Construction vs. Systems Acquisition Cost Estimating: A Comparative Analysis
The continued push to improve DOD’s acquisition processes includes several thrusts — regulatory streamlining, improving use of incentives, and workforce optimization. These are not new. To deal with these concerns, the acquisition community has a unique opportunity. DOD Cost estimators have recently received a strong “vote of confidence” in the acquisition community; new positions have been created and existing positions have been protected. That is not necessarily so in the construction industry, another large employer of cost estimators. The construction industry has undergone a transformation over the past six years, beginning with the housing collapse in 2006 and enduring through the years of the Great Recession. During that time, construction employment fell 29.4%, and many feel that it will never recover to pre-recession levels. Many of those who lost their jobs are construction cost estimators; they did not fare nearly as well as their fellow estimators in the systems acquisition community. This paper examines the relationship between the two occupations — skill sets; background and education; methods, techniques, and cost models used; levels of compensation; certifications; and even incentives and motivation. The objective is to understand more about the two estimating domains and those who work in them to increase our awareness of the industry in which we work, and to consider new talents and skills to address system acquisition thrusts.
Although the general purpose for preparing estimates is the same, there are significant differences between the two occupations. Cost estimating for construction projects had been around long before it became a formal discipline in systems acquisition. Construction estimators typically assess detailed design drawings and apply parametric cost models to derive estimates for buildings using generally proven construction methods and processes. Most construction estimators work in private industry, where time is money. System acquisition estimators are often confronted with estimating new systems using immature technologies pushing “state of the art,” being acquired under frequently burdensome federal government oversight. As a result, differences in approaches have evolved between the two disciplines. It is important that the systems acquisition community understands the differences, since we often see resumes for construction estimators in response to system acquisition job postings. We shouldn’t be so hasty to disqualify a construction cost estimator for a systems acquisition job; perhaps a more detailed understanding of the qualifications of construction estimators is warranted. Maybe that would lead to a more diversified DOD estimator workforce and attainment of some of the acquisition improvements sought.
Kalman & Company, Inc.
Mr. Tom Sanders is a Senior Associate with Kalman & Company, Inc., an industry leader in cost and economic analysis support to DOD customers for 25 years. For Kalman, Mr. Sanders oversees cost analysis processes and insures that the company is on the leading edge applying industry best practices. He has over 32 years of experience in a wide variety of private and public sector assignments. Mr. Sanders is a retired Air Force Reserve Colonel with significant experience in AF source selections and AF infrastructure analysis, and has worked for several industry leading cost estimating firms supporting US Special Operations Command, the Joint Interagency Task Force, the US Air Force’s Air Training Command, and many others. Prior to joining Kalman, he spent several years in the construction industry as the Senior Economist with L-3 STRATIS, a construction cost estimating firm supporting numerous Architectural and Engineering (A&E) and construction firms. With L-3, Mr. Sanders authored a quarterly newsletter and was a regular speaker and consultant to the DOD’s Tri-Services Cost Engineering Steering Group, the agency responsible for programming MILCON funding. He spearheaded initiatives to introduce privatization concepts into military family housing (MFH); those initiatives were used to prepare legislation authorizing housing privatization arrangements. Mr. Sanders earned his CCEA in 1993 and is active with ICEAA at the national level, leading professional development tracks at SCEA conferences for the past 15 years.
Stephen W. Essig
MOCA Systems, Inc.
Mr. Essig is currently the Vice President of Cost Engineering Services at MOCA Systems, Inc. He is a registered Professional Engineering in Mississippi, Florida and Virginia and an AACE International Certified Cost Engineer. He has 30 years of experience in the construction industry in the areas of design, cost engineering/estimating and project management. He has spent the last 21 years of his career supporting the Department of Defense (DOD) and other government agencies with cost engineering, life cycle cost analysis, risk analyses, cost modeling, and project management on over 1,500 projects.
Prior to joining MOCA, Mr. Essig was employed at L-3 STRATIS where he was Vice President of Cost Engineering. During his 19 years at L-3, Mr. Essig managed numerous IDIQ contracts supporting the DOD cost community. He also worked on the original development of the PACES and RACER systems as well as the Life Cycle Cost module of the Air Force’s Construction Cost Management Analysis System (CCMAS) and the design and development of the Real Property Maintenance system, a long term maintenance planning tool for Military Family Housing. Mr. Essig has also provided expert witness testimony in support of nine commercial construction claims and disputes.
Timothy P. Anderson
Mr. Timothy P. Anderson, Vice President for Technical Services at iParametrics, LLC, has over 18 years of extensive experience as a Professional Cost Analyst and Operations Research Analyst, primarily in the area of Department of Defense (DoD) weapon systems and civil and national security space acquisition. His areas of interest are cost analysis, cost uncertainty analysis, risk analysis, operations research, and decision analysis. Mr. Anderson served for 20 years in the U.S. Navy and began working in the cost estimating field in 1994 while assigned to the Naval Center for Cost Analysis. He served as a military professor at the Naval Postgraduate School, teaching cost estimation, operations research, and other technical courses. He retired from the Navy in June 2001. Prior to joining iParametrics, he served as Director of NASA Program Assessments at The Aerospace Corporation.
Mr. Anderson is well known throughout the international cost estimating community as a subject matter expert on cost estimating risk and uncertainty. He has over nine years of experience as an adjunct professor of Engineering Economics and Cost Estimation for the Naval Postgraduate School (Systems Engineering Department) and as an adjunct faculty member of George Mason University. He was also recently appointed as an adjunct faculty member of the Air Force Institute of Technology.
Mr. Anderson is an ICEAA certified cost estimator/analyst; a board member of the Washington Capital Area chapter of ICEAA; and a frequent presenter of topics related to cost estimating and cost uncertainty analysis at forums including the International Cost Estimating and Analysis Association (ICEAA), the Military Operations Research Society (MORS), the DoD Cost Analysis Symposium (DoDCAS) and the Space Systems Cost Analysis Group (SSCAG). Tim received the 2010 SCEA (now ICEAA) Cost Estimator of the year award for technical achievement at the 2010 joint ISPA/SCEA conference.