PREPARATION OF CONSTRUCTION COST ESTIMATES
Background and Purpose
Each year, the Navy is faced with budgeting limited shore construction dollars
among those projects deemed most critical to the needs of the fleet. In turn,
NORTHDIV must assure that each project under design remains within budget.
Therefore, it is essential that the preparation of an accurate construction
cost estimate is included as an integral part of the design process for all
This guidance has been prepared for use by A/E firms under contract with
NORTHDIV. The purposes of this guidance are:
To itemize A/E contract requirements with regard to cost estimating.
b) To improve the accuracy of construction cost estimates prepared for
NORTHDIV through emphasis on cost analysis and specialized cost estimating
c) To emphasize the importance of cost control throughout the entire
d) To assure uniformity in cost estimates produced for NORTHDIV, thus
permitting faster review and comparison among estimates.
e) To assure that final cost estimate information can be collected,
compiled, stored and retrieved for use in establishing budgets for future
similar projects and for comparison during cost analyses.
General A/E Contract Requirements for Cost Estimating
Construction Cost Limitation
The A/E is required to design a facility within the ECC. Refer to Section
01011, "General Paragraphs", Paragraph 1, "Design Within Funding Limitations"
for amplification of this requirement. Note that under certain circumstances
this paragraph requires the A/E to redesign the facility at no cost to the
government when bids or proposals for the construction contract exceed the
In keeping with the above, each A/E submittal shall reflect a design solution
which is within the ECC. Submittals over the ECC are not acceptable. If,
during the course of design and cost estimate preparation, the A/E determines
that the cost estimate will exceed the ECC, then the A/E shall take the
following actions to reduce the cost of construction prior to making the
a) Check all quantities, prices and arithmetic in the cost estimate and
make corrections, if necessary.
b) Check "markup" costs, such as overhead and profit, escalation,
design contingency, etc., for appropriateness and make adjustments, if
Check to see that scope has not been exceeded.
d) Reduce the complexity and/or quality of systems and materials
selected to a level appropriate to the budget yet still consistent with the
requirements of all other design criteria.
Redesign and/or simplify as necessary to bring the facility to