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(EST-3713) Escalation Study for DOE NNSA’s Capital Acquisition Projects

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Level: Basic
TCM Section(s):
7.3. Cost Estimating and Budgeting
Venue: 2021 AACE International Conference & Expo

Abstract: The Office of Programming, Analysis, and Evaluation (PA&E) (NA-MB-90) within the U.S. Department of Energy’s (DOE’s) National Nuclear Security Administration's (NNSA) is charged with leading programmatic cost estimating and associated analytical support throughout the federal budgeting process. Within PA&E, the Office of Analysis and Evaluation (NA-MB-92) is responsible for NNSA’s programmatic cost estimating, including capital acquisition estimates, analyses of alternatives , and other planning estimates for NNSA strategic documents such as the Stockpile Stewardship and Management Plan (SSMP). As part of this effort, the office performed this escalation study to improve its cost estimating by investigating and selecting the most representative existing escalation index for NNSA’s capital acquisition portfolio.

The study team identified NNSA’s representative market basket of goods for capital acquisition projects using historical project cost data; identified published federal, commercial, and public escalation rates and factors to screen against; applied screening factors to remove inappropriate or unrepresentative indices; and selected an index based on a similar market basket of goods and other appropriate factors.

Upon completion, PA&E selected the Engineering News-Record (ENR) Construction Cost Index (CCI) as the most appropriate index for normalizing historic NNSA construction cost data and applying escalation to early-phase capital acquisition cost estimates, using the compound annual growth rate (CAGR) of the ENR CCI over the past four decades (three percent annually).