Agencies get cost-estimating advice from GAO

The Government Accountability Office has published its first manual to help federal, state, and local government agencies develop more reliable cost estimates to better manage government projects. The guide applies to civilian and defense projects managed by government organizations or private contractors, said Gene Dodaro, acting comptroller general.

The guide, released March 2, seeks to help agencies produce well-documented, comprehensive, accurate and credible estimates with a formalized approach to cost estimating based on best practices, he said. Managing a cost estimate involves continually updating the estimate with actual data as it becomes available, revising the estimate to reflect changes, and analyzing differences between estimated and actual costs, GAO said.

“Government agencies will be better able to avoid common problems, such as cost overruns, missed deadlines and performance shortfalls,” Dodaro said. “To get better results, programs will need higher levels of knowledge when they start and standardized monitoring metrics."

The guide also emphasized that agencies use earned value management, a project-management tool that compares completed work to expected outcomes, in setting realistic program baselines and managing risk. In future audits, GAO plans to use the new guide to assess the accuracy of agencies’ cost estimates and determine whether programs are on schedule, he said.

GAO explained how to manage program costs after a contract has been awarded and presented 48 case studies that illustrate typical pitfalls and successes in cost estimating, including some from the Defense Department and NASA.

The guide can be found here.