIP OF STAGES OF DEVELOPMENT TO TYPES OF ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 A. Study Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2 B. Design Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3 C. Implementation Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3 D. EM and Conventional Construction Stages . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3 3. NATIONAL ENVIRONMENTAL POLICY ACT ACTIVITIES . . . . . . . . . . . . . 3-3 A. Environmental Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 B. Environmental Impact Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 4. STUDY PHASE ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 A. Pre-Title I Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6 B. Assessment - Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6 1. Comprehensive Environmental Response Compensation and Liability Act (CERCLA): Preliminary Assessment/Site Inspection . . . . . . . . . . . . . . 3-6 2. Resource Conservation and Recovery Act (RCRA): Facility Assessment3-7 5. DESIGN ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7

A. Conventional Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7 1. Title I (Preliminary) Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8 ii DOE G 430.1-1 03-28-97 CONTENTS (continued) 2. Title II (Detailed) Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8 B. Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9 1. CERCLA: Remedial Investigation/Feasibility Study . . . . . . . . . . . . . . 3-9 2. RCRA Facility Investigation/Corrective Measures Study . . . . . . . . . 3-10 C. Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11 6. IMPLEMENTATION OF DESIGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 A. Conventional Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 B. Environmental Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 C. Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-12 7. PROJECT SUPPORT ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 A. Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13 B. Construction Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15 C. Construction Management for Environmental Management Projects . . . . . 3-15 D. Project Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 E. Startup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 F. Construction Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16 G. Program Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 H. Program Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 I. Activity Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-18 J. Environmental Restoration Management Contractor . . . . . . . . . . . . . . . . . . 3-19 CHAPTER 4 - TYPES OF COST ESTIMATES 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 2. CONSTRUCTION ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1 A. Planning/Feasibility Study Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2 B. Budget or Conceptual Design Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3 C. Title I Design Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4 D. Title II Design Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5 3. ENVIRONMENTAL RESTORATION ESTIMATES . . . . . . . . . . . . . . . . . . . . . 4-6 A. Assessment Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-6 1. Planning Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 2. Preliminary Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7

3. Detailed Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 B. Cleanup Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8 1. Planning Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8 2. Feasibility Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8 3. Preliminary Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 4. Detailed Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 4. OTHER ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 A. Government Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 B. Estimates for Minor Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11 iii DOE G 430.1-1 03-28-97 CONTENTS (continued) C. Current Working Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11 D. Independent Cost Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11 E. Bilateral (Two-Party) Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-12 F. Performance versus Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-12 CHAPTER 5 - COST CODES AND THE WORK BREAKDOWN STRUCTURE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 A. Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 B. Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 3. PURPOSE OF SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 A. Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 B. Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 4. INTERFACE OF SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3 5. THE WORK BREAKDOWN STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4 A. Fundamental Structure of a Work Breakdown Structure . . . . . . . . . . . . . . . . 5-4 B. Preparing a Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6 1. Understanding of the Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6 2. Defining the Levels and Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6 3. Use of the Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . 5-6 4. Updating the Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . 5-7 6. THE COST CODE SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7 Fundamental Structure of a Cost Code System . . . . . . . . . . . . . . . . . . . . . . . 5-7 7. INTERFACE BETWEEN ASSET TYPES AND CODE OF ACCOUNTS . . . . . 5-7 CHAPTER 6 - PROJECT FUNCTIONS AND ACTIVITIES DEFINITIONS FOR TOTAL PROJECT COST

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 A. Total Estimated Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1 B. Other Project Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 C. Total Project Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 3. DISCUSSION OF CHARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 A. Different Phases of Project Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 B. Different Functions of Total Estimated Cost and Other Project Cost . . . . . . 6-3 1. Total Estimated Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3 2. Other Project Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3 4. COST ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4 A. Plant and Capital Equipment (PACE) Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4 B. Operating Expense Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4 iv DOE G 430.1-1 03-28-97 CONTENTS (continued) C. Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4 CHAPTER 7 - DIRECT/INDIRECT COSTS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 A. U. S. Department of Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 B. American Association of Cost Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1 C. Table of Indirect/Direct Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2 D. Type of Contract Cost Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2 CHAPTER 8 - STARTUP COSTS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 2. DEFINITION OF STARTUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 A. Conventional Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 B. Environmental Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1 3. STARTUP COMPONENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 A. Startup Transition Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 B. Startup Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 C. Operating and Maintenance Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 D. Spare Parts Inventory and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2 E. Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2

4. ESTIMATING GUIDANCE FOR STARTUP COSTS . . . . . . . . . . . . . . . . . . . . . 8-3 CHAPTER 9 - OPERATING COSTS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 2. OPERATING COSTS FOR CONVENTIONAL CONSTRUCTION PROJECTS 9-1 A. Capital Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 B. Utility Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-1 C. Labor Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2 D. Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2 E. Support Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2 F. Environmental Compliance/Permit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3 G. Downtime Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3 3. OPERATING COSTS FOR ENVIRONMENTAL REMEDIATION AND RESTORATION PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3 A. Capital Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3 B. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3 C. Labor Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-4 D. Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-4 v DOE G 430.1-1 03-28-97 CONTENTS (continued) E. Support Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-5 F. Downtime Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-5 G. Special Environmental Remediation/Restoration Project Costs . . . . . . . . . . . 9-5 CHAPTER 10 - ESCALATION 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 2. EXAMPLE OF USE OF ESCALATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1 3. ESCALATION RELATIONSHIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4 A. Historical Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4 B. Predictive Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4 C. Escalation Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-4 4. ESCALATION INDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5 A. Developing Escalation Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5 B. Escalation Indices Published by DOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5 5. USE OF DOE ESCALATION INDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5 A. How to Select an Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-5 B. How to Apply an Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6

C. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6 CHAPTER 11 - CONTINGENCY 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 2. CONTINGENCY DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 A. General Contingency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-1 B. Buried Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-2 3. SPECIFICATIONS FOR CONTINGENCY ANALYSIS . . . . . . . . . . . . . . . . . . 11-2 A. Construction Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-3 1. Project Complexity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-3 2. Design Completeness or Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-4 3. Market Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-4 4. Special Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-5 B. Environmental Restoration Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-7 1. Assessment Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-7 2. Remediation/Cleanup Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-8 C. Contingency Tools - Monte Carlo Analyses Methodology . . . . . . . . . . . . . 11-9 CHAPTER 12 - THE SCHEDULE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 2. SCHEDULE ELEMENTS/BASIC REQUIREMENTS . . . . . . . . . . . . . . . . . . . . 12-1 A. Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 vi DOE G 430.1-1 03-28-97 CONTENTS (continued) B. Durations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 C. Sequence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1 D. Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 3. SCHEDULE PORTRAYAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 A. Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 B. List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 C. Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2 D. Programmed Evaluation and Review Technique . . . . . . . . . . . . . . . . . . . . . 12-2 4. KEY DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3 A. Key Decision 0 (KD-0) - Approval of Mission Need . . . . . . . . . . . . . . . . . 12-3 B. Key Decision 1 (KD-1) - Approval of New Start . . . . . . . . . . . . . . . . . . . . 12-4 C. Key Decision 2 (KD-2) - Approval to Commence Title II, or Final/Detailed Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-4

D. Key Decision 3 (KD-3) - Approval to Commence Construction or Enter Full- Scale Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-5 E. Key Decision 4 (KD-4) - Approval to Commence Operation/Production . . 12-5 5. FUNDING PROFILE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-5 A. Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-5 B. Developing Costs for the Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-6 6. BUDGETARY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-6 CHAPTER 13 - CHECK ESTIMATES AND INDEPENDENT COST 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 2. CHECK ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 A. General Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 B. Check Estimate Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1 1. Review Background Data and Conditions . . . . . . . . . . . . . . . . . . . . . 13-2 2. Review Check Estimate Coverage and Scope . . . . . . . . . . . . . . . . . . . 13-2 3. Evaluate the Estimate Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 4. Identify Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 5. Complete Estimate Review Checklist . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 3. INDEPENDENT COST ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 A. General Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-2 B. Independent Cost Estimate Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3 1. Documentation Review (Type I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3 2. Reasonableness Review (Type II) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-3 3. Parametric Estimating Technique (Type III) . . . . . . . . . . . . . . . . . . . . 13-3 4. Sampling Technique (Type IV) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4 5. Bottoms-up Estimating Technique (Type V) . . . . . . . . . . . . . . . . . . . . 13-4 6. Independent Cost Estimate Content . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4 4. DOUBLE CHECKING THE ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-5 vii DOE G 430.1-1 03-28-97 CONTENTS (continued) CHAPTER 14 - PROJECT CONTROLS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 2. COST ESTIMATION PACKAGE USAGE BY PROJECT CONTROLS . . . . . . 14-1 A. Technical Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 B. Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1 C. Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-2 CHAPTER 15 - ESTIMATING METHODS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1

2. ESTIMATING METHODS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 A. Bottoms-Up Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 B. Specific Analogy Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1 C. Parametric Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2 D. Cost Review and Update Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2 E. Trend Analysis Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2 F. Expert Opinion Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2 3. DATA COLLECTION AND NORMALIZATION . . . . . . . . . . . . . . . . . . . . . . . 15-2 4. HOW TO ESTIMATE DIRECT COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3 A. Material Takeoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3 B. Pricing the Material and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3 C. Construction Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3 D. Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4 E. Special Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4 F. Government Furnished Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5 G. Sampling and Analysis Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5 H. Transportation and Waste Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5 I. Environmental Management Considerations . . . . . . . . . . . . . . . . . . . . . . . . 15-5 5. HOW TO ESTIMATE INDIRECT COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6 A. Each Indirect Cost Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6 B. Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6 C. Government Furnished Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-7 D. Special Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-7 6. GUIDELINES FOR MANAGEMENT COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . 15-8 A. Construction Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-8 B. Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-8 C. Construction Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-8 D. Quality Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-8 E. Health and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-9 F. Environmental Restoration Management Contractor . . . . . . . . . . . . . . . . . . 15-9 viii DOE G 430.1-1 03-28-97 CONTENTS (continued) G. Program Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-9 CHAPTER 16 - EXAMPLE COST CODES FOR CONSTRUCTION PROJECTS

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1 2. OUTLINE OF THE LEVEL 1 COST CODES FOR CONSTRUCTION PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-1 A. Land and Land Rights (400) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 B. Improvements to Land (460) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 C. Buildings (501) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 D. Other Structures (550) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2 E. Utilities (600) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 F. Special Equipment/Process Systems (700) . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 G. Improvements for Others (800) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 H. Demolition (810) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 I. Tunneling (820) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-3 J. Drilling (830) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4 K. Standard Equipment (860) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4 3. OUTLINE OF LEVEL 1 AND LEVEL 2 COST CODES . . . . . . . . . . . . . . . . . . 16-4 4. DESCRIPTION OF LEVEL 2 COST CODES . . . . . . . . . . . . . . . . . . . . . . . . . . 16-7 A. 400 Land and Land Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-7 1. 4010 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-7 2. 4020 Land Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-8 3. 4030 Minerals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-8 4. 4040 Timber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-8 B. 460 Improvements to Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-8 1. 4601 Site Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-8 2. 4602 Drainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-9 3. 4603 Landscaping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-10 4. 4605 Railroads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-10 5. 4606 Port Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-11 6. 4700 Roads, Walks, and Paved Areas . . . . . . . . . . . . . . . . . . . . . . . . 16-12 7. 4800 Fences and Guard Towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-13 8. 4900 Other Improvements to Land . . . . . . . . . . . . . . . . . . . . . . . . . . 16-13 C. 501 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-13 1. 5011 Excavation and Backfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-13

2. 5012 Concrete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-14 3. 5013 Masonry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-15 4. 5014 Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-16 5. 5015 Wood and Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17 6. 5016 Finishes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-18 7. 5017 Special Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-21 ix DOE G 430.1-1 03-28-97 CONTENTS (continued) 8. 5018 Mechanical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-22 9. 5019 Electrical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-24 D. 550 Other Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 1. 5501 Excavation and Backfill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 2. 5502 Concrete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 3. 5503 Masonry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 4. 5504 Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 5. 5505 Wood and Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-27 6. 5506 Thermal and Moisture Protection . . . . . . . . . . . . . . . . . . . . . . . 16-27 7. 5507 Special Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-29 8. 5508 Mechanical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-29 9. 5509 Electrical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-30 E. 600 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-30 1. 6100 Communications Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-30 2. 6150 Electric Transmission and Distribution Systems . . . . . . . . . . . . 16-30 3. 6210 Alarm Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-30 4. 6250 Gas Transmission and Distribution Systems . . . . . . . . . . . . . . . 16-30 5. 6300 Irrigation Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-30 6. 6400 Sewerage Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-31 7. 6450 Steam Generation and Distribution Systems . . . . . . . . . . . . . . . 16-31 8. 6500 Water Supply, Pumping, Treatment, and Distribution Systems 16-31 9. 6600 Oil Piping and Distribution System . . . . . . . . . . . . . . . . . . . . . 16-31 10. 6900 Other Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-31 F. 700 Special Equipment/Process Systems . . . . . . . . . . . . . . . . . . . . . . . . . . 16-31 1. 7010 Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-31 2. 7020 Heat Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-31 3. 7030 Mechanical Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32

4. 7040 Package Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 5. 7050 Process Piping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 6. 7060 Electrical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 7. 7065 Instrumentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 8. 7070 Protective Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 9. 7080 Reactor Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32 G. 800 Improvements for Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-33 H. 810 Demolition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-33 I. 820 Tunneling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-33 J. 830 Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-33 K. 860 Standard Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-34 1. 8610 Heavy, Mobile Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-34 2. 8615 Hospital and Medical Equipment . . . . . . . . . . . . . . . . . . . . . . . 16-34 3. 8620 Laboratory Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-34 4. 8625 Motor Vehicles and Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-34 x DOE G 430.1-1 03-28-97 CONTENTS (continued) 5. 8630 Office Furniture and Equipment . . . . . . . . . . . . . . . . . . . . . . . . 16-34 6. 8635 Process Equipment (for Mfgr.) . . . . . . . . . . . . . . . . . . . . . . . . 16-34 7. 8640 Railroad Rolling Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-35 8. 8645 Reactors and Accelerators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-35 9. 8650 Portable Security and Protection Equipment . . . . . . . . . . . . . . 16-35 10. 8655 Shop Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-35 11. 8660 Reserve Construction Equipment Pool . . . . . . . . . . . . . . . . . . . 16-35 12. 8670 Automatic Data Processing (ADP) Equipment . . . . . . . . . . . . . 16-35 13. 8699 Miscellaneous Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-36 5. INDIRECT CONSTRUCTION COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-36 A. Engineering, Design, and Inspection (ED&I) . . . . . . . . . . . . . . . . . . . . . . 16-36 1. Surveys, Geological Studies, and Tests . . . . . . . . . . . . . . . . . . . . . . . 16-36 2. Preliminary Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-36 3. Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-36 4. Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 5. Design of Specialized Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 6. Expediting or Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 7. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37

B. General and Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 1. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-37 2. Superintendence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 3. Construction Contractor’s Engineering . . . . . . . . . . . . . . . . . . . . . . . 16-38 4. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 5. Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 6. Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 7. Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 8. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-38 9. Office Supplies and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 C. Other Indirect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 1. Payroll Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 3. Damages not Covered by Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 4. Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 5. Taxes Other Than Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 6. Holiday and Vacation Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-39 7. Signup and Termination Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 8. Retroactive Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 9. Reporting Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 10. Welding Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 11. Contribution to Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 12. Transportation of Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 xi DOE G 430.1-1 03-28-97 CONTENTS (continued) 13. Motor Pool Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 14. Aircraft Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-40 15. Medical and First Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 16. Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 17. Fire Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 18. Maintenance of General Construction Plant . . . . . . . . . . . . . . . . . . . 16-41 19. Small Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 20. Drinking Water and Sanitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 21. Light and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41

