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Construction is a major industry in the United States. In 2010, over $506 billion was spent in construction and construction-related activity, amounting to over 3.4% of Gross Domestic Product (GDP). $21.2 billion, or 0.6% of federal outlays for 2010 was spent on military construction. This accounts for nearly 4% of total construction annually. This study examined three variables in the life of an Air Force military construction (MILCON) project: the programmed amount (PA), the contract award (CA), and the final current working estimate (CWE). These variables, respectively, reflect the initial planning budget (PA), the actual contractor's estimate and bid (CA), and the final, actual cost of the project to the Air Force (CWE). Statistical hypothesis tests showed there is an appreciable difference between each variable. Generally speaking, the PA is higher than the CA, but the CWE approaches the PA at end of the project. The study suggests several reasons for this, including contractor estimate errors or "bad faith", non-inclusion of inflation, and initial estimate inaccuracy. The results of this study can be used to better analyze contractors' bids as well as initial budgetary estimates to get a more accurate picture of the cost of a particular MILCON project.
Cost Engineering, Government Construction, Military Construction
Date of Defense
November 5, 2012.
A Thesis submitted to the Department of Civil and Environmental Engineering in partial fulfillment of the requirements for the degree of Master of Science.
Includes bibliographical references.
John O. Sobanjo, Professor Directing Thesis; Yassir Abdelrazig, Committee Member; Lisa Spainhour, Committee Member.
Florida State University
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