Tulsa DISTRICT Engineering & Construction (E&C) Cost Perspectives 19 March 2019 Shawn Painter, P.E. Chief, Engineering Branch Tulsa District, USACE

E&C Cost Perspectives Mission Areas Overview Programming Design Recommendations Conclusion E&C Hydropower Implementation

Mission Areas Overview USACE Mission is diversified and Tulsa District has nearly every mission. Planning Regulatory Recreation Dam and Levee Program (Flood Risk Management) Emergency Management Civil Works Operations & Maintenance Hydropower Navigation Interagency Support Military Construction Military Sustainment, Restoration, and Modernization (SRM) Environmental Real Estate File Name

Mission Areas Overview USACE Mission is diversified and Tulsa District has nearly every mission. Planning Regulatory Recreation Dam and Levee Program (Flood Risk Management) Emergency Management Civil Works Operations & Maintenance Hydropower Navigation Interagency Support Military Construction Military Sustainment, Restoration, and Modernization (SRM) Environmental Real Estate File Name

Mission Areas Overview USACE Mission is diversified and Tulsa District has nearly every mission. Planning Regulatory Recreation Dam and Levee Program (Flood Risk Management) Emergency Management Civil Works Operations & Maintenance Hydropower Navigation Interagency Support Military Construction Military Sustainment, Restoration, and Modernization (SRM) Environmental Real Estate File Name

Military & IIS Mission Engineering Construction Installation Support Vance AFB Pantex Tinker AFB Altus AFB McAlester Fort Sill Sheppard AFB

Cost and the Mission DoD (and Industry Partners by Extension) Are: Stewards of Taxpayers Dollars Risk Informed Decision Makers Process Improvers Partners in Success/Failure Supporting our Nation with Critical Infrastructure Cost Issues Can Impact All Phases of Project Development Planning & Programming Design Construction Operations & Maintenance

Planning & Programming Steps in the MILCON Budget Process: Identification of the Project Need & Constraints (NEPA, Siting, Alternatives, Scope, etc.) Project Initiation – Requirements Documentation/Project Definition Identify Execution Method (D/B, DBB, etc.) Budgetary Cost Development Submit Package for Funding Authorization from Billpayer (Congress, CF Hydropower, etc.) Design, Construction, O&M/SRM, Disposal MILCON Programming Programming is the process of developing and obtaining approval and funding for Military Construction (MILCON) projects (AFI 32-1021) Planning Charrette to Develop the DD1391 Form at Installation for Agency & Congressional Approval. 5 Year process for MILCON projects (minimum)

DD 1391 Example CCL PA

Example Timeline for MILCON projects

Programmatic Discussion Items Incorporation of Risk When Developing the DD1391? Price of working inside the fence vs. outside (Area Cost Factors accurate?) Price of government process and controls vs. private industry Market conditions, worker availability, material cost fluctuations (forecasting contractor risk?) Acquisition approach Unforeseen conditions Lost design/Scope Reduction/User Requested Changes Incorporate Lessons Learned Due diligence during PDR/CDR Understanding Program Estimate Limitations ($/SF) Cost is not definitized by actual scope and design of this specific project Standard designs can help, but there are local conditions that may not be included (safe rooms, SSMR, foundations, sustainability measures, etc.). Unique facilities that don’t fit in the typical cost/SF Economy of scale impacts Material selection Type of building construction Sustainability Utility requirements

Design Discussion Items Cost Accuracy Improves During Design Develop the Independent Government Estimate (IGE) Iterative Design Process Sharpens IGE Accuracy with Time Value Engineering Risk Identification (*Not All) Design Cost Drivers Change in Criteria/Codes Quality Management Performance Sustainable Features Site Issues (Drainage, AT/FP, etc.) Construction Material Selection (ICF, PEMB, CMU, tilt-up, etc.) Architectural Compatibility Foundation Type Utility Uncertainties PDR/CDR Omissions Real Property Installed Equipment MILCON & SRM Extents (Colors of Money) Biddability & Constructability of Design

Cost Concerns - MILCON Don’t Push Design Problems to Construction Ability to timely impact change is LOW Cost to impact change is HIGH Ambiguity/Conflicts Create Disputes Between Gov/Ktr (REAs/Claims) Partnership Suffers Quality Design = Better Cost Control Don’t Delay Reprogramming Can Take 6-8 Months Identify Potential Design Issues Immediately (Ktr  Area OfficesDOR) Design Corrections During Construction Impact Schedule and Cost Re-work Costs Everyone

Recommendations Programming Phase Design Pre-Award Phase Develop Risk Matrix During PDR/CDR (Gov & Ktr Risks) Cost-Schedule-Risk-Analysis (CSRA) Approach during DD1391 Development Independent Development of DD1391 Costs with Peer Review/Validation Inclusion of Lessons Learned During PDR/CDR (Correct People on the Bus) Program to Minimum Facility Requirement AND Add 5-10% in User Options Installation/Owning Agency Consider What Is Minimally Acceptable Installations consider SRM funded Investigations/Survey/Site Assessment Prior to PDR/CDR DoD Consider Funding DDC Via Discretionary Pot vs. Project Funds (DDC Is Deducted from Contingency) Design Pre-Award Phase Design to 95% of CCL (Sacrifice Options if Needed) Enforce Independent Government Estimate with Peer Review/Validation Insure Proper Design Quality Management Upward Report Cost Concerns During Design Immediately Incorporate Ktr Risk Reduction Measures Contractor Involvement in Common Construction Problems (e.g. MATOC Pool Queries/Surveys) Value Engineering Partner on Cost Concerns Ktr’s Provide Cost Reduction Recommendations During Bidder Inquiry Ktr’s Provide Feedback to KO After Pre-bid Site Visits

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Backup Slides

References ICEAA Link: http://www.iceaaonline.com/ready/wp-content/uploads/2014/06/MM-1-Presentation-Military- Construction-Cost-Estimating.pdf Whole Building Design Guide: http://wbdg.org

Programmatic Concerns Costs Concerns After Congressional authorization, the funding available for construction is locked at the PA and includes a standard 5% contingency. (reprogramming above the 5% is authorized at Agency level up to $2M or 20% - whichever is less, otherwise Congress has to reauthorize) Construction cost estimate in the DD1391 Block 9 is derived using historic SqFt estimates for facility type for the services nationwide. Not definitized cost estimates. Facilities have unique local requirements (SafeRooms, SSMRs, foundations, sustainability,etc) that can be cost increasers compared to national averages. Economy of scale can be advantage/disadvantage Area Cost Factors (ACF) are used to adjust for perceived local market rates and can be incorrect (local industry interest, access requirements, etc) Programmatic cost estimates are not “real time” inclusive of market trends (steel tariffs, labor availability, material shortages, etc). Cost books can capture project costs well beyond the last 2 years. Acquisition requirements are not fully established at DD1391 development. (i.e. will project be split into multiple acquisitions) Rolling risk into the DD1391 is very challenging as the process doesn’t lend itself to cost risk outside the standard 5%. Installations/commands are competing for a line in the agency budget submission. So, too much cost can put the project at risk. Programming charrettes can be performed more than 5 years out of the program year and local conditions may change the associated project scope & risks.