22. Heat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-41 23. Compressed Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 24. Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 25. General Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 26. Camp Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 27. Camp Operation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 28. Camp Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 29. Recovery of Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 30. Contract Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-42 CHAPTER 17 - EXAMPLE OF ENVIRONMENTAL RESTORATION CODE OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1 2. FUNDAMENTAL STRUCTURE OF THE REMEDIATION COST . . . . . . . . . 17-1 3. LEVEL 1 COST CODES FOR REMEDIATION, LIST AND DESCRIPTION . 17-2 A. Preliminary Assessment (100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 B. Site Inspection (200) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 C. Remedial Investigation (300) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2 D. Feasibility Study (400) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 E. Remedial Design (500) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 F. Remedial Action (600) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3 4. LIST OF LEVELS 1 AND 2 REMEDIATION COST CODES . . . . . . . . . . . . . . 17-3 5. LIST OF LEVEL 3 REMEDIATION COST CODES . . . . . . . . . . . . . . . . . . . . . 17-5 CHAPTER 18 - USE OF COST ESTIMATING RELATIONSHIPS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 2. LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 A. Historical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 B. Bounds of the Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1 C. Different Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2 3. CHARACTERISTICS OF THE ESTIMATING RELATIONSHIP . . . . . . . . . . . 18-2 xii DOE G 430.1-1 03-28-97 CONTENTS (continued) Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2 4. HARDWARE CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-6 5. JUDGMENT IN COST ESTIMATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-6 CHAPTER 19 - DATA COLLECTION AND NORMALIZATION FOR THE DEVELOPMENT OF COST ESTIMATING RELATIONSHIPS

1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1 2. DATA COLLECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-1 A. Examining the Historical Data for Selection . . . . . . . . . . . . . . . . . . . . . . . . 19-1 B. Sources for Historical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2 C. Developing Data from Model Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3 D. Historical Data Versus Model Developed Cost Estimating Relationships . . 19-4 3. DATA NORMALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4 A. Accounting Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-5 B. Physical and Performance Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . 19-5 C. Nonrecurring and Recurring Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-5 D. Price-Level Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6 E. Cost-Quantity Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6 F. Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6 G. Regional Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6 H. Other Possible Cost Normalizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6 4. DEVELOPING COST ESTIMATING RELATIONSHIPS . . . . . . . . . . . . . . . . . 19-7 A. Simple Averages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 B. Detail of Cost Estimating Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-7 C. Enhanced Cost Estimating Relationship Program . . . . . . . . . . . . . . . . . . . . 19-7 CHAPTER 20 - ESTIMATING SPECIALTY COSTS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1 2. RESEARCH AND DEVELOPMENT COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1 A. Personnel Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2 B. Equipment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2 C. Prototypes and Pilot Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2 D. Scaled Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2 E. Computerized Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-3 F. Cost Estimating Methods for Research and Development Projects . . . . . . . 20-3 1. Scoping Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-3 2. Scaling Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-3 3. Detailed Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-5 xiii DOE G 430.1-1 03-28-97 CONTENTS (continued) 4. Level of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-5 3. REGULATORY COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-5

A. Environmental Compliance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-5 B. Health and Safety Compliance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-7 C. Compliance Costs and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-8 4. SPECIALTY EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-8 CHAPTER 21 - LEARNING CURVE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-1 2. THE CURVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-1 3. LEARNING CURVE FROM SINGLE-UNIT DATA . . . . . . . . . . . . . . . . . . . . . 21-3 A. Unit Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-3 B. Cumulative Total Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-3 C. Cumulative Average Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-4 4. EFFECTS OF DOUBLING PRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-5 5. LEARNING CURVE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-5 6. LEARNING CURVE FROM GROUPED DATA . . . . . . . . . . . . . . . . . . . . . . . . 21-5 7. APPLICATION OF THE LEARNING CURVE . . . . . . . . . . . . . . . . . . . . . . . . . 21-6 CHAPTER 22 - COST MODELS AND COST ESTIMATING SOFTWARE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-1 2. DEFINITION OF A COST MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-1 A. Types of Cost Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-2 1. Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-3 2. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-4 B. Model Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-5 C. Computerized Cost Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-6 3. ESTIMATING SOFTWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-8 A. Survey of Available Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-8 B. DOE-Owned Software Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-9 1. The Enhanced Cost Estimating Relationship Program . . . . . . . . . . . . 22-9 2. The Historical Cost Data Base Management Program . . . . . . . . . . . . 22-13 3. The Independent Cost Estimating Contingency Analyzer (ICECAN) 22-13 4. Detailed Cost Estimating Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 22-14 C. Commercial Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-16 xiv DOE G 430.1-1 03-28-97 CONTENTS (continued) CHAPTER 23 - LIFE CYCLE COST ESTIMATE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1 2. LIFE-CYCLE COST ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1

A. Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1 B. Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-2 C. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-3 D. Common Errors Made in Life-Cycle Cost Analysis . . . . . . . . . . . . . . . . . . 23-3 E. Typical System Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-3 F. Life-Cycle Cost Analysis Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-4 G. Example Life-Cycle Cost Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-5 CHAPTER 24 - ACTIVITY BASED COSTING 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-1 2. ACTIVITY BASED COSTING METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . 24-1 A. Activity Based Costing Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-1 B. Use of Activity Based Costing Methodology . . . . . . . . . . . . . . . . . . . . . . . 24-2 C. Identification of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-2 D. Example of an Activity Based Costing Estimate . . . . . . . . . . . . . . . . . . . . . 24-2 3. APPLICATION OF ACTIVITY BASED COSTING . . . . . . . . . . . . . . . . . . . . . 24-4 CHAPTER 25 - GUIDELINES FOR ENGINEERING, DESIGN, & INSPECTION COSTS 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-1 2. ENGINEERING, DESIGN, AND INSPECTION COSTS ACTIVITIES . . . . . . 25-1 3. WAYS TO ESTIMATE ENGINEERING, DESIGN, AND INSPECTION COSTS25-2 A. Count Drawings and Specifications Method . . . . . . . . . . . . . . . . . . . . . . . . 25-2 B. Full Time Equivalent Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3 C. Percentage Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3 D. Documenting Engineering, Design, and Inspection Costs . . . . . . . . . . . . . . 25-3 E. Considerations When Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-5 1. Comprehensiveness of the Functional/Operational Requirements . . . . 25-5 2. Quality Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-5 3. Design Planning Tabulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-5 4. Design Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 5. Engineering Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 6. Drafting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 7. Specification Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 8. Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 9. Cost Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-6 10. Design Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 DOE G 430.1-1 xv (and xvi) 03-28-97

CONTENTS (continued) 11. Safety Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 12. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 13. Government Furnished Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 14. Off-Site A/E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 15. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-7 16. Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 17. Labor Density . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 18. Complexity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 19. Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 20. Adequacy of Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 21. Offsite Fabrications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-8 22. Location of the Job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-9 23. Guideline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-9 24. Performance Specification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-9 F. Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-10 APPENDIX A - DICTIONARY APPENDIX B - REFERENCES APPENDIX C - EXAMPLES OF COST ESTIMATION PACKAGES DOE G 430.1-1 xvii (and xviii) 03-28-97 LIST OF FIGURES 1-1 Major System Acquisition Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3 5-1 Typical Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2 5-2 Work Breakdown Structure Extended to Cost Account and Work Package Levels Indicating Cross Walk to Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5 11-1 Contingency as a Function of Project Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-6 11-2 Contingency Data Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-11 12-1 Bar Chart Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3 12-2 Example of a Funding Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-6 15-1 Idaho National Energy Laboratories Indirect Costs (1988) . . . . . . . . . . . . . . . . . 15-7 18-1 Scaling Curve Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-3 18-2 Cost Versus Project Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-4 18-3 Cost Comparison of Analogous Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-5 20-1 Application of "Six-Tenth-Factor" Rule to Costs for Shell-and-Tube Heat Exchangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-5 20-2 Growth of Health and Environmental Protection Laws . . . . . . . . . . . . . . . . . . . . 20-6

21-1 Curve Appearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-1 21-2 Data on Log-Log Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-2 21-3 Curves on Log-Log Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-4 22-1 Simplified Cost Model Flow Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-11 23-1 Stages of LCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-2 23-2 Actions Affecting LCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-4 23-3 LCC Profile for System Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-5 DOE G 430.1-1 xix (and xx) 03-28-97 LIST OF TABLES 3-1 EM and Conventional Construction Terminology Crosswalk . . . . . . . . . . . . . . . . 3-2 3-2 Comparison of EM Project Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14 4-1 Degrees of Accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14 6-1 TPC and TEC Guidance and Clarification Inclusion of Detailed Activities in TPC and/or TEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5 6-2 Recommended Cost Allocation Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12 7-1 Recommended Categories for Direct/Indirect Cost Elements . . . . . . . . . . . . . . . . 7-3 10-1 Example of Five-Year Project Requiring Escalation Calculations . . . . . . . . . . . . 10-2 11-1 Contingency Allowance Guide by Type of Estimate . . . . . . . . . . . . . . . . . . . . . . 11-3 11-2 Contingency Allowances for Current Working Estimates . . . . . . . . . . . . . . . . . . 11-5 11-3 Contingency Guidelines for Environmental Restoration Projects . . . . . . . . . . . . 11-8 21-1 Production Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-3 22-1 Equations Analyzed by the ECER Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-12 xxi DOE G 430.1-1 03-28-97 ACRONYMS AND ABBREVIATIONS A/Es architect/engineer ABC Activity Based Costing ACM Asbestos Containing Material ADP Automatic Data Processing ADS Activity Data Sheet AES Automated Estimating System BA Budget Appropriation BM Bill of Material BO Budgetary Outlay CACES Corps of Engineers’ Computer-Aided Cost Engineering System CAD Computer-aided Drafting CC Construction Contractors CCMD Committee for Cost Methods Development CDR Conceptual Design Report CER Cost Estimating Relationship CERCLA Comprehensive Environmental Response Compensation and Liability Act CFO Chief Financial Officer CM Construction Management CM Construction Management CMD Cost Methods Development CMI Corrective Measures Implementation CMP Configuration Management Plan COA Code of Accounts CPDS Construction Project Data Sheet CSI Construction Specification Institute Code CWBS Contract Work Breakdown Structure D&D Decontamination and Decommissioning DOE Department of Energy DOS Disk Operating System DPT Design Planning Tabulation EA Environmental Assessment ECER Enhanced Cost Estimating Relationship ED&I Engineering, Design, and Inspection EIS Environmental Impact Statement EM Environmental Management EPA Environmental Protection Agency ERDA Energy Research and Development Administration ERMC Environmental Restoration Management Contractor ESAAB Energy System Acquisition Advisory Board ESAARs Energy System Acquisition Advisory Reviews F/O Functional/Operational FA Facility Assessment

xxii DOE G 430.1-1 03-28-97 ACRONYMS AND ABBREVIATIONS (continued) FI/CMS Facilities Investigation/Corrective Measures Study FI Facility Investigation FM Field Management FM-50 Office of Infrastructure Acquisition, Office of the Associate Deputy Secretary for Field Management FONSI Finding of No Significant Impact FS Feasibility Study FSR Feasibility Study Report FTE Full Time Equivalent GFE Government Furnished Equipment H&N Holmes & Narver (H&N) HRS Hazard Ranking System ICE Independent Cost Estimate ICECAN Independent Cost Estimating Contingency Analyzer JMN Justification of Mission Need KD Key Decision LANL Los Alamos National Laboratory LCC Life-cycle costs M&O Management and Operating NCR Non-Conformance Report NEPA National Environmental Policy Act OMB Office of Management and Budget OPC Other Project Cost ORNL Oak Ridge National Laboratory ORR Operational Readiness Review PA/SI Preliminary Assessment/Site Inspection PA Preliminary Assessment PACE Plant and Capital Equipment PC Personal Computer PDS Project Data Sheet PD&E Planning Design and Engineering PERT Programmed Evaluation and Review Technique PL Public Law PM Project Management PM Project Manager PMP Project Management Plan POPR Potential for an Occurring or past Release PSAR Preliminary Safety Analysis Report PSD Prevention of Significant Deterioration PSO Project Support Officer (Chapter 13) PSO Project Secretarial Officer (chapter 5) PSWBS Project Summary Work Breakdown Structure DOE G 430.1-1 xxiii (and xxiv) 03-28-97 QA Quality Assurance QC Quality Control R&D Research and Development RAP Remedial Action Plan RCRA Resource Conservation and Recovery Act RFA RCRA Facility Assessment RI Remedial Investigation RI/FS Remedial Investigation/Feasibility Study ROD Record of Decision SAR Safety Analysis Report SARA Superfund Amendments and Reauthorization Act of 1986 SER Safety Evaluation Report SI Site Inspection SWMU Solid Waste Management Unit TEC Total Estimated Cost TPC Total Project Cost UCR Uniform Capital Recovery UMTRA Uranium Mill Tailings Remedial Action UMTRAP Uranium Mill Tailing Remedial Action Project UMTRCA Uranium Mill Tailings Radiation Control Act of 1978 WBS Work Breakdown Structure CHAPTER 1 INTRODUCTION 1. PURPOSE This Guide serves as a companion to the Department of Energy (DOE) Order 5700.2, COST ESTIMATING, ANALYSIS, AND STANDARDIZATION. The objective of this Guide is to improve the quality of cost estimates and further strengthen the DOE program/project management system. This Guide strives to achieve this goal by providing uniform cost estimating methods as well as consistent estimate terminology. DOE federal and contractor personnel can use the information contained in this Guide as a check to ensure that estimate items that are required by DOE are included in their project estimates. This Guide also serves as a resource tool for DOE cost estimators who may be asked to develop a project estimate that is unusual or unfamiliar to them. In this case, the Guide serves as a Guide for gathering preliminary information on how to prepare such an estimate. This Guide, however, is not meant to be an inclusive, detailed Guide. It is intended that information specific to activities at particular sites be developed by the cognizant DOE Field Offices.

This volume is divided into two parts. Part I discusses the different types of DOE cost estimates, the elements of a cost estimate, and the preparation of the estimate. Part I also covers the increased role of environmental restoration and hazardous waste management projects in DOE activities and the impact of stringent environmental regulations on DOE programs/projects. Part II of this Guide contains additional information on cost estimating techniques and their uses. Part II includes topics such as cost estimating relationships, the effect of the learning curve, cost and schedule integration, operating costs, and how cost estimates support baseline management of the projects. There is also a chapter on specialty costs for estimators who may be asked to prepare estimates for innovative or advanced technology projects. 2. BACKGROUND Originally this volume was prepared as a textbook for DOE personnel involved in estimating construction project costs. Out of necessity, this volume has been expanded to address environmental project costs and other important elements of cost estimating, such as specialty costs, learning cures, and operating costs. Since the original edition, new sections have been added, and many sections have been rewritten based on user comments and the need for additional cost estimating tools in support of DOE’s changing mission objectives. Any 1-2 DOE G 430.1-1 03-28-97 comments or suggestions for further improving this volume should be directed to the Director, Office of Infrastructure Acquisition (FM-50). 3. COST ESTIMATING AND THE PROGRAM/PROJECT MANAGEMENT SYSTEM There are several different types of cost estimates, each prepared for different reasons and at different times during the life of a program/project. However, there is one thing that all DOE cost estimates have in common. Each is prepared as a tool that supports the overall management of the program or project. For this reason, a basic understanding of how cost estimates support the DOE Program/Project Management System is imperative for those involved in the cost estimating process. For many years the Department managed its program/projects with a very “hands-off” approach due to a predominantly contractor, production-oriented focus on nuclear weapons and the highly secretive evolution of the advanced scientific technology associated with this effort. Historically, DOE program/project managers used cost and schedule as the major indicators in program/project accomplishment. In an attempt to improve the overall program/project management system, the Department has shifted emphasis to concentrate on the accomplishment of the project’s technical and schedule baseline objectives and closely control changes to the original baselines throughout the life of the program/project. With this method, costs naturally follow the accomplishment of the objectives of the program/project. As illustrated in Figure 1-1, cost estimates are tools that support the entire DOE major system acquisition process. Current cost estimates are critical to supporting baselines and providing information for the Key Decision (KD) making process throughout the life of the project. At KD-0, the Acquisition Executive gives approval to begin the conceptual design review process. The conceptual design report (CDR) will produce technical, schedule, and cost baselines that will be approved at KD-1 and updated by the change control process through to the start of operations. An independent cost estimate (ICE) will be conducted prior to KD-1 and updated prior to KD-2 and KD-3.

