3
cost estimating and management
practices
1 cost management principles
design within budget
Unless otherwise specified in design-contract documents, the A-E must design the project
so that construction costs will not exceed the funding limitations established as the Basis
of Fee Negotiation. FAR 36.609-1 requires that the A-E redesign the project at the firm's
own expense to ensure that a responsive construction bid amount will be within funding
limitations.
prospectus authorization/appropriation
In accordance with the Public Buildings Act of 1959 (PL 86-249), as amended, the United
States Congress must authorize the scope and budget of each major capital construction
project before design begins. Once Congress has approved a project's construction
budget, it cannot be increased, so the design team must approach prospectus funding as
an absolute limit.
pursuit of construction services
Construction bids may be solicited only if the Estimated Cost of Construction at Award
(ECCA) amount at final construction documents is within congressionally authorized
prospectus limits.
itemized cost management
When project funds are secured from different agencies or are provided as a dedicated
allowance for a specific program goal, independent estimates must be made for each,
allowing separate tracking of expenditures. Funding allocated for such projects is tracked
to confirm that expenditures are apportioned according to amounts authorized by each
agency, so as not to exceed the dedicated allowance.
independent estimates
The Government requires third-party estimators for major construction projects to verify
project estimating requirements P-120
6
section 1.3
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