Independent Cost Review

For Major System Projects, or for projects as designated by Senior Management of the Office of Science, the Office of Project Management (PM) will conduct an Independent Cost Review (ICR). This review validates the basis of the ROM cost range and provides an assessment of whether the range reasonably bounds the alternatives to be analyzed in the next project phase. It also determines the Project Management Executive (PME) authority designation (see the Project Decision Matrix). 

The cost estimate continues to be developed as the design matures, and a complete Basis of Estimate is available at CD-2 to validate the cost estimate including uncertainties. Cost contingency is evaluated from uncertainties in the point estimate, and risks.

Cost estimates should be developed with input from subject matter experts and use vendor quotes or similar work recently completed where possible. Similarly, schedules and labor estimates should be developed by subject matter experts where possible; planning packages may be used for future work not sufficiently well defined to allow detailed schedule development.  Costs should be adjusted to reflect both escalation from prior-year costs where they are used, and also escalation into future years for planned activities and procurements. Overheads and burdens on labor and non-labor costs must also be escalated appropriately, with forward-pricing obtained from the OCFO Budget Office.

An ICR is an independent evaluation of a Project Team’s cost estimate that examines the reasonableness of the estimate quality, assumptions, and risks. The ICR Team reviews all available project documentation; receives briefings from and holds discussions with the Project Team; completes sufficient analysis to assess the reasonableness of project assumptions supporting the cost and schedule estimates; assesses the rationale for the methodology used in preparing the estimate; and checks the completeness of the estimate, including appropriate allowances for risks and uncertainties. The result of the ICR is a report that details the findings, comments and associated recommendations. Office of Science Senior Management will validate the report and provide recommendations to the Program Office.

A cost estimate, or cost range, should be provided at each CD gateway, but the degree of rigor and detail for a cost estimate should be carefully defined, depending on the degree of confidence in project scale and scope that is reasonable to expect at that stage. Whatever figure or range that is provided should explicitly note relevant caveats concerning risks and uncertainties inherent in early estimates at CD-0 and CD-1 stages given the immature requirements definition at this juncture. 

Established methods and best practices will be used to develop, maintain, monitor, and communicate comprehensive, well-documented, accurate, credible, and defensible cost estimates. Cost estimates shall be developed, maintained, and documented in a manner consistent with methods and the best practices identified in DOE G 413.3-21, GAO Cost Estimating and Assessment Guide (GAO-09-3SP), and, as applicable, with the Federal Acquisition Regulation (e.g., FAR Subpart 15.4 – Contract Pricing; FAR Subpart 17.6 – Management and Operating Contracts), Office of Management and Budget Circular A-11, Preparation, Submission, and Execution of the Budget, and Department of Energy Acquisition Regulation (DEAR) Subpart 915-4 – Contract Pricing.