Accurate and timely cost estimates are integral to the effective and efficient management of DOE projects and programs. However, good cost estimates alone will not guarantee a fully successful project/program management process. Early management involvement in the decision making process at KD-0 and continued management attention to the important issues of technical and schedule baselining, change control, ICE updates, etc., will further strengthen the process. The increased management attention will help to ensure prudent use of scarce fiscal resources and improve DOE’s credibility with oversight groups. DOE G 430.1-1 1-3 (and 1-4) 03-28-97 CC CC CC Operations (7) (1) (7)(7) (2) (3) (4) (5) (6) TEC TPC (1) Planning/feasibility study cost estimate (6) Current working estimate (2) Budget/conceptual cost estimate (7) Independent cost estimate (3) Title I design cost estimate CC - Change control (4) Title II design cost estimate TEC - Total estimated cost (5) Government cost estimate TPC - Total project cost Figure 1-1. Major System Acquisition Process --When Costs Occur. CHAPTER 2 COST ESTIMATION PACKAGE 1. INTRODUCTION When estimating the cost of a project or program, the estimator needs to know more than a quantity and a price for that quantity to develop an all inclusive (or a good) estimate. When developing an estimate, the estimator is producing a cost estimation package. This package consists of the estimate, the technical scope, and the schedule, all of which should be cross- referenced to ensure that they are consistent. This package establishes a baseline document for the project or program at its onset. This chapter focuses on the components (or elements) of the cost estimation package and their documentation. More detail about the components can be found in later chapters of this cost guide. 2. BEGINNING THE PACKAGE When given the task to develop a cost estimation package, the estimator must first establish the following: • a description of the purpose of the package (i.e. what type of estimate is required: planning, feasibility, Title I, Title II, etc.); • a description of the technical scope; and • a schedule or timeframe for the project. Once these are established or developed by the estimator as an assumption, the preparation of the cost estimation package may begin. If developing a revision to an existing package, the estimator must also obtain the complete cost estimation package from the previous estimate. 2-2 DOE G 430.1-1 03-28-97 3. TECHNICAL SCOPE The technical scope should include all requirements for the project or program. It should include the following information: • detailed description of work to be performed; • work not included in the scope; • description of regulatory drivers; • deliverables; • any constraints or special conditions; • sequence of events and any interdependencies; • milestones; • work breakdown structure (WBS); and • code of accounts (COA). The above items should be provided to the estimator by the program/project manager or the estimator may assist in their development. 4. COST ESTIMATE Once the technical scope information is available, the estimator can start developing the estimate. As the estimate is developed, the estimator should keep well-organized worksheets and documentation. These would include the following. • Definition of what is included in the total project cost (TPC) or the total cost of the program.

• Methodology of how the estimate was developed. This would include information such as any cost databases used, actual quotes, any cost estimating relationships (CERs) used, etc. • Description of direct and indirect costs. Field distributable overhead should be in enough detail to describe what is included (e.g., site security, on-site trailers, health and safety, etc.). • Explanation of site overhead rates. • Definition of when start-up begins and ends and its associated costs. • Operating costs if the estimate is a program estimate and includes operations as well as construction activities. • Escalation since most estimated projects are estimated in the current year even though they are not built for several years. 2-3 DOE G 430.1-1 03-28-97 • A written analysis of how contingency was developed. • Any estimate history if this is a revision to an existing estimate or a change order estimate. • The name, signature, and/or initials of the preparer and reviewer of the estimate. 5. SCHEDULE The schedule can play an important role in the cost estimate package since it can help identify the basis for budget cycle timing, any premiums on long-lead items to ensure their timely delivery, and the basis for escalation. The schedule used or developed with the cost estimate should be documented and will become part of the cost estimation package. 6. DOCUMENTING THE COST ESTIMATION PACKAGE A well-documented cost estimate package withstands scrutiny. If rigorous documentation and estimation procedures are followed, the credibility of the estimate increases. It is important to document all steps of the estimate process. The following items should be well documented and incorporated into the cost estimation package. • The type and/or purpose of estimate being performed (i.e., Pre-Title I, etc.). • A detailed description of the technical scope of work. It should define the performance specification and the work activities required, but it should also identify work not included, any constraints or special conditions, ground rules, assumptions, and regulatory drivers. • All estimating backup, which includes quantity takeoffs, calculations, databases used, historical data, CERs, and actual quotes. • Detail of indirect costs (field distributables) or a description of what is included and how they were estimated. • Explanation of site overhead rates. • If start-up is a part of the estimate, it should be defined and the methodology of its estimation should be included as well as any supporting documents. • Basis of any operating costs with associated backup. • Basis of escalation. • Basis of contingency and how it was calculated. 2-4 DOE G 430.1-1 03-28-97 • A schedule, which can be in the form of a list, a bar chart, or a network diagram. • A resource loading report, if appropriate. • A funding profile, or a spreadsheet showing the funding requirements by year in both constant year and escalated dollars. • Details of how the WBS was developed and a correlating activity dictionary. • Description of the COA. • The reviewed estimate. CHAPTER 3 STAGES OF PROJECT DEVELOPMENT 1. INTRODUCTION Estimates are produced throughout the life of a project at various stages. It is important to understand the stages of project development in order to understand how they relate to the various estimates. Chapter 4 describes the various estimates and their relationship to each other as well as to the key decisions. All projects, whether they are conventional construction or Environmental Management (EM), evolve through a series of stages. Both types of projects originate with preliminary study and then follow a series of design stages. Finally, the design is implemented in the form of a finished product.

Regardless of the finished product, all projects will require management and support activities throughout the life of the project. Major differences between these two types of projects are observed in the study and design phases. EM projects tend to have more intricate study and design phases than those of conventional construction projects. Also, EM projects are unique in that each complete project is divided into two parts: assessment and cleanup. Each part of an EM project is comprised of a complete cycle of study, design, and implementation; hence, the cycle is completed twice for the completion of a single project, whereas the cycle is only completed once for construction projects. A comparison of activities involved in conventional construction and EM projects is provided in Table 3-1. Also included is Table 3-2, Comparison of EM Project Phases to conventional construction phases. 2. RELATIONSHIP OF STAGES OF DEVELOPMENT TO TYPES OF ESTIMATES The development of a project occurs in three major stages: study, design, and implementation. As a project develops, more information and specifications are required, 3-2 DOE G 430.1-1 03-28-97 DOE ASSESSMENT AND CLEANUP PHASE TERMINOLOGY 4700.1 TERMINOLOGY CONVENTIONAL CONSTRUCTION STUDY Preliminary Assessment Inspection Development Phase Conceptual Design Report DESIGN Characterization Evaluation of Cleanup Alternatives Title I Title II IMPLEMENT Cleanup Action Compliance Construction/Title III Operations resulting in more estimates than were included in the previous stage. These estimates become a more accurate representation of the actual project cost. In the following, a description of conventional construction terminology will be discussed in relation to the project stages of development and their estimates. A. Study Stage The study stage consists of a development phase and a conceptual design report (CDR). Investigations and studies are conducted to compile the information that is essential for the design stage. Through these investigating processes, planning feasibility study estimates are derived for preliminary budget estimates of total project cost on the basis of any known research and development requirements. This preliminary phase establishes the scope, feasibility, need, and activities included in TABLE 3-1 EM AND CONVENTIONAL CONSTRUCTION TERMINOLOGY CROSSWALK 3-3 DOE G 430.1-1 03-28-97 the CDRs, which results in a budget/conceptual design estimate, which is used to request congressional authorization for funding. B. Design Stage The design stage consists of the Title I and the Title II phases. The Title I (preliminary) design phase defines the project criteria in greater detail, permitting the design process to proceed with the development of alternate concepts and a Title I design summary. The approved Title I concept and the supporting documentation prepared for Title I form the basis of all activity in the definitive phase, Title II of project design. Title II incorporates all the restudy and redesign work, the final specifications and drawings for bids from contractors, and the construction cost estimator along with analyses of health and safety factors. Moreover, the coordination of all design elements and local and government agencies is also included. The Title I and Title II phases are used to prepare the most accurate estimate possible prior to competitive bidding and construction. Title I estimates shall include all items referred in the CDR estimate basis. The Title II estimate uses the Title II design for its basis. The Title II estimate may be used for the government’s estimate.

C. Implementation Stage The implementation stage consists of construction, Title III, and operational phases. This is the time during which actual work and operations are performed. Current working estimates are required throughout the life of the project for cost control. These estimates reflect the most recent cost and data design available, the estimated cost to complete, the allowance for contingency, detailed contingency analysis, and the uncertainties remaining in the project. D. EM and Conventional Construction Stages The terminology of EM and conventional construction stages may differ, but the same basic structure of project development is evident as depicted in Table 3-1, which compares the stages of a project using DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM, terminology with one using EM terminology. 3. NATIONAL ENVIRONMENTAL POLICY ACT ACTIVITIES The stages of project development will include a number of engineering and scientific studies that address design, technical, and regulatory issues. Environmental assessments (EAs) are conducted to meet the requirements of the National Environmental Policy Act (NEPA). The objective of an EA is to determine if a proposed action or project will have a significant impact on the environment, to assess that impact, and to identify alternatives. 3-4 DOE G 430.1-1 03-28-97 In conventional construction, this step occurs in the Pre-Title I phase of project development. For EM projects, this step occurs in the latter part of the assessment phase. A. Environmental Assessments The objective of an EA is to determine if a proposed action will have a significant impact on the environment and to assess that impact. If an EA results in a finding of no significant impact (FONSI), a notice is published in the Federal Register to that effect. If there is a significant impact or if there are objections to the FONSI, an environmental impact statement (EIS) may be required. An EA can include the following elements of work. 1. Planning and coordination of the EA process, in which potential sources of data are identified and the scope of the proposed action is reviewed. 2. Inventory of natural, human, and cultural resources based on existing sources of information. Typical elements of the resource inventory include geology, hydrology, vegetation, wildlife, threatened and endangered species, air quality, land use (existing and planned), visual characteristics, socioeconomic character, and acoustic conditions. Cultural resources include archaeological sites, historical sites, sites with religious or social significance, and other structures or areas with cultural significance. 3. Impact assessment and mitigation planning, in which the proposed action is evaluated to determine the impact on the resources identified in the inventory. Appropriate mitigation measures are identified where it is possible to make adjustments in the proposed action that reduce or eliminate impacts. 4. Participating in agency reviews of the EA and responding to questions and comments. 5. Preparing an EA, including decision documents. When the NEPA process is successfully concluded with an EA, other environmental permitting actions may follow, such as preparation of a prevention of significant deterioration (PSD) permit under the Clean Air Act. If a FONSI cannot be obtained, an EIS is required. B. Environmental Impact Statements

EISs are prepared to meet the requirements of the NEPA whenever an EA does not result in a FONSI. The objective of an EIS is to evaluate any major federal action that is proposed that has the potential for significant environmental impact and to provide a forum for a public decision making process regarding the action. An EIS can include the following elements of work. 3-5 DOE G 430.1-1 03-28-97 • EIS scoping in which the general technical approach is agreed upon and the public involvement program is initiated. Potential sources of data are identified and the scope of the proposed action, as well as any known alternatives, is reviewed. • Inventorying natural, human, and cultural resources based on existing sources of information. Typical elements of the resource inventory include geology, hydrology, vegetation, wildlife, threatened and endangered species, air quality, land use (existing and planned), visual characteristics, socioeconomic character, and acoustic conditions. Cultural resources include archaeological sites, historical sites, sites with religious or social significance, and other sites with cultural significance. • Impact assessment and mitigation planning, in which the proposed action is evaluated to determine the impact on the resources identified in the inventory. Appropriate mitigation measures are identified where it is possible to make adjustments in the proposed action that reduce or eliminate impacts. Alterna­ tives to the proposed action, including “no action,” are considered to evaluate the impact on the environment. The impact of the proposed action is compared to the impact of the other alternatives. • Preparing a draft EIS and distributing that report to all interested parties including elected officials, citizen groups, and the public. • Participating in agency reviews and public hearings regarding the draft EIS and responding to questions and comments. • Preparing a final EIS including all comments and the responses to those comments. • Preparing decision documents required for a record of decision (ROD). When the NEPA process is successfully concluded with an EIS, other environmental actions may follow, such as permit preparation. 4. STUDY PHASE ACTIVITIES Preliminary phase activities consist of studies and investigations. These studies and investigations must be conducted to gather the information that is necessary for the design phase. A. Pre-Title I Activities 3-6 DOE G 430.1-1 03-28-97 Pre-Title I activities are defined in a variety of DOE references as all activities taking place prior to the start of the preliminary design. This includes siting and related engineering studies conducted to establish project scope, feasibility, need, etc., as well as all activities that produce formal deliverables, such as CDRs. Pre-Title I activities shall be funded from the operating expense budget. B. Assessment - Environmental Management Assessment is the technical activity of an engineering, scientific, or regulatory nature that is required to establish scope, meet regulatory requirements, or evaluate alternatives for a task. This will include preliminary assessment/site inspection (PA/SI), facilities investigation/corrective measures study (FI/CMS), remedial investigation/feasibility study (RI/FS), and any other pre-cleanup design activities performed in support of a particular activity.

The environmental restoration program scope will include a large number of engineering and scientific studies, as well as activity and program management that address design, technical, and regulatory issues not encountered on conventional construction projects. These have been grouped into legal categories that establish the general requirements for each. 1. Comprehensive Environmental Response Compensation and Liability Act (CERCLA): Preliminary Assessment/Site Inspection PA/SI is the first phase of work for sites being remediated under CERCLA and is comparable to the development phase of construction. The objective of this effort is to identify potential release sites for future study and to rank the hazard according to a U.S. Environmental Protection Agency (EPA) methodology called the Hazard Ranking System (HRS) from existing data and cursory inspection. PA/SI includes the following elements of work: • review of existing data concerning past operating practices including waste disposal, operations involving potentially hazardous materials, and spills or similar incidents; • review of existing data concerning the natural setting, such as geology, hydrogeology, surface water, flora, and fauna; • analysis of existing data to assess completeness and determine if there is a need for sampling; • site visit to confirm site location and relationships with major features; • limited sampling and analysis where warranted; 3-7 DOE G 430.1-1 03-28-97 • evaluation of the hazard posed using the HRS; and • preparation of a PA/SI report. 2. Resource Conservation and Recovery Act (RCRA): Facility Assessment A RCRA facility assessment (RFA) is the first step undertaken at a suspected hazardous waste site that is regulated under RCRA and is comparable to the development phase of construction. The objective is to review operations and identify potential sources of release for further investigation. An RFA can include the following elements of work: • develop an facility assessment (FA) workplan, submit the plan to regulatory agencies for comments, and incorporate comments; • review historical data concerning present and past operations including any known spills or other unusual events; • identify all solid waste management units (SWMUs) on the site; • conduct technical investigations necessary for the identification of a potential for an occurring or past release (POPR); • prepare a POPR report; and • identify the need for interim corrective measures to contain or eliminate sources of continuing releases. 5. DESIGN ACTIVITIES Following the preliminary phase activities are the design activities. The basic stages of design activities are discussed below. A. Conventional Construction Design activities for conventional construction projects are divided into two categories: Title I design and Title II design. 1. Title I (Preliminary) Design Title I is the preliminary stage of project design. In this phase, the design criteria are defined in greater detail to permit the design process to proceed with the development of alternate concepts and a Title I design summary, if required. 3-8 DOE G 430.1-1 03-28-97 As detailed in DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM, Title I includes the following elements of work: • design studies, including alternate design approaches, energy conservation evaluations, and analysis or review of health, safety, and environmental aspects of the project;

