Escalation is the anticipated increase in the project's Escalation is the anticipated increase
in the project's cost due to inflation between the time the estimate is prepared and when the
project is finished, since inflation continues during project construction. For simplicity, the
estimator must assume that half of the work will occur before the midpoint of construction
and half after. Therefore, the estimate is escalated to the midpoint of construction to reflect
the contractor's provision for inflation in its bid.
In the planning stage, escalation rates are taken from the GCCRG. As the design progresses,
the A-E and GSA must agree on an annual construction-cost escalation compounding rate,
based on a market survey prepared by the A-E, for use in all design estimates and cost
analyses. It is the responsibility of the design A-E to control the cost of the project so that
when the ECCA budget is reduced by the forecasted escalation rate, the residual budget
amount equals the current value of the project.
The art-in-architecture set aside amount is 0.5% of ECCA.
The construction contingency is an allowance for cost growth that may occur during
construction as a result of unexpected circumstances or incomplete design documents.
GSA currently recommends 7% for new construction projects and 10% for renovations, but
may direct the use of different figures on a project-by-project basis.
applying markups, contingency and escalation
Figure 1 demonstrates how mark-ups, contingencies, and escalation should be calculated
and applied to projects.
reviewing and reconciling estimates
On projects for which GSA requires the preparation of an IGE, the A-E is responsible for
designating a member of its team to reconcile the IGE with its own estimate in an orderly and
Accurate estimating is an important component of GSA's cost-management process, as
well as an important decision-making tool for the design team in its selection of systems
general requirements and principles