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Walt Cooper Cost Analysis Improvement Group CAIG Office, Secretary of Defense

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To describe the Cost Analysis Improvement Group (CAIG) and its methods for ... with comparisons to actual costs of other major renovations in Metro DC area ... – PowerPoint PPT presentation

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Title: Walt Cooper Cost Analysis Improvement Group CAIG Office, Secretary of Defense


1
Walt CooperCost Analysis Improvement Group
(CAIG)Office, Secretary of Defense
Project Cost Estimating

November 14, 2006
2
Purpose
To describe the Cost Analysis Improvement Group
(CAIG) and its methods for developing independent
cost estimates. Case study Pentagon
Reconstruction and Renovation.
3
About the CAIG
  • Established in January 1972 by Secretary Laird
  • Responsibilities
  • Conducts independent cost estimates of Major
    Defense Acquisition Programs and selected other
    capital projects
  • Principle advisor to Secretary of Defense on
    matters concerning program life-cycle costs
  • Functions in addition to cost estimating
  • Cost research
  • Training Annual Department of Defense Cost
    Analysis Symposium
  • Data and analytic resources
  • Visibility and Management of OS Costs (VAMOSC)
  • CAIG Library

Required by Title 10, Section 2434.
4
CAIG Structure
  • Staff size 30 full-time equivalents
  • About 50-55 CAIG estimates per year
  • 1 to 4 analysts per estimate
  • Average time commitment per cost estimate
  • 6 calendar months
  • 8 to 10 man-months of effort
  • 4 man-months for lead
  • 4 to 6 man-months for others combined
  • About 7 man-years in functions other than cost
    estimating

5
Pentagon Reconstruction and Renovation (PENREN)
  • Begun in 1998
  • Experienced rapid increase in costs
  • Congress established a ceiling on total costs
    2 billion
  • Pentagon reconstruction after September 11 attack
    highly accelerated program
  • CAIG directed to develop independent cost
    estimates
  • Examine costs of recovery and reconstruction
    after September 11 attack
  • Determine likelihood of further cost growth that
    would exceed Congressional cap
  • Make appropriate management recommendations

All costs in FY 2001 constant dollars
6
PENREN Phasing Plan
Phoenix
7
Phoenix/Wedge 1 Recovery
  • 2 million ft2 reconstructed
  • Peak workforce 3,000
  • 87 contractors and sub-contractors

8
Estimating Approach
  • Documentation narrative description (results of
    contract analysis, interviews, etc.), drawings
    and specs
  • Base estimate on parametrics (e.g., cost per
    mens bathroom), factors (e.g., scaling for
    acceleration), concentrating on areas of greatest
    cost risk

9
Phoenix/Wedge 1 RecoveryConclusions
  • Results
  • PENREN estimate 472 million for portion of
    project based on drawings and specifications
  • CAIG estimate 425 million for same scope (10
    less than PENREN)
  • Project Managers estimate reasonable, with the
    following issues that caused cost growth from
    project inception
  • Missing scope in work definition
  • Inefficiencies in construction process
  • Clearances for workers
  • Relocation of Pentagon employees
  • Contract perturbations

10
Wedges 2 through 5
11
About Wedges 2 through 5
  • 20,000 employees to be moved
  • Removal of 332 million lbs of debris
  • 115 million lbs of hazardous materials
  • New building elements
  • Energy-saving building elements/materials
  • Smart Walls
  • Elevators and escalators
  • Thermal insulated and blast-resistant windows
  • Security upgrades

12
PENREN Phasing Plan
Phoenix
13
Estimating Approach
  • Develop detailed space models for each space/type
    function
  • Wedge 2 core and shell drawings
  • Tenant space plans
  • Space type narratives
  • Contracts
  • Analyst judgment
  • Developed cost estimate for each space/function
    type on square foot basis
  • Direct costs
  • RS Means, Inc.
  • Engineering judgment
  • Prevailing wage rates for trades
  • Indirect costs Standard industry mark-ups and
    complexity factors to obtain indirect cost

14
Work Breakdown Structure
15
Wedge Cost Estimates
Wedge 2
Wedge 3
Wedge 4
Wedge 5
Notes 1. CAIG is extrapolation from Wedge 1
actuals bottoms up estimate forthcoming 2.
CAIG has not addressed information management and
technology or acceleration in depth
16
Additional Analyses
  • Top Down look
  • Used actual cost from pre-9/11 work to determine
    a unit cost
  • Simple Excel worksheet used
  • Compare to analogous building renovations
  • Department of Justice
  • Seven year project
  • 100 million
  • Naval Sea Systems Command Headquarters
  • Historical building
  • 1,000,000 ft2
  • 192 Million

Wedge Cost by Space
Pentagon Factor
17
Wedge Costs by Space Type
400.00
350.00
300.00
250.00
Not Occupiable
C Space
FY01 M
200.00
SP Space
150.00
O Space
100.00
50.00
0.00
1
2
3
4
5
Wedge
18
The Pentagon Factor
300
Hazardous materials
Remote Delivery Facility, clearances
250
Walls, enhanced sprinkler systems, signs
200
Special purpose areas, command centers
FY 2001 /ft2
150
Abatement of hazardous materials
Security
100
Force protection
Basic design and construction
50
0
DoJ
NAVSEA
Extrapolation From Wedge 1
19
Growth in Wedge Cost Estimates
20
Wedges 2 through 5Conclusions
  • PENREN PMO estimates for Wedges 2 through 5
    higher than CAIG estimate by about 10
  • CAIG estimate consistent with comparisons to
    actual costs of other major renovations in Metro
    DC area
  • High level of contamination
  • Significant force protection and security
    measures
  • High proportion of expensive command and
    operations space
  • Program likely to remain under Congressional cap

21
Recommendations to Senior Leadership
  • Support current obligational authority for
    Phoenix/Wedge 1 Recovery
  • Propose alternative estimate in FY 2004 Budget
    Review to adjust current PMO estimate for Wedges
    2-5
  • Establish PENREN Cost Analysis Team
  • Review all major changes to the Wedge 2 contract
    prior to implementation
  • Address cost growth in Information Management and
    Technology and from acceleration of work

22
Some Take-aways
  • A clearly defined and described program is
    essential. We require a Cost Analysis
    Requirement Description (CARD) before doing any
    estimate.
  • We base estimates on thoughtful analysis of
    actuals.
  • You cannot cost what you cannot see.
  • Talk to program managers
  • Talk to contractors
  • See the equipment/project
  • We consider independent cost estimating as
    inherently governmental. No contractors,
    except in cases where we lack technical
    expertise.
  • Understand contractors position when evaluating
    plans/estimates.
  • Understand leaderships position when providing
    recommendations.
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