•. review of the project design criteria to develop greater detail and to incorporate any design modifications that may result from engineering studies conducted in Title I; • preliminary design drawings showing the proposed design and any alternates in sufficient detail to establish the design features of each approach and to permit a preliminary estimate to be made of the construction cost; • outline specifications for construction and specifications for equipment procurement; identification of long lead time items for advance procurement; • preliminary safety analysis report (PSAR) if not included in the CDR; • preliminary cost estimate based on the approved design and other such estimates as required to support the evaluation of alternate designs pre­ pared during preliminary design (Title I); • preliminary project schedule based upon information available during preliminary design (Title I). Title I activities are funded from the Plant and Capital Equipment (PACE) Fund (engineering, design, and inspection (ED&I)). 2. Title II (Detailed) Design Title II is the definitive stage of project design. The approved Title I concept and the supporting documentation prepared for Title I form the basis of all activity in Title II. As detailed in DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM, Title II design includes the following elements of work: • restudy and redesign work required to incorporate changes from the design prepared in Title I; • final drawings, specifications, and test plans, suitable for soliciting bids from contractors; 3-9 DOE G 430.1-1 03-28-97 • construction cost estimates; • analyses of health, safety, environmental, and other project factors that may impact the project, as directed by the contracting officer; • coordination of all design elements with other project features, such as utilities, government-furnished equipment, and portions of the project or related projects being designed by others; and • attendance at all meetings scheduled for design review or coordination with the DOE, the management and operating (M&O) contractor, and local agencies, such as public utilities. Title II activities are funded from the PACE Fund (ED&I). B. Environmental Management 1. CERCLA: Remedial Investigation/Feasibility Study RI/FS is the investigation phase of assessment under CERCLA and is comparable to the CDR phase of construction. During remedial investigation (RI), quantitative methods of cleanup are developed and compared, and a pre­ ferred method is selected for implementation. RI/FS ends when a ROD is reached. Remedial investigation can include the following elements of work: • review of information collected in the PA/SI and applicable regulations; • development of an RI/FS work plan, including a sampling and analysis plan, a quality assurance project plan, and a health and safety work plan; • field sampling and laboratory analysis; • evaluation of data from field sampling and data analysis; • preparation of risk assessment reports including identification of source terms, identification and analysis of pathways and exposure scenarios, identification of receptors, and toxicological assessment. The feasibility study (FS) can include the following elements of work: • screening of cleanup technologies for suitability; 3-10 DOE G 430.1-1 03-28-97 • screening of process options for cleanup considering waste character, site conditions, regulatory considerations, and other factors;

• conducting an endangerment assessment; • developing and evaluating alternatives for cleanup, including preparation of conceptual designs, schedules, and feasibility estimates; • conducting treatability studies to establish the effectiveness of selected treatment alternatives; • preparing a feasibility study report (FSR) presenting the results of the FS, including the results of cleanup technology screening, process options evaluation, alternative evaluation, regulatory review, and treatability studies; • responding to comments from regulatory agencies and the public; • preparing a ROD. 2. RCRA Facility Investigation/Corrective Measures Study A facility investigation under RCRA is comparable to a remedial investigation under CERCLA and the CDR phase of construction. The objective of this effort is to characterize the natural environment, the nature of any hazardous materials that may be present, and identify technologies that will be needed to implement corrective measures. A RCRA facility investigation (FI) can include the following elements. • Development of an FI workplan, submittal of the plan to regulatory agencies for comments, and incorporation of subsequent comments. The work plan typically includes such elements as data management, health and safety, and project management. • Field investigation, analysis, and research needed to develop a complete description of the regional setting including climatic conditions. • Field investigation, sampling, modeling, and analysis required to characterize the extent of any release of hazardous material that may have occurred. • Field investigation, sampling, modeling, and analysis required to describe the site hydrogeology, geology, soil conditions, and surface water hydrology. DOE G 430.1-1 3-11 03-28-97 • Performance of a health risk analysis, including quantification of source terms, identification and evaluation of pathways, identification of receptors, and toxicological evaluation of dose response relationships for the affected populations. • Development of a community relations program and implementation of elements of that plan consistent with plan requirements for the FI. • Identification of potential technologies to be employed in corrective measures. A CMS develops and evaluates alternatives for corrective measure implementation. A CMS can include the following elements of work: • develop a CMS workplan, including submittal of that workplan to regulatory agencies for review, comment, and incorporation of subsequent comments; • screen cleanup technologies for suitability; • screen process options for cleanup considering waste characteristics, site conditions, regulatory requirements, and other factors; • develop and evaluate alternatives for cleanup, including preparation of conceptual designs, schedules, and feasibility estimates; • conduct treatability studies to establish the effectiveness of selected treatment alternatives; • prepare a CMS report presenting the results of the cleanup technology screening, process options evaluation, alternative evaluation, regulatory review, and treatability studies; • respond to comments from regulatory agencies and public comments; and • prepare a consent order or permit modification. C. Cleanup

Engineering design for the cleanup will be performed on the basis of the method identified in the ROD (CERCLA) or permit (RCRA). The activities that encompass cleanup design are preliminary design, detailed design, and engineering during construction. The initial phase of cleanup design is referred to as preliminary design because engineering alternatives are being developed and evaluated. In some cases, this phase may be shortened or eliminated entirely if no alternatives can be identified 3-12 DOE G 430.1-1 03-28-97 within the scope of the ROD or permit. The second phase of cleanup design is definitive design, in which a single alternative is carried to completion. 6. IMPLEMENTATION OF DESIGN Once design activities are complete, the next stage is implementation of design. A. Conventional Construction Implementation of design for conventional construction projects is simply the building of the facility. Construction activities are funded from the PACE Fund (construction). B. Environmental Management The implementation of assessments follows the completion of the first cycle of stages of an EM project and the beginning of the next cycle of stages (i.e., the cleanup part of the EM project). At this point in the project’s life, the cycle begins again for cleanup. C. Cleanup Engineering design for the cleanup will be performed on the basis of the method identified in the ROD (CERCLA) or permit (RCRA). The activities that encompass cleanup design are preliminary design, detailed design, and engineering during construction. The initial phase of cleanup design is referred to as preliminary design because engineering alternatives are being developed and evaluated. In some cases, this phase may be shortened or eliminated entirely if no alternatives can be identified within the scope of the ROD or permit. The second phase of cleanup design is definitive design, in which a single alternative is carried to completion. All equipment, labor, and materials required to install a remedy are considered part of cleanup construction. Construction can consist of the following activities: • site modifications (e.g., installation of containment systems, excavation of contaminated and uncontaminated materials, site preparation for installation of equipment); • demolition of existing structures; • installation of equipment (e.g., construction of pumping systems; construction required for installation of treatment systems; installation of testing and monitoring equipment); and DOE G 430.1-1 3-13 03-28-97 • surface controls (e.g., erosion control, site restoration). 7. PROJECT SUPPORT ACTIVITIES Throughout the life of a project, various support activities are required to ensure successful completion of the project. These activities are discussed below. A. Project Management Project management covers those services provided to the DOE on a specific project, beginning at the start of design and continuing through the completion of construction, for planning, organizing, directing, controlling, and reporting on the status of the project. They are as follows: • technical management and liaison with the designers, architect/engineers (A/Es) management, and M&O contractors during Title I, II, and III design; • coordination, including interface control during design and construction; • maintenance and operation of scheduling, estimating, and project control sys­ tems during design and construction;

• technical management and coordination of the construction manager and his support staff; • overall management and coordination of the activities of non-dedicated project support personnel; • technical management of review and approval activities conducted by dedicated management personnel; • coordination of all aspects of the project; and • preparation, revision, and related activities in support of the final safety analysis report. Project management activities are funded from the PACE Fund (ED&I). 3-14 DOE G 430.1-1 03-28-97 DOE ASSESSMENT AND CLEANUP PHASE TERMINOLOGY RCRA TERMINOLOGY ACTIVE FACILITIES TERMINOLOGY SUPERFUND/ INACTIVE FACILITIES CERCLA DECONTAMINATION TERMINOLOGY RADIOACTIVE/ INACTIVE FACILITIES DECOMMISSIONING & Preliminary Assessment Inspection Characterization Evaluation of Cleanup Alternatives RCRA Facility Assessment Included as a part RCRA Facility RCRA Corrective Measures Study of RCRA Facility Assessment Investigation NEPA Environmental Review Preliminary Assessment Site Inspection Remedial Feasibility Study ROD Investigation NEPA Environmental Review Included in Characterization Included in Characterization NEPA Environmental Review ROD or FONSI Characterization Cleanup Action RCRA Corrective Measures Implementation (CMI) Remedial Design Remedial Action Engineering and Operation Compliance Postclosure Monitoring Operation and Maintenance Postdecommissioning TABLE 3-2 COMPARISON OF EM PROJECT PHASES DOE G 430.1-1 3-15 03-28-97 B. Construction Management Construction management (CM) covers those services provided by the organization responsible for management of the construction effort during Title I and Title II design and continuing through the completion of construction. CM services are further defined in DOE Order 4700.1. Typically, CM includes— • reviewing and approving construction packages; • reviewing and acceptance of construction test procedures; • control of field design change requests; and • supporting the construction contractor by furnishing general condition items not provided in the bid package, such as security, temporary facilities, debris removal, and other similar project re­ quirements not included in the bid package. All costs associated with CM shall be charged against PACE Fund (Construction). C. Construction Management for Environmental Management Projects CM includes those activity management services required to manage construction or cleanup activities, including review and approval, cleanup bid package review and acceptance of construction test procedures, control of field design change requests, and review and approval of contractor pay requests. The construction manager provides items and services not included in the construction contractor’s bid package, such as debris removal, temporary facilities, site security, and storage. All of the above functions (program management, program support, activity management, and CM) will be charged directly to the Environmental Restoration Program to the extent allowed by DOE policy. When M&O contractors are providing program or activity management services, only those services will be charged to EM that are incremental and not covered under the operating contract, as required by DOE Order 2200.6, FINANCIAL ACCOUNTING.

Activity support services, which consist of activities performed by the M&O contractor for internal management and technical support of activities or programs but are within the scope of the operating contract, are not chargeable to the program. Examples of activity support services include establishment and maintenance of site programs for health, safety, quality assurance, legal affairs, training, and security. Cost methods development (CMD) identifies several common elements applicable to EM that form the basis of allowance costs for project and program management. 3-16 DOE G 430.1-1 03-28-97 • Construction management cost is rolled up into project management cost. • Project management functions should be provided by full-time personnel to the greatest extent possible. This does not preclude the use of a matrix organization; however, DOE policy clearly prefers the use of full-time personnel assigned to the project wherever possible. D. Project Support Support covers those activities performed by the M&O contractor for internal management and technical support of the project manager (PM), including— • document control; • auditing of compliance with quality assurance, health physics, safety, and environmental requirements; and • design review by non-dedicated M&O contractor personnel on an as-needed basis including: independent technical analysis, constructability review, life cycle cost comparisons, life safety review, health physics review, and code checks. Project support is funded from the M&O contractor’s expense budget. E. Startup Startup covers one-time costs incurred by the M&O contractor during the transition period between the completion of construction and operation of the facility. This includes the following activities: • operations planning, operator training, and operational readiness review; • startup coordination, post-acceptance testing, startup chemicals, and related supplies; and • salaries of startup personnel. Startup activities are funded from the Operating Expense Fund. F. Construction Engineering This phase of the activity begins when bid packages are assembled following detailed design and consists of engineering services during construction, including both office support and field services. The following elements of work are included under office support: DOE G 430.1-1 3-17 03-28-97 • review of all vendor drawings and submittals for conformance with the approved design drawings and specifications; • review and evaluation of all proposed deviations for the original Detailed Design for conformance with regulatory requirements, codes, and standards; • incorporation of all approved as-built record drawings for delivery to the activity manager; collection and maintenance of all construction related records; • preparation of cost estimates to establish reasonable amounts of increase or decrease in contract price or schedule caused by design or procedure changes; evaluate proposals submitted by the cleanup contractor for reasonableness from the perspective of cost and schedule, and make recommendations to the activity manager; • expedition of the procurement of material and equipment from suppliers, vendors, or fabricators; • audits of vendors, suppliers, and subcontractors as required by the quality assurance program plan; and • additional technical service, such as evaluation of site monitoring data, update of risk analyses, review of regulatory correspondence, participation at public meetings, and other similar activities.

The following elements of work are included under field services: • furnishing and maintaining governing lines and benchmarks to prime horizontal and vertical controls to which construction may be referred; • inspecting the construction contractor’s workmanship, materials, and equipment and reporting on their conformance or nonconformance with the approved drawings and specifications; • making or procuring such field or laboratory tests as are necessary to ensure that construction materials and practices are in accordance with the approved drawings and specifications; • marking up field copies of the design drawings and specifications to show the as-built condition for submittal to the designer for incorporation into the as- built record drawings; • providing input to construction progress reports as required; and 3-18 DOE G 430.1-1 03-28-97 • verifying that planned quality control measures are implemented and evaluating the results of those measures to ensure that the work is being completed in accordance with the approved plans and specifications. G. Program Management Program management includes those services provided to the DOE on a specific program for planning, organizing, directing, controlling, budgeting, and reporting on the program. Program management will be provided as multiple levels within the EM program, including the Headquarters, operations office, and installation. Program management includes program support. H. Program Support Program support covers those activities performed for internal management and technical support of the program by part-time or full-time personnel. The following activities are illustrative of services included in this category: • program document control; • development of program plans and auditing of activity level functions for compliance with programmatic quality assurance, health physics, safety, environmental, and related requirements; • design review or technical oversight of activity level functions by including independent technical analysis, constructability review, life cycle cost comparisons, life safety review, health physics review, and code checks; • program level reporting, budgeting, and planning; and • purchasing, contracting, and other functions required to obtain the services of outside contractors. I. Activity Management Activity management services are those provided to the EM Program on a specific activity beginning at the start of assessment and continuing through the completion of the cleanup. Activity management includes those services required to plan, organize, direct, control, and report on the activity. The cost of construction management is rolled up into activity management. The following functions are illustrative of services included in activity management: • technical management and liaison with the designers during cleanup design; • coordination, including interface control, during design and construction; DOE G 430.1-1 3-19 (and 3-20) 03-28-97 • maintenance and operation of scheduling, estimating, and activity control systems during design and cleanup; • technical management and coordination of the construction management staff; • overall management and coordination of the activities of non-dedicated activity support personnel; • technical management of review and approval activities conducted by dedicated management personnel; • coordination of all aspects of the activity; and

• preparation of activity plans, activity management plans, and quality assurance project plans. J. Environmental Restoration Management Contractor An environmental restoration management contractor (ERMC) is a contractor that manages and executes the Environmental Restoration Program at a particular site. The ERMC includes the prime contractor and any named member(s) of the ERMC team of subcontractors considered essential to the accomplishment of the work. CHAPTER 4 TYPES OF COST ESTIMATES 1. INTRODUCTION All projects, both construction and environmental restoration, require cost estimates to plan and budget the project efficiently. Numerous estimates are often prepared sequentially for a given project as the project matures, and the level of information and detail available to the estimator increases. This chapter will describe the estimates required on government-managed projects for both general construction and environmental management. The various estimates required for each type of project will be described, including what comprises these estimates and the time frame in the project’s life at which they are required. Guidelines for these designs and estimates will be in accordance with the DOE Order 5700.2, COST ESTIMATING, ANALYSIS AND STANDARDIZATION, and DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM. Table 4-1 summarizes these estimates and indicates the Degree of Accuracy associated with each. 2. CONSTRUCTION ESTIMATES For construction project development and control, there are four basic types of cost estimates that are developed and used by DOE and its contractors. These estimates are planning/feasibility study estimates, budget or conceptual design estimates, Title I design estimates, and Title II design estimates. Each type of estimate has a separate purpose, basis, and design scheme. These traits are described in this section. The level of accuracy and confidence in the estimate are based on the type and detail of the estimate. The American Association of Cost Engineers defines accuracy as “the degree of conformity of a measured or calculated value to some recognized standard or specified value.” Accuracy depends on the amount of quality information available as well as the judgment and experience of the estimator. Consequently, as the amount of information and specific details increase, so does the degree of accuracy. A. Planning/Feasibility Study Estimate 1. Purpose Planning/feasibility study estimates are normally prepared by the operating contractor for a proposed project prior to completing conceptual design. Planning estimates are used for scoping studies and for preliminary budget 4-2 DOE G 430.1-1 03-28-97 estimates of TPCs and shall be reflected on short form project data sheets for identified projects. The short form project data sheet includes an estimate of funds required and a schedule for the performance of conceptual design on each project. These short form project data sheets are submitted to the appropriate DOE Headquarters program office for review and advisement on which projects will be supported in the budget requests. Planning/feasibility study estimates should support Key Decision 0. 2. Basis

