GAO’s Cost and Schedule Assessment Guides

U.S. Government Accountability OfficeApplied Research and Methods

Cost Engineering SciencesJason T Lee, Assistant Director

Contracting and National Security AcquisitionsMolly W Traci, Assistant Director

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Agenda

• The role of GAO• GAO Cost Guide and the characteristics of a reliable cost

estimate• GAO Schedule Guide and the characteristics of a reliable

schedule• Examples of how GAO teams use the Cost and Schedule

Guides during program reviews

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Known as the investigative arm of Congress, GAO exists to support Congress in meeting its constitutional responsibilities. To that end, GAO works to

• Help improve the performance of federal government

• Ensure government agencies and programs are accountable to the American people

• Examine the use of public funds, and

• Evaluate federal programs by providing analyses and recommendations to help Congress make informed oversight and funding decisions

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The Role of GAO in Government

Cost Estimating and Assessment Guide• Outlines GAO’s criteria for assessing cost

estimates during audits

• Drafted 2005-2007, published in 2009

• Contains 20 chapters with supporting appendixes

• Chapters 1-17: developing credible cost estimates and the 12-step cost estimating process for developing high quality cost estimates

• Chapters 18-20 address managing program costs once a contract has been awarded and discuss Earned Value and risk management

• Provides case studies of prior GAO audits to show typical findings related to the cost estimating process

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A Reliable Process for Developing Credible Cost Estimates

Characteristics of Reliable Cost Estimates

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Comprehensive

• Include all life cycle costs

• Standardized WBS

• Based on a technical baseline description

• Identify ground rules and assumptions

Accurate

• Account for inflation

• Use best methodologies from collected data

• Regularly updated• Document and

explain variances• Based on

historical record

Credible

• Compare to an independent cost estimate

• Include sensitivity analysis

• Include risk and uncertainty analysis

• Develop crosschecks

Well Documented

• Sources and reliability of data

• Step-by-step details of cost estimate

• Reviewed and accepted by management

• Can be recreated by documentation alone

Are all costs included?

Is the estimate unbiased?

What is the uncertainty?

Can the estimate be recreated?

Schedule Assessment Guide• Outlines GAO’s criteria for

assessing master schedules• Drafted 2010-2015, exposure

draft published May 2012• Final publication December 2015• Contains chapters for each of the

10 best practices plus supporting appendixes

• Also provides case studies of prior GAO audits to show typical findings related to the scheduling process

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Four Characteristics of a Reliable Schedule

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Comprehensive

• Capture all activities

• Assign resources to all activities

• Establish durations for all activities

Well Constructed

• Sequence all activities

• Confirm the critical path

• Confirm reasonable float (slack)

Credible

• Confirm vertical and horizontal traceability

• Conduct a schedule risk analysis

Controlled

• Update the schedule with progress

• Maintain a schedule baseline

Is all effort included?

Is the network logical?

What is the uncertainty?

Is progress measured?

How Do GAO Teams Use the Guides During Program Reviews?• Deep Dive Reviews

• If GAO is conducting a program review of a major project that recently established cost and schedule baselines, it is likely that the team will assess the estimates against GAO’s best practices.

• If cost and schedule estimates do not meet best practices, GAO will make recommendations to improve the estimates.

• Program Management Reviews• GAO teams may not conduct a deep dive review of cost and

schedule estimates, but still use the Cost and Schedule Guides to make recommendations to improve project management.

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Deep Dive ExampleOrion Cost Estimate Assessment Part 1

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Deep Dive ExampleOrion Cost Estimate Assessment Part 2

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Program Management Review Examples• Updating Joint Cost and Schedule Confidence Level (JCL) analyses

• GAO’s cost estimating best practices call for estimates to be updated through the life of the project as risks can materialize or change throughout the project.

• We have recommended that major projects—including James Webb Space Telescope and Orion—update JCLs. (GAO-13-4 and GAO-16-620)

• Developing baselines to enhance a program’s transparency• GAO’s cost estimating guidebook identifies baselines as a critical

means for measuring program performance over time.• We have recommended that NASA baseline Space Launch System

and Exploration Ground Systems costs for capabilities beyond Exploration Mission-1. (GAO-14-385 and GAO-18-28)

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Thank you- Any Questions?

Guides Available Online: • GAO Cost Estimating and Assessment Guide:

http://www.gao.gov/products/GAO-09-3SP• GAO Schedule Assessment Guide:

http://www.gao.gov/products/GAO-16-89G

Examples of Deep Dive Reports:• James Webb Space Telescope, GAO-13-4• Space Launch System, GAO-15-596• Orion, GAO-16-620

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