The Society of American Military Engineers (SAME) leads efforts to identify and resolve national security infrastructure-related challenges through Industry-Government Engagement (IGE). As I’ve written about before, IGE is not about selling government access; it is about sharing knowledge and best practices, conducting joint training, and collaborating on issues to solve problems and reach consensus.
For the past two and a half years, SAME has tackled the challenge of providing accurate construction cost estimates for military construction (MILCON) projects. In 2019, the Tulsa Post of SAME conducted an IGE workshop on cost engineering challenges on MILCON projects and produced a white paper outlining the issues and providing recommendations to fix the problems.
This white paper was the focus of the 2019 SAME Small Business Conference CEO Roundtable. As a result of this roundtable, a working group was organized to:
- Improve the Department of Defense’s (DoD) understanding of financial risk and project costs from the perspective of the architecture, engineering, and construction (AEC) industry. The AEC industry will independently assess that risk and costs in their products and services to DoD.
- Provide advice for improving DoD’s process for developing cost estimates.
The working group led a virtual Cost Engineering Forum as part of the 2020 SAME Joint Engineering and Training Conference. As a follow-up to that forum, SAME organized five separate virtual roundtables to examine the following areas of concern:
- Cost of design within design-build contracts
- Risk mitigation of cost input changes
- Scope-cost tradeoffs through project lifecycle
- Pricing information recommendations
- Sources of contractor risk driving costs
Each roundtable resulted in a white paper with recommendations for DoD. During the SAME Capital Week in March of 2021, the working group participated in an Executive Session on Cost Engineering with Air Force Civil Engineer Center (AFCEC), Naval Facilities Office of the Secrectary of Defense (NAVFAC OSD), and United States Army Corps of Engineers (USACE). During this session, these agencies reported on their initiatives, and industry made additional recommendations. After reviewing these initiatives and recommendations, the SAME working group conducted a final virtual roundtable to more thoroughly examine contractor financial risk and the associated cost of that financial risk.
The final product of SAME’s Cost Engineering Working Group is an updated Cost Engineering White Paper with 28 separate recommendations, many of which are already being implemented by the military services. The recommendations fall into four general areas:
- Encourage Industry-Government collaboration and partnering.
- Require the use of tools that identify and quantify risk to develop cost estimates and project contingency budgets.
- Update the DD1391 cost estimate prior to the project being entered into the President’s Budget as a Budget Year project.
- Reduce time between completion of design and construction advertisement.
- Reexamine MILCON specification to provide more flexibility.
These recommendations will improve MILCON cost estimate accuracy, improve MILCON budgeting, and allow more MILCON projects to be awarded on time. This will improve the overall MILCON process while saving both the government and industry money. I’ll be presenting the results of our two and a half year effort to the SAME Executive Advisory Group next week at the SAME 2021 Small Business Conference in Atlanta, Georgia. Afterwards, you will be able to read the entire white paper on SAME’s revamped IGE webpage. Additionally, I would be happy to discuss this and other IGE efforts with you at that conference. You can connect with me at booth #904.