The basis for the planning estimate must describe the purpose of the project, general design criteria, significant features and components, proposed methods of accomplishment, proposed construction schedule, and any known research and development requirements. Any assumptions made by the estimator in this phase shall be documented for review and concurrence. Planning estimates are based on past cost experience with similar type facilities, where available, and order of magnitude estimates in the absence of previous cost experience. Engineering costs in this type of estimate generally are based on a percentage of estimated construction costs, and consideration will be given to the complexity of the project in establishing the percentage to be used. Similarly, an allowance for contingency will be included in the total project estimate using a percentage of total engineering and construction costs established on the basis of complexity and uncertainties of the component parts of the project. 3. Design Scheme a. Requirements: Sufficient criteria must be provided to enable the estimator to prepare a planning estimate. This criteria can range from a description of the functional/operational requirements of the project to a brief description of the completed project’s intended objective. The description may be supplemented with a sketch, a tour of the proposed project site, or references to similar projects that are already existing. b. Guidelines: A planning estimate is an order of magnitude estimate; it can be estimated on a per square foot, linear foot, cubic yard, kilowatt, etc., basis. The estimator shall get all available information about the project from the requestor. On many projects, the available data will be minimal and only an allowance can be made for various segments of the estimate. It is imperative that the estimator fully describe the basis of the estimate, how the estimate was prepared, and any items specifically excluded from the estimate. 4-3 DOE G 430.1-1 03-28-97 c. Degree of Accuracy: Because this estimate is an order of magnitude estimate, the degree of accuracy is generally plus or minus 40 percent. This range could be wider if the design criteria are not well defined. B. Budget or Conceptual Design Estimates 1. Purpose A budget/conceptual design estimate is required to request congressional authorization for funding. This request is required for each line item construction project and each contingency-type project. The fundamental purposes of a budget or conceptual design estimate are: • to ensure project feasibility and attainable performance levels; • to develop a reliable project cost estimate consistent with realistic schedules; • to use it to establish baseline project definitions, schedules, and costs; and • to support Key Decision 1. The completed conceptual design estimate normally serves as the basis for preparation of a construction project data sheet. This form is submitted to DOE Headquarters for review and, if approved, the project is included in the budget submitted to the Office of Management and Budget (OMB). If the project is approved at this level, it is included in the President’s budget submittal to the Congress. When the project is approved by the Congress and funds are appropriated, OMB apportions the funds to DOE Headquarters which, in turn, issues a financial plan to the DOE Field Office providing funds for the project. Work on the project is initiated at this time.

2. Basis The basis for a budget or conceptual design estimate shall include as many of the detailed requirements in the CDR as possible. This CDR shall include all general criteria and design parameters, applicable codes and standards, quality assurance requirements, space allocations for required functions, types of construction, significant features and components, building and facility utility services, energy conservation goals, site work, process equipment requirements, project cost estimates, schedules, methods of performance, environmental protection requirements, waste minimization requirements, decontamination and decommissioning requirements, health and safety requirements, related research and development or test programs, 4-4 DOE G 430.1-1 03-28-97 comprehensive project planning, and any other special requirements for the project. 3. Design Scheme a. Requirements: The conceptual design sketches and specifications, as well as the functional/operational requirements, shall be available to the estimator prior to developing the budget/conceptual design estimate. Where possible, this information shall be supplemented with a tour of the proposed site. Site drawings can be used as a reference for details of construction and for quantity take-off. These reference drawings are very helpful when estimating demolition costs. b. Guidelines: The request for funding is based on the budget/conceptual design estimate. The estimate shall incorporate all details available as well as a detailed breakdown of any allowances used. The estimator must fully document the basis of the estimate, including sources of quotations, assumptions, and any items specifically omitted. c. Degree of Accuracy: The degree of accuracy is plus or minus 30 percent for budget/conceptual design estimates. C. Title I Design Estimate 1. Purpose The Title I design estimate is an intermediate estimate used to verify that the Title I design details still remain within the project funding. The Title I design details are written in the Title I design phase; this is the initial work accomplished under an approved project. Estimates of this type are completed in conjunction with the Title I preliminary design phase. These Title I design estimates should support Key Decision 2. 2. Basis The basis for the Title I estimates shall include all items mentioned in the CDR estimate basis, plus all the refinements developed during the course of producing the Title I engineering package. This includes all drawings, outline specifications, data sheets, bills of material, schedule refinements, definitions of scope, methods of performance, and changes in codes, standards, and specifications. 3. Design Scheme 4-5 DOE G 430.1-1 03-28-97 a. Requirements: Title I estimates are based on the Title I drawings and specifications. In addition to the Title I drawings and specifications, the estimator shall have access to the budget/conceptual design estimate and the project’s final functional/operational requirements. A tour of the site and reference drawings of the construction site shall be used in preparing the estimate. Criteria to be followed in the performance of Title I design are based upon the conceptual design for the project. In Title I, the design criteria are defined in greater detail, and, if necessary, the conceptual design drawings are expanded with more detailed information including additional drawings. Also, further refined descriptive information and more detailed specifications are developed, as required, to serve as a firm basis to proceed with Title II definitive design.

b. Guidelines: The Title I estimate is an estimate of construction cost. At this point in a project, the engineering design, inspection, and project administration costs have been allocated and only need to be verified. A Title I estimate will have more detail available than a conceptual estimate and this additional detail shall be shown. c. Degree of Accuracy: Due to the increased accuracy of the detailed drawings and information developed during the course of Title I design, the Title I estimate and the schedules developed from the estimate are more accurate than those previously developed. The degree of accuracy range is plus or minus 20 percent. D. Title II Design Estimates 1. Purpose The purpose of the Title II estimate is to estimate construction costs as accurately as possible, prior to the commencement of competitive bidding and construction activities. As Title II design specifications and drawings are developed, the Title II estimate is completed. The completed Title II estimate is in support of Key Decision 3. 2. Basis The basis for the Title II cost estimate must include all the approved engineering data, methods of performance, final project definition and parameters, project schedule, and final exact detailed requirements. This will include a complete list of all engineering data used (i.e., drawing data sheets, specifications, bills of material, job instructions, proposed schedules, etc.) Since the Title II definitive design results in working drawings and specifications for construction work, including procurement and shop 4-6 DOE G 430.1-1 03-28-97 fabrication, the Title II estimates are prepared in accordance with the approved Title II drawings and specifications. 3. Design Scheme a. Requirements: The Title II estimate is based on the Title II drawings and specifications. This estimate shall approximate the construction bids that will be received for this project and may be used as the independent government estimate. The estimator shall have the Title II drawings and specifications for the Title II estimate, the functional/operational requirements, and the tentative construction schedule before generating the Title II estimate. A project site tour shall be made if the estimator is not completely familiar with the construction area. b. Guidelines: The Title II Estimate is a refinement of the Title I estimate. Allowances shall only be used on minor items whose total is an insignificant portion of the total cost. Engineering design, inspection, and project administration costs only need verification at this point. c. Degree of Accuracy: The degree of accuracy is plus 15 percent to minus 5 percent. 3. ENVIRONMENTAL RESTORATION ESTIMATES Unlike construction capital projects that have well established points at which cost estimates are generated, there is little agreement in the environmental community on the types and time frame of environmental restoration estimates. In this document, the environmental restoration project will be discussed using the terminology and phase divisions found in CERCLA, Superfund Amendments and Reauthorization Act of 1986 (SARA), and RCRA programs. Environmental restoration projects can be divided into two distinct phases, the assessment phase and the cleanup phase. Estimates for both phases have different purposes, bases, code of accounts, and degrees of accuracy. A. Assessment Phase

In the assessment phase of an environmental restoration project, information is gathered on the types and amount of contamination involved at a project site. All sampling is completed and a list of environmental restoration options is developed. The assessment phase concludes with a final decision on the remediation alternative to be implemented on site. In the assessment phase there are three types of 4-7 DOE G 430.1-1 03-28-97 estimates: the planning estimate, the preliminary estimate, and the detailed estimate. 1. Planning Estimate a. Purpose: The planning estimate assists in the preliminary planning and budgeting of the project. This estimate is normally requested for use in Environmental Restoration and Waste Management 5-Year Plans. b. Basis: The basis for the planning estimate is very limited because there is a large amount of unknown and/or highly uncertain information. Only the location of the work, likely contamination, and prior use of the land may be known. Due to the limited information available, analogies, simple cost estimating relationships, and more sophisticated parametric tools are utilized for the estimate. c. Degree of Accuracy: The degree of accuracy for the planning estimate is minus 50 percent to plus 100 percent. 2. Preliminary Estimate a. Purpose: A more detailed estimate can be completed after some basic information is available from a preliminary assessment or site inspection. preliminary estimates are used as a budgetary tool and are included in the Environmental Restoration and Waste Management’s 5-Year Plan. b. Basis: This estimate is developed after the preliminary assessment is completed. The estimate is more detailed. Unit cost is applied at this point to some project categories in the assessment phase, such as laboratory analysis and monitor well drilling. c. Degree of Accuracy: The degree of accuracy for the preliminary estimate is minus 30 percent to plus 70 percent. 3. Detailed Estimate a. Purpose: Detailed estimates are used to decide between the alternatives for remediating a site. There are numerous detailed estimates, one for each remediation alternative. The detailed estimates are the final estimates of the assessment phase. b. Basis: The basis of the detailed estimate includes all information gathered during the assessment phase. 4-8 DOE G 430.1-1 03-28-97 c. Degree of Accuracy: The degree of accuracy for the detailed estimate is plus or minus 25 percent. B. Cleanup Phase After the remediation alternative is selected, estimates are required during the cleanup phase of the project. There are four basic cleanup estimates: planning estimates, feasibility estimates, preliminary estimates, and detailed estimates. 1. Planning Estimate a. Purpose: The planning estimate is required for budgetary purposes or for inclusion in planning documents. This estimate is included in the Environmental Restoration and Waste Management 5-Year Plan, and is the basis for the funds represented in the activity data sheets (ADSs). b. Basis: Minimal design information is available; therefore, use of historical cost data is helpful. All information gathered during the assessment phase is used in the computation of this estimate. c. Degree of Accuracy: The degree of accuracy for the planning estimate is minus 50 percent to plus 100 percent. 2. Feasibility Estimate

a. Purpose: Feasibility estimates are used to evaluate the numerous technical solutions developed to remediate a site. These estimates perform two functions: one, they present a total estimated cost on each alternative on the basis of the best information available, and two, they provide a logical, traceable framework for comparing alternatives with each other. b. Basis: Use lowest level of detail possible and takeoffs from available drawings. When sufficient detail is not available, historical data may be used. c. Degree of Accuracy: The degree of accuracy for the feasibility estimate is minus 30 percent to plus 80 percent. 3. Preliminary Estimate a. Purpose: After a remediation alternative is selected, a more detailed cost estimate is developed. This estimate shall be in sufficient detail so it can be used as one of the project control tools. 4-9 DOE G 430.1-1 03-28-97 b. Basis: This estimate shall show all costs incurred to date. All future estimated costs, such as equipment costs, vendor pricing, or materials pricing, shall be as accurate as possible. c. Degree of Accuracy: The degree of accuracy for preliminary estimates is minus 30 percent to plus 60 percent. 4. Detailed Estimates a. Purpose: This estimate is used to verify the contractor’s figures in both lump sum and negotiated fee projects. b. Basis: The basis of the final detailed estimate for an environmental restoration project includes the final approved drawings, specifications, calculations, schedule, and anticipated method of accomplishment of the project goals. This estimate shall be performed as an independent contractor would perform the estimate for bidding purposes. All cost figures shall be escalated to the midpoint of each activity. All major equipment required for the project shall be outlined and priced, and escalation rates shall be established to arrive at a total dollar figure. c. Degree of Accuracy: The degree of accuracy for detailed estimates is minus 10 percent to plus 25 percent. 4. OTHER ESTIMATES Once actual work commences on either construction or EM projects, revised estimates may be required when changes in the work are discovered or unknowns are identified. A revised estimate may also be generated when schedule changes affect escalation calculation. A. Government Estimate 1. Government estimates, sometimes called engineer’s estimates, are used to determine the reasonableness of competitive bids received in connection with construction contracts and serve as a control in evaluating cost estimates prepared by a prime construction contractor. In construction, the Title II design estimate is prepared by the designer. After the Title II estimate is reviewed and approved by the government, it is the basis for the government estimate. The detailed cleanup estimate is used in EM projects. 2. The services of an M&O contractor, construction contractor (with respect to subcontracts), or construction manager may be used as appropriate to prepare, review, or revise the government estimate prior to government approval. Government review and approval of the government estimate is not required 4-10 DOE G 430.1-1 03-28-97 when the estimate is within the limits established by the government’s approval of the cost-type contractors procurement system. The specifics of a government estimate vary with the size and type of contracts as delineated below. a. Architect-Engineer and Construction Contracts

Government estimates shall be prepared for all construction and architect- engineer contracts, except for contracts less than $25,000. Such estimates may be revised when inaccuracies or inconsistencies are revealed during negotiations. b. Fixed-Price Construction Contracts 1. Government estimates for fixed-price construction contracts and modifications thereto shall be based on approved Title II working drawings and specifications. These estimates shall be prepared in accordance with the practices of the construction industry and in the same careful manner as if the government were bidding in competition with private contractors. 2. Government estimates shall be summarized to conform with bid items but shall include the following items as backup listed separately: • separate estimates for alternates set forth in the bidding documents; • a breakdown indicating quantities and unit costs for labor, materials, and equipment entering into the work; • estimates for mobilization, demobilization, etc.; and • allowance for contractor’s overhead and profit, including the cost of such items as sales tax, insurance, and bonds. 3. Government estimates shall be prepared independently in advance of any bid or solicited proposal submitted by a prospective contractor or subcontractor. 4. Prior to opening of bids, access to or disclosure of information concerning government estimates shall be limited to personnel requiring such information in performance of their duties. DOE G 430.1-1 4-11 03-28-97 5. Government estimates for formally advertised or competitive proposal fixed-price construction contracts shall not be changed after the opening of bids or proposals except where careful reexamination indicates a definite typing or arithmetic error. In the event an estimate is changed under such circumstances, detailed reasons for the revision shall be documented. B. Estimates for Minor Projects The preparation of government estimates in connection with work estimated to cost less than $10,000 is optional with the field organization manager. Where the field organization manager elects to use a contractor’s estimate, bid, or proposal instead of a government estimate under this limitation, the contractor’s estimate shall be carefully evaluated to verify that it is fair and reasonable. The basis used to make adjustments or refinements shall be listed and made a part of the project file. Estimates shall be performed in the same manner as Title II estimates. C. Current Working Estimates Current working estimates are required for cost control on construction projects and are conducted periodically throughout the life of the project from the completion of conceptual design until final completion of construction. It is necessary that working estimates be kept under constant review to ensure that they reflect the latest cost and design data available, the estimated cost to complete, the allowance for contingency, detailed contingency analysis, and the uncertainties remaining under the project. D. Independent Cost Estimate An independent cost estimate (ICE) is a documented cost estimate that has the express purpose of serving as an analytical tool to validate, cross check, or analyze estimates developed by proponents of a project.

