Cost estimating by the U.S. Energy Dept. on its construction and cleanup projects needs revamping to keep overruns under control, says a new report from the U.S. Government Accountability Office. Outdated estimating guidelines have caused the agency to sometimes request too little money from Congress to complete work, adds GAO.
Contractors do almost all DOE’s site construction and waste-cleanup projects. Some jobs will take decades; cost estimates total hundreds of billions of dollars. “Without a way to ensure that its contractors use best practices in generating cost estimates” and without adequate federal oversight, “DOE has effectively ceded a significant portion of its control...to its contractors,” the report adds.
Much of the problem stems from outdated and non-specific cost-estimate guidelines. Some DOE field managers still rely on guidance the agency cancelled in the 1990s or on unofficial “draft guidance,” says GAO.
In a response, DOE Deputy Secretary Daniel Poneman says the agency is developing new policy but did not say when it would be ready. He concurs with GAO’s suggestion to combine two offices with similar functions: the Office of Cost Analysis, created in 2008, and the Office of Engineering and Construction Management.
GAO also says DOE did not provide enough independent cost estimates for new and existing projects, using personnel who had no “vested interest” in the projects. Poneman says DOE arranges such reviews on projects when more is spent than was initially estimated.
GAO prepared the report for the House Appropriations subcommittee on energy and water development, which decides DOE appropriations and has been critical of the agency’s waste-cleanup management division.