!
                                                                     DE
                                                                    I
                                                                 NS
                                                          OOK I
                                                     k to L
                                                    c
                                                   li
                                                  C
                     INDEPENDENT COST ESTIMATES
                               AND COST REVIEWS
                              2
                       E = Mc  = TPC                   But what 
                              =                        should it 
                                                      really cost?
                             Michael Peek, PE CCE CFM
         Why Independent Cost Estimates
               and Cost Reviews?
      We cannot solve our problems with the same thinking we used 
        when we created them.
                    Albert Einstein
   • Support Secretarial/Acquisition Executive decision 
    making
   • Logical “next step”… increase focus on front-end 
    planning
   • Address External Stakeholder Concerns
     – Consistent with GAO Best Practices Guidelines (GAO-09-3SP)
     – Adopt Industry Standards
   • Requirements addressed in DOE O 413.3B
   • Statutory requirement … mandated in FY2012 
    Consolidated Appropriations Act (P.L. 112-74)
                       DOE O 413.3B Requirements
               If you can't explain it simply, you don't understand it well enough. 
                                                            Albert Einstein
        •    With the implementation of DOE Order 413.3B, Program and 
             Project Management for the Acquisition of Capital Assets, the 
             Office of Engineering and Construction Management is 
             required to conduct an Independent Cost Review (ICR) and/or 
             develop an Independent Cost Estimate (ICE) to support the 
             Secretarial Acquisition Executive’s (SAE)/Acquisition 
             Executive’s (AE) decision at various Critical Decision (CD) 
             milestones …
                     Requirement       DOE O 413.3B 
                                         • For projects > $750M, OECM must conduct ICR prior to CD-0
                                         • For projects > $100M, OECM must conduct:
                                              Prior to CD-1, ICE and/or ICR
                    Cost Reviews              Prior to CD-2, ICE
                   (App C, Sec 18.)           Prior to CD-3, ICE (if warranted) 
         FY2012 Consolidated Appropriations 
                   Act Requirements (P.L. 112-74)
            A perfection of means, and confusion of aims, seems to be our 
            main problem.
                                           Albert Einstein
       •   Sec 308: None of the funds made available in this 
           title may be used to approve critical decision-2 or 
           critical decision-3 under Department of Energy 
           Order 413.3B, or any successive departmental 
           guidance, for construction projects where the total 
           project cost exceeds $100,000,000, until a separate 
           independent cost estimate has been developed for 
           the project for that critical decision.
                                   Best Practices
                 The only source of knowledge is experience. 
                                Albert Einstein
       •  GAO Cost Estimating and Assessment Guide:    Best 
          Practices for Developing and Managing Capital 
          Program Costs, March 2009 (GAO-09-3SP)
       •  Association for the Advancement of Cost Engineering 
          International (AACEI)
           – Recommended Practices
           – Professional Practice Guides
       •  Society of Cost Estimating and Analysis (SCEA)
           – Cost Estimating Body of Knowledge (CEBok)
       •  DOE G 413.3-21 Cost Estimating Guide, May 2011