An ICE is performed by the Office of Infrastructure Acquisition (FM-50), Office of the Associate Deputy Secretary for Field Management, in support of key decisions by the Under Secretary. Other check estimates may be initiated by an Assistant Secretary, program manager, project manager, or some other program advocate as an “independent” assessment of the project estimate, but they shall be labeled as a program office check estimate. The basis for an ICE shall be the identical parameters used to formulate the estimate it will be compared with. 4-12 DOE G 430.1-1 03-28-97 The basis for these cost estimates must carefully define the purpose and scope of the estimate, along with a complete list of all the considerations used to develop the estimate for costs experienced to date and data used to complete the projections. E. Bilateral (Two-Party) Estimate This estimate is prepared concurrently by two parties who have mutual responsibility or interest in the total cost. For example, when a site changes operations from production to decontamination and decommissioning (D&D), a budget estimate for the shutdown and D&D must be completed. When this transfer of operations involves two programs or agencies, both interested parties will work together to develop the estimate. An FM-50 ICE could also be performed on this type of estimate. F. Performance versus Forecast Performance versus forecast estimates are usually produced for long-term projects (i.e., a project life of 5 or more years). These estimates can be completed for the whole project or a portion of a project. The performance versus forecast estimate looks at the project costs in two divisions: what the costs are to date, and what the forecast costs are to complete the project. The costs to date can be compared against what was expected (performance). The estimated forecast costs may need to be adjusted based on the performance of the project. For example, if actual excavation costs are higher than the original estimate, the soil may have been rockier than originally expected. This slows productivity. This new productivity factor should be used in the forecast amount. The actual and forecast values will give you the total project costs. DOE G 430.1-1 4-13 03-28-97 TABLE 4-1 DEGREES OF ACCURACY TYPE PURPOSES ACCURACY RANGE Conventional Construction Planning/Feasibility or Order of Magnitude Estimate (Proposal) 1. Scoping Studies. 2. Preliminary budget estimates of 3. Support Key Decision 0. Total Project Cost. ± 40% Budget/Conceptual Design Estimate (Equipment Factored) 1. Ensure project feasibility. 2. Develop reliable project cost 3. Establish baseline project estimate. definitions, schedules, and costs. 4. Support Key Decision 1. (Design 10% to 15% Complete) ± 30% Title I Estimate 1. Verify that Title I design details still remain within the project funding. 2. Support Key Decision 2. (Design 25% to 35% complete) ± 20% Title II or Definitive Estimate (Detailed) 1. Estimate construction costs as accurately as possible, prior to competitive bidding and the commencement of construction activities. 2. Support Key Decision 3. (Design 60% to 100% Complete) - 5% to + 15% Construction Estimate 1. Estimate is based on bid information. (Design 100% complete) - 5% to + 10% 4-14 DOE G 430.1-1 03-28-97 TABLE 4-1 DEGREES OF ACCURACY TYPE PURPOSES ACCURACY RANGE Environmental Restoration - Assessment Phase Planning Estimate Assist in the preliminary planning and budgeting of a project.

(usually requested for use in EM 5-Year Plans) - 50% to + 100% Preliminary Estimate Used as a budgetary tool and is included in the EM 5-Year Plan. - 30% to + 70% Detailed Estimate Used to decide between the alternatives for remediating a site. - 25% to + 55% Environmental Restoration - Cleanup Phase Planning Estimate 1. Assist in preliminary planning and budgeting of the cleanup. 2. Required for budgetary purposes for inclusion in planning documents. 3. Included in the EM 5-Year Plan. 4. Basis for funds represented in the ADSs. - 50% to + 100% Feasibility Estimate Used to evaluate the numerous technical solutions developed to remediate a site. - 30% to + 80% Preliminary Estimates A more detailed cost estimate that is developed after a remediation alternative is selected. - 30% to + 60% Detailed Estimate Used to verify the contractor’s figures in both lump sum and negotiated fee projects. - 10% to + 25% CHAPTER 5 COST CODES AND THE WORK BREAKDOWN STRUCTURE 1. INTRODUCTION This chapter will discuss the purpose of the work breakdown structure (WBS) and code of account (COA) cost code system, show the purpose and fundamental structure of both the WBS and the cost code system, and explain the interface between the two systems. For further information, see DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM. 2. DEFINITIONS A. Work Breakdown Structure A WBS is the result of project/program planning that establishes the physical work packages or elements and the activities within those packages that completely define a project. It organizes the physical work packages into levels that can be developed into a summary. Figure 5-1 shows a typical WBS. B. Code of Accounts A COA is a logical breakdown of a project into controllable elements for the purpose of cost control and reporting. The breakdown is a numbered structure, organized in a logical manner. Chapters 16 and 17 contain example COAs for construction and Environmental Restoration and Waste Management projects. 3. PURPOSE OF SYSTEMS The WBS and COA systems provide a consistent organization throughout the life of the project. The Department does not require a specific WBS or COA for use in cost estimating. It is envisioned that each Field Office or Program Officer will specifically delineate a WBS and COA for each office or program. These would be used in developing cost estimates throughout the project’s life. oe.o Energistic Demo Unit 1 1 I r 08.1 08.2 I 08.3 I ., Site and Equipment Data Buildings 2 ....... ...... ------- - - - - - ----- ---------- -- 08.1.1 I 08.1.2 08.1.3 I Site Plant Technical Preparation Buildings Support 3 Jo.. ~ ----- - -----------------r 08.1.2.1 08.1.2.2. I ., Building #1 Building #2 4 -- ---~----~--~----~- 08.1.2.1.1 08. 1.2. 1.2 ( ~ Foundation Superstructure and and Sub Structure Finishing 5 ---------- ---~--------- 1.2.1.1.11 08.1.2.1.1.2 08.1.2.1.1.3 I SUb Level Ground Siebe Peripheral Slab. Building Stan G Figure S-1. Typical Work Breakdown Structure 5-2 DOE G 430.1-1 03-28-97 5-3 DOE G 430.1-1 03-28-97 A. Work Breakdown Structure A WBS shows the relationship of all elements of a project. This provides a sound basis for cost and schedule control. During that period of a project’s life from its inception to a completed project, a number of diverse financial activities must take place. These activities include cost estimating, budgeting, accounting, reporting, controlling and auditing. A WBS establishes a common frame of reference for relating job tasks to each other and relating project costs at the summary level of detail.

Since the WBS divides the package into work packages, it can also be used to interrelate the schedule and costs. The work packages or their activities can be used as the schedule’s activities. This enables resource loading of a schedule, resource budgeting against time, and the development of a variety of cost budgets plotted against time. B. Code of Accounts A cost code system or COA is established early in a project and is used for its duration. An organized, numbered structure for a project is developed. This standardization is used in the development, collection, organization, and reporting of project data. The COA organizes data at a detail level that is developed into higher summary levels. As the detail of a project increases, more detail levels can be developed. The COA is used during the estimate stage to organize the costs. As a project progresses, the same COA is used, but the elements of data are updated. By comparing the changes in the elements of the COA, variances and trends can be identified. Using the same COA once construction work begins will provide consistency between the estimate and actual cost data for cost control purposes. A project cost code manual must be provided for each line item construction project. If the cost code system has not been developed prior to the CDR, it must be issued as a part of the CDR. All subsequent estimates must then be made in accordance with the cost code system. 4. INTERFACE OF SYSTEMS Even though the numeric systems established for the WBS and COA differ, they are both based on a structure that increases in detail as the levels increase. A correlation exists between the WBS and COA levels. This relationship is inherent since there are costs 5-4 DOE G 430.1-1 03-28-97 associated with the execution of each work package or element of the WBS. This correlation is shown in Figure 5-2. Incorporating the cost codes into the WBS will provide: • a framework for basic uniformity in estimating and accounting for the costs of construction work; • a means for detecting omission and duplication of items in budget estimates; • a basis for comparing the cost of similar work in different projects or at different locations; • a record of actual costs incurred on completed projects in a form that will be useful in the preparation of estimates for other projects; and • a means of establishing the cost of property record units for continuing property accounting records. 5. THE WORK BREAKDOWN STRUCTURE A. Fundamental Structure of a Work Breakdown Structure A WBS is a numerical, graphic representation that completely defines a project by relating elements of work in that project to each other and to the end product. The WBS is comprised of discrete work packages, called elements, that describe a specific item of either hardware, service, or data. Descending levels of the WBS provide elements of greater and greater detail. The number of levels of a WBS depends on the size and complexity of the project. The DOE WBS Guide presents a structure that may be used as a guideline when developing the project/program WBS. Examples of the first three levels of a WBS are as follows. 1. Level 1 contains only the project end objective. The product at this level shall be identifiable directly to elements of the DOE Budget and Reporting Classification Structure. 2. Level 2 contains the major product segments or subsections of the end objective. Major segments are often defined by location or by the purpose served.

3. Level 3 contains definable components, subsystems or subsets, of the Level 2 major segments. rJl ... = = Q 1,1 1,1 < ... Q Qi 'Cl Q u Figure 5-2 Work Breakdown Structure Extended to Cost Account and Work ~ 'S "' a 1:11 ~ Package Levels Indicating Cross Walk to Code of Accounts Level 1 MSA Level 2 Installation Level 3 Subproject She l'repaialion Sub Level Slam Ground Slobs I - - - - - - - - - - J I ... 0 ., - -1- - - -I -1- - j ... ~ - l ; -1- - - -I - I - ,- - - -, - Cost Account ·~ - - ...._ __ _, Cost Account Work Breakdown Structure I - I -I - Superstnu:&W< ond Finishin Peripheral Slabs Cost Account Data Work Packages 5-5 D O E G 430.1-1 03-28-97 5-6 DOE G 430.1-1 03-28-97 B. Preparing a Work Breakdown Structure The initial WBS prepared for a project is the project summary work breakdown structure (PSWBS). Normally, the PSWBS contains the top three levels only. Lower-level elements may be included when necessary to clearly communicate all project requirements. 1. Understanding of the Scope The first prerequisite to the preparation of the PSWBS is the clear understanding and statement of the project objective by the Project Secretarial Officer (PSO). This can include the delivery of a specific major end item, the erection of a building, or the remediation of a section of land. Once this overall project objective is established, it assists in determination of the supporting project subobjectives. This process of identification and definition of subobjectives assists the PSO in structuring WBS levels and the contributing elements during WBS preparation. 2. Defining the Levels and Elements Early in project planning, DOE project management should select the summary WBS(s) that will best describe the work of the project in the way it will be executed. WBS elements can be organized by physical area, process, or function. All elements of the WBS should be defined in an accompanying WBS dictionary. The summary WBS elements should be used as guides as the levels of the WBS are added or changed to reflect the changes and refinements of the scope as the design and project execution are being developed. As levels are added to the WBS, they should be checked across the project to ensure that they remain at the same level of detail. When developing a numbering system, the use of the computerized system should be considered since they may limit the number of digits in the WBS numeric identifier. 3. Use of the Work Breakdown Structure The PSWBS should be used to identify work for proposed supporting contractors. Subsequently, the PSWBS elements assigned to contractors are extended by the contractors to derive each contract work breakdown structure (CWBS). Together, the PSWBS and each CWBS constitute the project WBS, which then provides the framework for cost, schedule, and technical planning, and control through the life of the project. 4. Updating the Work Breakdown Structure 5-7 DOE G 430.1-1 03-28-97 The PSO must maintain the WBS. Changes may occur when the work effort can be more accurately defined or if a revised approach (e.g., technically different or more cost effective) is implemented to satisfy or meet the project objective. Also, contractors, while developing their CWBS, may propose to DOE alternative approaches to better accomplish the contract objectives. If the alternatives are accepted by DOE project management, the preliminary PSWBS will be revised accordingly. Thus, when establishing the numeric series for the WBS, it is advisable to leave some blocks of numbers for changes and additions to the scope. This makes the WBS revision process easier.

6. THE COST CODE SYSTEM Fundamental Structure of a Cost Code System A direct cost system generally includes three levels of codes. The “first-level” codes, sometimes called “primary levels,” represent the major cost categories. The major components or categories of work for each of the primary levels are listed and assigned a “second-level” or sub-summary code. These “second-level” codes are then broken down by work elements or bills of material and each work element or bill of material (BM) is assigned a “third-level” or fine-detail-level. The cost estimate will list the labor and material required at the “third-level” code, then all “third-level” codes will be summarized by their respective “second-level” codes. Likewise all “second-level” codes will be summarized by their respective “primary levels.” The “primary levels” will be summarized by each “subproject” or “project” total to obtain the “project” overall cost estimate. Subproject Designation. Subproject is a term used to divide a project into separately manageable portions of the project. A subproject is generally used to identify each separately capitalizable identity, such as a building. A subproject can also be used to identify a specific geographical area or separate physical features of a project. A matrix should be drawn for each project listing the subprojects designated and indicating all the second-level cost codes for the construction work required by each. 7. INTERFACE BETWEEN ASSET TYPES AND CODE OF ACCOUNTS When a construction project has been completed, an asset has been created and must be reflected on DOE’s property book. The Accounting Practices and Procedures Handbook contains a listing of the asset types used by DOE. In an effort to bridge the gap between a construction account and an asset type, the committee to update the code of accounts decided to use a primary level of accounts coincided with the asset types 5-8 DOE G 430.1-1 03-28-97 used by the Finance and Accounting Offices and thereby reduce the likelihood of introducing errors that could result from translating “as built” costs to asset type categories. Thus, the numbers differ from those used in the older Energy Research and Development Administration (ERDA) manuals and, of course, differ from the Construction Specification Institute Code (CSI). It should be noted that although the numbering is different, the elements of the emerging code of accounts permit both the older ERDA classification system and CSI system to be applied at sublevels of the cost code. CHAPTER 6 PROJECT FUNCTIONS AND ACTIVITIES DEFINITIONS FOR TOTAL PROJECT COST 1. INTRODUCTION Because of an obvious disparity of opinions and practices with regard to what exactly is included in total estimated cost (TEC) and total project cost (TPC), guidelines were developed and are included in this chapter. The development of guidelines is important because it provides consistency in estimating and reporting of project costs and it provides uniformity of information used for cost data bases. It should be noted that TEC does not apply to most of the EM projects; only TPC applies. 2. DEFINITIONS Total project cost is defined as all costs specific to a project incurred through startup of a facility, but prior to the operation of the facility. Thus, TPC includes TEC and other project costs (OPC), or TEC + OPC = TPC. A. Total Estimated Cost

TEC is defined as all engineering design costs (after conceptual design), facility construction costs, and other costs specifically related to those construction efforts. These are typically capitalized. TEC will include, but not be limited to: project and construction management during Titles I, II, and III; design and construction management and reporting during design construction; contingency and economic escalation for TEC-applied elements; ED&I during Titles I, II, and III; contractor support directly related to design and construction; and equipment and refurbishing equipment. 6-2 DOE G 430.1-1 03-28-97 B. Other Project Costs OPCs are defined as all other costs related to a project that are not included in the TEC, such as supporting research and development, pre-authorization costs prior to start of Title I design, plant support costs during construction, activation, and startup. OPCs will include, but not be limited to: research and development; NEPA documentation; project data sheets (PDSs); CDR; short form project data sheets; surveying for siting; conceptual design plan; and evaluation of RCRA/EPA/State permit requirements. C. Total Project Cost TPC is defined as all costs specific to a project incurred through the startup of a facility but prior to the operation of a facility. It is comprised of TEC and OPC. TPC will include, but not be limited to, activities such as: design and construction; contingency; economic escalation; Pre-Title I activities; feasibility study reports (FSRs); maintenance procedures (to support facility startup); one-time start-up costs, initial operator training, and commissioning costs; and operating procedures (to support facility start-up). 3. DISCUSSION OF CHARTS Table 6-1 is a matrix that summarizes the different individual project activities and indicates their designation with respect to TPC and TEC. The project activities identified are divided into different phases of project development. The activities are charged to the different functions that comprise TEC and OPC and are shown in the sequence they would most likely occur. A. Different Phases of Project Development The different individual project activities identified are divided into different stages of project development. The first section of the matrix identifies activities encountered during pre-authorization or Pre-Title I design. The second section of the matrix identifies activities encountered during Titles I and II of design. The matrix progresses in that manner to include Title III design and start-up. B. Different Functions of Total Estimated Cost and Other Project Cost The different project activities are allocated to different project functions with respect to TEC and OPC. The activities are designated as based on the project phase under which the activity occurs. 6-3 DOE G 430.1-1 03-28-97 1. Total Estimated Cost TEC is divided into costs associated with ED&I, project management (PM), construction management (CM), and construction contractors (CC). a. ED&I: ED&I activities include the engineering and design activities in Titles I & II, the inspection activities associated with Title III, and activities defined in the Brooks Bill (e.g., the 6 percent allowed for design, drawings, and specifications). b. PM: Project management covers those services provided to the DOE on a specific project, beginning at the start of design and continuing through the completion of construction, for planning, organizing, directing, controlling, and reporting on the status of the project.

