Todd Jacobson
NS&D Monitor
12/5/2014
Department of Energy and National Nuclear Security Administration projects continue to be plagued by cost estimating weaknesses, the Government Accountability Office said last week in a report that criticizes DOE/NNSA for not implementing best practices for cost estimating across the complex. Requirements for implementing best practices are inconsistent, the GAO said, noting that the Department’s 2010 project management order requires one of 12 cost estimating best practices, conducting an independent cost estimate, for major projects, while its 2011 cost estimating guide recommends using 10 of 12 best practices. Neither the order nor the guide requires the use of best practices, which the GAO earlier this year said led to weaknesses in determining the lifecycle cost estimate for the NNSA’s Plutonium Disposition Program. “In the absence of a requirement for using best practices, it is unlikely that DOE, NNSA, and their contractors will consistently develop reliable cost estimates,” the GAO said.
A large portion of the Department’s cost estimating problems are linked to not following four key best practices, the GAO said, highlighting weaknesses in determining the estimating structure, identifying ground rules and assumptions, conducting risk and uncertainty analysis, and documenting the estimate. The GAO recommended that DOE revamp its requirements and guidance to guarantee that the DOE project management order includes guidance on cost estimating best practices, cost estimates are developed using the 12 best practices, DOE’s cost estimating guide fully reflects best practices, and independent reviews of programs are conducted periodically.
DOE agreed with the report’s findings and recommendations. “The recommendations are consistent with our commitment to continuous improvement in cost estimation,” DOE Office of Management Director Ingrid Kolb said in a response to the report. “We will take the necessary steps to address the recommendations and strive to adhere to best practices in cost estimating.”