c. CM: Construction management covers those services provided by the organization responsible for management of the construction effort during Title I and Title II design, and continuing through the completion of construction. CM services are further defined in DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM. d. CC: Construction contractors cover salaries, travel, and other expenses of engineers, engineering assistants, and their secretarial support responsible for engineering and design performed by the construction contractor. When work normally performed by an architect/engineer (A/E) is performed by a CC, the associated costs are charged to the applicable ED&I accounts. 2. Other Project Cost Any activities that are not representative of TEC functions are allocated to OPC. They are typically Pre-Title I activities, startup costs, and some support functions. 4. COST ALLOCATIONS The definitive document within DOE for allocations of cost is DOE Order 2200.6, FINANCIAL ACCOUNTING, but a general discussion of cost allocations follows. 6-4 DOE G 430.1-1 03-28-97 A. Plant and Capital Equipment (PACE) Fund The Plant and Capital Equipment (PACE) Fund provides funding for the plant and its basic equipment/furnishings. This fund is for conventional construction projects only. B. Operating Expense Fund The Operating Expense Fund provides funding for ongoing activities, such as laundry, cleaning, etc. These items are typically captured in site overhead accounts and then allocated to projects as site overhead. Operating expense funded items more directly related to projects are items such as Pre-Title I and start-up activities, etc. C. Usage Once standard definitions are developed and the different project activities are identified, it is then possible to uniformly allocate costs to the different project development activities. Table 6-2 is a matrix that summarizes recommended cost allocations for operating expense and PACE (ED&I and construction). It is important to note that the estimator should refer to these tables throughout the entire life of a project. DOE G 430.1-1 6-5 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC 1. PRE-KEY DECISION - 0 (Prior to Determination of Mission Need) A. Engineering Study X B. Alternatives Assessment/Site Selection Studies X C. Surveying for Siting X D. Capital Review Board X E. Candidate Projects (support sheet and presentation to DOE) X F. Conceptual Design Plan X G. Work Orders - CDR Preparation, etc. X H. Integrated Programmatic/Project Schedule (R&D, Safety, Environmental, Operations, etc.) X I. Requirements for Safety Analysis Determination X J. Functional Design Criteria X K. Evaluation of RCRA/EPA/State Permit Requirements X L. Cultural Resources Review X 2. Key Decision - 0 and Key Decision - 1 (Determination of Mission Need and Approval of New Start) A. Conceptual Design Report X B. Design Reviews X C. NEPA Documentation X D. Conceptual Project Schedule X E. Plant Forces Work Review X F. Energy Conservation Report X 6-6 DOE G 430.1-1 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC G. Economic/Life Cycle Cost Analysis X H. Alternative Engineering (before Title I) X I. Physically Handicapped Review X J. Energy System Acquisition Advisory Board and Acquisition Executive Review Board Support X

K. Preliminary Safety Analysis Report (PSAR) X L. Facility/Project Security Review and Plan X M. Facility Security Vulnerability Assessments X N. Master Safeguards & Secure Analysis X O. Construction Project Data Sheet (CPDS) X P. ES&H Requirements Assessment X Q. Strategic Facility Assessment X R. Budget/Conceptual Estimates, as required (Parametric Assessments) X S. Project/Validations Support X T. Monthly Conceptual Status Report X U. Architect/Engineer (A/E) Selection and Statement of Work Development X V. Identification of Project Record Requirements X W. Project Management Plan (PMP) X X. Project Quality Assurance (QA) Plan X Y. Configuration Management Plan (CMP) X DOE G 430.1-1 6-7 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC Z. Pilot Plants X AA. Research and Development (Project Specific) X AB. Facility As-Built/Existing Condition Drawings (Prior to Design Start) X AC. Obtain Permits Required Prior to Start of Construction (before Title I) X 3. Key Decision - 1 and Key Decision - 2 (Approval of New Start and Start of Detailed Design: Title I and II Activities) A. PMP Revisions X B. CPDS Revisions X C. Integrated Detailed Project Schedules/Critical Path Analysis X D. Project Revalidations X E. Project Authorization Modification Support X F. A/E Internal Design Coordination X G. Identification of Long Lead Procurements X H. Design Studies X I. Design Calculations & Analysis X J. CADD and other Computer Services X K. Cost Estimates X L. Procurement & Construction Specification Development X M. Design Reviews by Project Team X X N. Design Review Support X X 6-8 DOE G 430.1-1 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC O. Drawings X P. Project Schedules X X Q. Acceptance Test Procedures & Plans X X R. Certified Engineering Reports X S. Research & Development (required to complete project as defined by KD-0) X T. Performance Evaluations of A/E X U. Inspection Planning X X V. Surveys - Support Design X W. Design Cost & Scheduling Analysis & Control X X. Decision Progress Reporting X X X Y. Design QA Plan and Overview X X Z. Constructibility Reviews X X AA. Safety Reviews by A/E X AB. Regulatory Overview by A/E X AC. Reproduction - for Design X AD. Travel - Support Design X AE. Obtain Permits Required Prior to Start of Construction (after Title I) X AF. Change Control - for Design X X AG. Value Engineering (after Title I) X DOE G 430.1-1 6-9 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC 4. Key Decision - 3 Approval to Start Construction or Full Scale Development to Key Decision - 4: Approval to Commence Operations or Pre-Production (Title III Activities) A. Bid Package Preparation X X B. Bid Evaluations, Opening and Award X X C. Construction Coordination and Planning X X D. Contract Administration X X E. Engineering Support (A/E) X F. Design Changes/Control X X X G. Non-Conformance Reports (NCRs) X X H. Control Systems for Construction Activities X X I. Project Assessment & Reporting X X X J. Construction Status Reports and Meetings X X K. Davis-Bacon Administration X X L. Vendor Submittals X X X X M. Field Support of Construction X X

N. Field or Lab Tests X O. Radiation Control Timekeepers X P. Radiation Protection by Contractor X Q. Safety and Safeguard/Security Operations X X R. M&O Contractor/M&O Project Support During Construction X S. Project Estimates (Purpose Dependent) X X X 6-10 DOE G 430.1-1 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC T. Quality Control (QC) Inspection X X X U. Inspection and Acceptance X X V. Negotiations of Fixed Price Contract Changes X X W. Trips to Vendor/Fabricators X X X X X. Procurement Coordination X X X Y. Equipment/Hardware Cost X X Z. Material Procurement Rate X X AA. Initial Office Furniture and Fixtures X AB. Spare Parts Inventory X AC. Installation/Alterations X AD. Disposal of Mixed Waste X AE. Cost Plus Award Fee/Fixed Price Construction X X AF. Plant Forces Work X AG. Initial Spares X AH. Safety Plan & Overview X X AI. Decontamination (exceeds normal operating levels) X AJ. Decontamination (as removal cost) X AK. Surveying to Support Construction X X X AL. Interest Penalties X X X X DOE G 430.1-1 6-11 03-28-97 TABLE 6-1 TPC AND TEC GUIDANCE AND CLARIFICATION INCLUSION OF DETAILED ACTIVITIES IN TPC AND/OR TEC ACTIVITY TPC OPC TEC ED&I P M CM CC 5. Key Decision - 4: Planning and Preparation for Acceptance/Operational Startup and Pre-production for Commencement of Operations A. Perform Acceptance Testing X X B. Perform Operation Acceptance Testing X C. Final Safety Analysis Report (FSAR) X D. Operational Readiness Review (ORR) X E. Start-up Costs X F. Training of Operators X G. As-Builts X X X H. Project Closeout X I. A/E & Construction Performance Appraisals X J. User Move-In X K. Develop Operating Procedures, Manuals, and Documentation X L. Operations Planning X M. Safety and System Integration X N. Safety Evaluation Report (SER) X O. Post-Acceptance Testing X P. Start Up Coordination, Materials, and Supplies X Q. Correction of Design/Construction Deficiencies X R. Transition Planning X X X 6-12 DOE G 430.1-1 03-28-97 TABLE 6-2 RECOMMENDED GENERAL COST ALLOCATION MATRIX PROJECT DEVELOPMENT ACTIVITY PROJECTS1 EXPENSE OPERATING P&CE ED&I CONSTR. Pre Title I X Title I X Title II X Title III X Construction X2 X Construction Management X Project Management X3 X3 Project Support X Startup X Applies to Line Item Projects, Major Projects, and Major Systems Acquisitions.1 Capital funding for betterments, conversions, and replacements. Alterations are generally funded by2 operating expense. Project management during the design phase of Line Item Projects, Major Projects, or Major3 Systems Acquisitions authorized for design only is funded by P&CE-ED&I. Reference: DOE Order 2200.6, FINANCIAL ACCOUNTING. CHAPTER 7 DIRECT/INDIRECT COSTS 1. INTRODUCTION Estimates can be broken down into direct, indirect, contingency, and escalation costs. Standard definitions of direct and indirect costs provide consistency in estimating and reporting of project costs. This benefits program/project management, project validation, independent estimating and helps to provide uniformity in the departmental cost database. This chapter provides recommended categories for direct and indirect elements developed by the Committee for Cost Methods Development (CCMD) and describes various estimating techniques for direct and indirect costs. 2. DEFINITIONS A. U. S. Department of Energy

DOE Order 4700.1, PROJECT MANAGEMENT SYSTEM, states that direct costs include “...any costs that can be specifically identified with a particular project or activity, including salaries, travel, equipment and supplies directly benefitting the project or activity.” Emphasis is placed on the term “activity,” which is interpreted as being the same as a cost account. DOE Order 4700.1 states that indirect costs are “...costs incurred by an organization for common or joint objectives, and which cannot be identified specifically with a particular activity or project.” B. American Association of Cost Engineers The AACE defines direct costs as “...costs of installed equipment, material, and labor directly involved in the physical construction of the permanent facility.” The AACE defines indirect costs as “...all costs which do not become a final part of the installation, but which are required for its orderly completion. It includes (but is not limited to): field administration, direct supervision, capital tools, some start-up costs, contractor's fees, insurance, taxes, etc.” C. Table of Indirect/Direct Costs 7-2 DOE G 430.1-1 03-28-97 For the majority of the activities, there is agreement as to whether it is an indirect or direct cost. Table 7-1 provides guidance for the treatment of some categories and indicates whether they are indirect or direct costs. The definitions of the categories or activities can be found in Appendix A. D. Type of Contract Cost Considerations The items considered a direct cost vary with the type of contract as follows. Type of Contract Direct Costs Fixed Price or Lump Sum Cost Plus Fixed Percentage Material and labor costs including payroll burden Material and labor costs including payroll burden, field and home office expenses, accounting, secretarial, and equipment, or all costs except the fee. 7-3 DOE G 430.1-1 03-28-97 TABLE 7-1 RECOMMENDED CATEGORIES FOR DIRECT/INDIRECT COST ELEMENTS CONSTRUCTION COST ACCOUNT DOE-CCMD COMMITTEE ACCOUNTING I ADMINISTRATION I AIRCRAFT OPERATION I BONDS I CAMP OPERATIONS I COMPRESSED AIR I CONST. CONTRACTOR’S ENG. I CONSTRUCTION D CONST. EQUIPMENT I1 CONST. EQPT. MAINT. I CONST. FACILITIES I CONSUMABLES I CONTAMINATION RESTRICTIONS D CONTRACT FEE I CONTRIB. TO WELFARE PLANS I DEMOLITION D DRINKING WATER & SANITATION I ESCORTS D FIRE PROTECTION I FREIGHT D GENERAL CLEANUP I1 HEAT I HOLIDAY & VACATION PAY I INSURANCE I LAUNDRY I 7-4 DOE G 430.1-1 03-28-97 TABLE 7-1 RECOMMENDED CATEGORIES FOR DIRECT/INDIRECT COST ELEMENTS CONSTRUCTION COST ACCOUNT DOE-CCMD COMMITTEE LEGAL I LIGHT & POWER I MAINT. OF GEN. CONST. PLANT I MATERIAL HANDLING I MEDICAL & FIRST AID I MOTOR POOL OPERATIONS I OFFICE SUPPLIES & EXPENSES I PAYROLL INSURANCE I PAYROLL TAXES I PERMITS, LICENSES I PERSONNEL I PREMIUM PAY D PROCUREMENT I PRODUCTIVITY D PROTECTIVE CLOTHING D REPORTING TIME I RETROACTIVE PAY I/D2 SAFETY I SALES TAX I SCAFFOLDING I1 SECURITY I SECURITY RESTRICTIONS D SIGNUP & TERMINATION PAY I SITEWORK I/D3 SMALL TOOLS I DOE G 430.1-1 7-5 (and 7-6) 03-28-97 TABLE 7-1 RECOMMENDED CATEGORIES FOR DIRECT/INDIRECT COST ELEMENTS CONSTRUCTION COST ACCOUNT DOE-CCMD COMMITTEE STANDARD EQUIPMENT D SUPERINTENDENCE I1 SURVEYS, GEOL. STUDIES & TESTS I TAXES OTHER THAN PAYROLL I TRANSFER AND RELOC. I TRANSPORTATION OF WORKERS I WAREHOUSING I WATER I WELDING TESTS I

1 INDIRECT ONLY IF NOT ASSOCIATED WITH A PARTICULAR WORK OPERATION. 2 HOLDING ACCOUNT; ONLY UNALLOCATABLE COSTS SHOULD REMAIN IN THIS ACCOUNT. 3 DIRECT IF PERMANENT, OTHERWISE INDIRECT. CHAPTER 8 STARTUP COSTS 1. INTRODUCTION Many projects will have startup costs associated with the project. Startup is usually a gray area between the time project construction ends and a facility is commissioned and begins its operation. This chapter discusses startup costs for construction and environmental projects, and estimating guidance for startup costs. 2. DEFINITION OF STARTUP Obviously, different projects will have unique startup costs. This section defines startup costs for conventional and environmental projects. A. Conventional Projects Construction projects are usually considered conventional projects. During startup, a facility is tested to ensure that it meets the project’s technical performance specifications; however, actual operations at the facility may not have commenced. In fact, construction activities, such as punch lists and corrections, may still be occurring during startup, so it is difficult to separate construction modifications from initial facility operations. A distinction is made between startup and operations because startup costs are usually considered capital costs, while operating costs are charged to the facility’s operating budget. B. Environmental Projects Startup activities at environmental restoration facilities may commence prior to the completion of the construction phase of the environmental project. For example, contaminated soil may be excavated and stockpiled while startup of an on-site incinerator is occurring. Startup costs will be a function of the types of activities at the site and the remediation/restoration technology used at the site. 8-2 DOE G 430.1-1 03-28-97 3. STARTUP COMPONENTS Startup activities may include the activities discussed in the following sections. A. Startup Transition Plan The development of a startup transition plan for the conventional facility may be essential for smooth startup implementation. Typically, these plans will include test plan procedures, scheduling, security planning, and the associated documentation. A plan provides an excellent opportunity to think ahead to situations that may be encountered at the facility during startup. B. Startup Organization Development of a startup organization, including management, administrative, operations, maintenance, and technical support personnel, will be required prior to the actual startup. Employees may have to be relocated to staff the facility while it is being tested, so employee moving costs or employee living costs may also be included in the cost estimate for facility startup. C. Operating and Maintenance Procedures Site-specific operating and maintenance procedures will have to be developed for a new facility with special attention paid to equipment startup or initiation procedures. In some cases, as with a nuclear facility, startup operations and their sequence will be strictly regulated. D. Spare Parts Inventory and Training The startup cost estimate must include provisions for materials to be used during startup and spare parts for any maintenance that occurs during startup. Training for operations and maintenance personnel will also be required. E. Testing

Some facilities will require a safety/readiness review before they can be declared operational. Some scheduling may also be involved. For example, a facility may have to demonstrate successful operation at a certain capacity for a specified period of time before it is commissioned. The startup cost estimate must account for the testing schedule. DOE G 430.1-1 8-3 (and 8-4) 03-28-97 4. ESTIMATING GUIDANCE FOR STARTUP COSTS Although startup activities in the field may not begin until construction is almost complete, the planning for startup should occur early in the project. Planning for startup should be an integrated effort with construction personnel and operators to avoid holes or duplication of effort in the startup process. The input from the construction personnel and plant operators should be used when developing the startup cost estimate. Construction startup costs can range from 0.5 to 10 percent of the installed cost for the conventional construction facility. The startup cost estimate should be prepared under the guidance of the Program Manager and not an architect/engineer. The work breakdown structure and schedule for startup activities should be developed early. The startup costs are considered other total project cost. CHAPTER 9 OPERATING COSTS 1. INTRODUCTION The content of this cost estimating guide is primarily focused on capital costs for conventional construction and environmental restoration and waste management projects. For some projects, particularly environmental remediation projects, the operating costs over the life of the project can be several orders of magnitude larger than the initial capital costs. Therefore, it is important to examine operating cost estimates and verify that all elements of the project have been considered and properly estimated. 2. OPERATING COSTS FOR CONVENTIONAL CONSTRUCTION PROJECTS This section discusses operating costs which begin after start-up associated with conventional construction projects. All projects are not the same; therefore, some of the costs outlined in this section may not be applicable to a given project. This should not detract from the usefulness of this section to cost estimators and reviewers. In addition, taxes and insurance, which are normally included in operating cost estimates, are not applicable for DOE conventional construction projects because the federal government is not subject to state or local property taxes and is self-insured. A. Capital Recovery The operating cost estimate should contain some mechanism for capital recovery. Depreciation is the method commonly used for conventional construction projects. Capital recovery will be a function of the interest rate and the facility’s expected life. B. Utility Costs Utility costs are primarily comprised of conventional facility heating and cooling costs. Costs for utilities will be based on the utilities available to the facility (i.e., natural gas, fuel oil, electricity) and the climate at the facility’s location. Steam, process water, and compressed air may also be required by the facility. C. Labor Costs 9-2 DOE G 430.1-1 03-28-97 Facilities constructed as conventional projects do not operate without labor. These facilities may employ various types of labor, including operations, technical, administrative, and clerical labor. The level of estimate detail will dictate the level of labor cost breakout in the estimate. For a detailed estimate, the reviewer should verify that all facility functions have been identified and properly estimated.

Operating costs should include provisions for salaries and labor burden, including medical benefits, vacation and holidays, and other employee compensation items. Labor overhead will consist of administrative costs for scheduling, payroll, etc., as well as costs for employee workspace maintenance. Labor overhead will be present regardless of the facility operating schedule, but labor costs may be a function of the facility’s operating schedule, especially if shift work is involved. D. Maintenance Maintenance and upkeep of all facility components must be considered in the operating cost estimate. Maintenance and repairs should also include costs for labor, materials, and supervision. Facility equipment will have maintenance requirements, and vehicles used at the facility will require service and fluids (gaso­ line/diesel, oil). Spare parts for equipment and vehicles may also be maintained at the facility, and an allowance for spare parts should be provided in the operating cost estimate. Buildings and their infrastructures at the facility, including phone lines and power generators, will require maintenance to remain in good condition. Regular housekeeping service is usually necessary. Service roads at the facility must be maintained. Facility grounds may also require maintenance, usually for aesthetic purposes. Additional information on maintenance activities can be found in DOE Order 4330.2, CAPITAL ASSET MANAGEMENT PROGRAM. E. Support Services Support services include those miscellaneous services that may be needed at the facility. Drinking water, sanitation, waste disposal, site security, fire protection, cafeteria, and medical clinic/services are considered support services. Office supplies and expenses and small tools are also classified as support services. These items, if applicable, should be identified in the operating cost estimate. Temporary facilities during expansion or renovation may also require inclusion in an operating cost estimate. 9-3 DOE G 430.1-1 03-28-97 F. Environmental Compliance/Permit Costs In today’s regulated environment, most conventional DOE facilities will require operating permits. Air permits and wastewater discharge permits are two examples of operating permits. These permits may contain annual compliance provisions, including monitoring or testing of effluent or air emissions. Costs for testing and analytical analysis must be included in the operating cost estimate. Operating costs for equipment mandated by permit provisions should also be considered. G. Downtime Allowance Facilities will not operate 100 percent of the time. Weather-related shutdowns, equipment repair and maintenance, emergencies, and employee work schedules will affect the number of hours operated per year. Some facilities may be prevented from operating pending acceptance of the facility work plan or other permit. Proper allowance for downtime is important if the operating costs were estimated on a percentage of hours operated basis. For conventional construction facilities, this is not a significant factor unless the facility’s operating budget is dependent upon the number of hours operated. Maintenance and repair costs may also be a function of the number of hours of facility operation. 3. OPERATING COSTS FOR ENVIRONMENTAL REMEDIATION AND RESTORATION PROJECTS

This section discusses operating costs for environmental remediation and restoration projects. Each environmental project is unique; therefore, no two projects will have the same operating costs. It is the responsibility of the estimator and reviewer to verify that the operating cost estimate is consistent with activities which will be performed at the remediation/restoration site. Taxes and insurance, which are normally included in operating cost estimates, are not applicable for DOE environmental restoration and waste management projects because the federal government is not subject to state or local property taxes and is self-insured. A. Capital Recovery Capital recovery will be a function of the interest rate and the environmental remediation/restoration project’s expected life. The operating cost estimate should contain depreciation expenses for capital recovery cost. B. Utilities Utility costs will consist of facility heating/cooling plus the energy required to run any waste treatment equipment at the facility. For example, operating costs for a project involving an on-site incinerator would include workspace heating/cooling 9-4 DOE G 430.1-1 03-28-97 costs and the fuel requirements of the incinerator. Utility costs for environmental facilities will be a function of the utilities available to the facility, the climate at the facility’s location, and the amount of material processed/handled at the facility. Steam, process water, and compressed air may also be required. C. Labor Costs Estimates of labor costs for environmental projects will be different than estimates for conventional projects because of job functions required by the project. For example, work at the facility may dictate the number of health and safety professionals working on the project, and additional technical support may be required for projects that involve new or experimental remediation technology. Labor salaries are usually higher because of additional certification and training requirements for personnel who work in the environmental remediation field. Operating cost estimates should include provisions for salaries and labor burden, including medical benefits, vacation and holidays, and other employee compensation items. Labor overhead will consist of administrative costs for scheduling, payroll, etc., as well as costs for employee workspace maintenance. Training costs may increase labor overhead for environmental projects. Labor overhead will be present regardless of the project operating schedule, but labor costs may be a function of the facility’s operating schedule, especially if shift work is involved. Labor scheduling should also contain an allowance for personnel decontamination time. D. Maintenance Maintenance and upkeep of all facility components must be considered in the operating cost budget for an environmental project. Maintenance and repairs should also include costs for labor, materials, and supervision. Facility equipment will have maintenance requirements, and vehicles used at the facility will require service and fluids (gasoline/diesel, oil). Specialized vehicles, such as earth movers and dump trucks, and specialized equipment, such as an incinerator, may also be used at the site on a routine basis. Spare parts for equipment and vehicles may be maintained at the facility, and an allowance for spare parts should be provided in the operating cost estimate.

Buildings and their infrastructures at the facility, including phone lines and power generators, will require maintenance to remain in good condition. Regular housekeeping service is usually necessary. Service roads at the facility must be maintained. DOE G 430.1-1 9-5 (and 9-6) 03-28-97 E. Support Services Support services include those miscellaneous services that may be needed at the facility. Drinking water, sanitation, waste disposal, site security, fire protection, cafeteria, and medical clinic/services are considered support services. Office supplies and expenses and small tools are also classified as support services. These items, if applicable, should be identified in the operating cost estimate. F. Downtime Allowance Facilities will not operate 100 percent of the time. Weather-related shutdowns, equipment repair and maintenance, emergencies, and employee work schedules will affect the number of hours operated per year. Some facilities may be prevented from operating pending acceptance of the facility work plan or other permit. Proper allowance for downtime is important if the operating costs were estimated on a percentage of hours operated basis. Maintenance and repair costs may also be a function of the number of hours of facility operation. G. Special Environmental Remediation/Restoration Project Costs Special project costs for environmental projects include costs for transportation, protective equipment, monitoring, pollution control, permits, and analytical services. All environmental projects will have operating expenses in these areas. The majority of environmental remediation/restoration projects will require that personnel wear protective equipment. This equipment must be decontaminated on a regular basis and kept in good working order. Site areas may also require personnel and/or ambient monitoring to protect human health and the environment. Pollution control equipment is usually a permit requirement for waste treatment facilities, and the operation of this equipment must be considered in the operating cost estimate for environmental facilities. Environmental facilities are usually strictly regulated, and the facility permit conditions must be addressed in the operating cost estimate. Analytical services can be a substantial portion of operating costs because environmental projects are usually characterized by a significant number of soil, water, air, or personnel monitoring samples. An on-site laboratory may be required for project analytical analyses. Provisions for all testing, analytic work, and an on- site laboratory must be made in the operating cost estimate. CHAPTER 10 ESCALATION 1. INTRODUCTION Escalation is the provision in a cost estimate for increases in the cost of equipment, material, labor, etc., due to continuing price changes over time. Escalation is used to estimate the future cost of a project or to bring historical costs to the present. Most cost estimating is done in “current” dollars and then escalated to the time when the project will be accomplished. This chapter discusses how escalation is calculated and how escalation indices are applied. Additional information can be found in DOE Order 5700.2, COST ESTIMATING, ANALYSIS AND STANDARDIZATION. 2. EXAMPLE OF USE OF ESCALATION

Since the duration of larger projects extends over several years, it is necessary to have a method of forecasting or predicting the funds that must be made available in the future to pay for the work. This is where predictive or forecast escalation indices are used. The current year cost estimate is, if necessary, divided into components grouped to match the available predictive escalation indices. Then each group of components is multiplied by the appropriate predictive escalation index to produce an estimate of the future cost of the project. The future costs of these components are then summed to give the total cost of the project. Escalation accuracy for the total project increases with the number of schedule activities used in summation. To properly apply escalation indices for a particular project, the following data is required: • escalation index (including issue date & index) used to prepare the estimate; • current performance schedule, with start and completion dates of scheduled activities; and • reference date the estimate was prepared. Following is an example of a 5-year project that requires escalation calculations to determine the total project costs in the base year's dollars. 10-2 DOE G 430.1-1 03-28-97 TABLE 10-1 EXAMPLE OF 5-YEAR PROJECT REQUIRING ESCALATION CALCULATIONS ESTIMATE REFERENCE DATE: JULY 1, 1992 Step 1 Determine midpoint of scheduled activity. Duration Scheduled Activity WBS Start Complete (Months) Midpoint 1. ED&I Title I A1A 02/01/94 10/01/94 8 06/01/94 2. ED&I Title II A1B 11/01/94 04/01/95 6 01/15/95 3. ED&I Title III A1C 04/01/95 01/01/99 45 02/15/97 4. Equipment Procurement (General Services) B2A 10/01/94 10/01/97 36 04/01/96 5. Equipment Procurement (Long-Lead, GFE) B2B 04/01/95 12/01/95 8 08/01/95 6. Facility Construction B2C 07/01/95 08/01/98 37 01/15/97 7. Demolition Work D1A 01/01/98 09/01/98 8 05/01/98 8. Project Management E1A 02/01/94 01/01/99 59 07/15/96 Step 2 Select appropriate escalation rates (assume escalation rates are for 1992 base year). FY-1992 = 1.0 FY-1995 = 3.5 FY-1993 = 2.4 FY-1996 = 3.7 FY-1994 = 3.1 FY-1997 = 3.8 DOE G 430.1-1 10-3 03-28-97 TABLE 10-1 (continued) EXAMPLE OF 5-YEAR PROJECT REQUIRING ESCALATION CALCULATIONS ESTIMATE REFERENCE DATE: JULY 1, 1992 Step 3 Calculate appropriate escalation rates for each scheduled activity using estimate preparation date as starting point and apply escalation rates selected in Step 2 to midpoint dates determined in Step 1. For Example: ED&I - Title III (midpoint = 02/15/97) FY-Period Years x Escalation Index = Escalation Factor 07/01/92 to 01/01/93 6/12 .010 .005 01/01/93 to 01/01/94 1.0 .024 .024 01/01/94 to 01/01/95 1.0 .031 .031 01/01/95 to 01/01/96 1.0 .035 .035 01/01/96 to 01/01/97 1.0 .037 .037 01/01/97 to 02/15/97 1.5/12 .038 .005 Compound Escalation Factor = 1.005 x 1.024 x 1.031 x 1.035 x 1.037 x 1.005 = 1.144 OR 14.4% Step 4 The compound escalation factors derived in Step 3 are then applied to the total costs (direct cost + mark ups) for each scheduled activity. Total project escalation is the summation of escalation for all project activities Assume costs for Title III design are $100,000 for the base year. The escalated value would be: $100,000 x 1.144 = $114,400. Thus, the cost used for Title III designs in the total project cost is $114,400.

Note: Repetition of calculations is obvious; thus, application to a computerized escalation rate analysis forecast program would prove beneficial. Escalation rates applied to scheduled activities are practically tied to the project WBS. Unless a better determination can be made and supported, the midpoint of cash flow for a particular category is set equal to the midpoint of the scheduled activity for that category. 10-4 DOE G 430.1-1 03-28-97 3. ESCALATION RELATIONSHIPS To compare the costs of projects with differing durations, inflation/escalation costs must be considered. Escalation in cost estimating has two main uses: to convert historical costs to current costs (historical escalation index) and to escalate current costs into the future (predictive escalation index) for planning and budgeting. Historical costs are frequently used to estimate the cost of future projects. The historical escalation index is used to bring the historical cost to the present and then a predictive escalation index is used to move the cost to the future. Associated with escalation are concepts of present and future worth. These represent methods of evaluating investment strategies like life cycle cost analyses. For example, a typical life cycle cost evaluation would be determining whether to use a higher R factor building insulation at a higher initial cost compared to higher heating and cooling costs over the life of the building resulting from a lower R factor insulation. Present and future worth are discussed in Chapter 23. A. Historical Escalation Historical escalation is generally easily evaluated. For example, the cost of concrete differed in 1981 versus 1992. The ratio of the two costs expressed as a percentage is the escalation and expressed as a decimal number is the index. Generally, escalation indices are grouped. For example, all types of chemical process piping may be grouped together and a historical escalation index determined for the group. B. Predictive Escalation Predictive escalation indices are obtained from commercial forecasting services, such as DRI/McGraw Hill, which supplies its most current predictions using an econometric model of the United States economy. They are the ratio of the future value to the current value expressed as a decimal. Predictive escalation indices are typically prepared for various groups and may be different for different groups. For example, the escalation index for concrete may be different than the one for environmental restoration. C. Escalation Application Economic escalation shall be applied to all estimates to account for the impact of broad economic forces on prices of labor, material, and equipment in accordance with the following requirements. • Escalation shall be applied for the period from the date the estimate was prepared to the midpoint of the performance schedule. DOE G 430.1-1 10-5 03-28-97 • Since economic escalation rates are revised at least annually, all estimates shall include the issue date of the escalation rates used to prepare the estimate. • Costs used for design concept shall be fully escalated and referenced as required. 4. ESCALATION INDICES Costs continuously change due to three factors: changing technology, changing availability of materials and labor, and changing value of the monetary unit (i.e., inflation). Cost or escalation indices have been developed to keep up with these changing costs. The use of escalation indices is recommended by DOE to forecast future project costs. The use of an established index is a quick way to calculate these costs. To ensure proper usage of an index, one must understand how it is developed and its basis.

A. Developing Escalation Indices An escalation index can be developed for a particular group of projects. The projects are divided into their elements, which can be related to current industry indices. The elements are then weighted and a composite index is developed. Complete details on developing escalation indices can be found in the DOE Cost Guide, Volume 5, on How to Construct and Use Economic Escalation Indices. B. Escalation Indices Published by DOE DOE has developed construction escalation indices for various types of projects. These are published every February and August. A copy of the latest indices can be requested from Office of Infrastructure Acquisition (FM-50). 5. USE OF DOE ESCALATION INDICES A. How to Select an Index An index for a project or program is selected based on the type of project (i.e., the scope of work). DOE publishes several indices to cover the range of projects for DOE. If a project or program does not appear t