Discovery of Internal and External Factors Causing Military Construction Cost Premiums
Publication: Journal of Construction Engineering and Management
Volume 140, Issue 3
Abstract
Each year, the United States invests $30 billion in federal construction. Military construction (MILCON) represents 40% ($12 billion) of that capital investment. This study confirmed the existence of MILCON cost premiums compared with private sector construction through an analysis of existing research. This study also evaluated two nearly identical projects and used expert interviews and surveys to determine which factors influence the cost premiums. The projects represented a rare opportunity to compare projects that had the same end requirement: method of execution and acquisition, design/build and firm-fixed price; and location but differed by government construction agent. In addition to identifying the 28 factors that moderately or largely influence cost premiums, five overarching cost-premium themes emerged: failing to balance risk, additional public-sector requirements, stifling or not applying innovation, selection of construction specifications, and parameterization of the execution process. Additionally, once complete, two nearly identical projects differed by over a year of construction time and $7 million in spite of the contract requirement similarities. Research frequently cites federal laws and policies as the primary cost-premium driver; however, this research demonstrated that internal construction agent policies also cause increased cost premiums. Mitigating the causes of internal cost premiums could improve public-sector construction cost performance.
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Acknowledgments
The writers would like to thank the Air Force Civil Engineer Center, United States Army Corps of Engineers Alaska District, 673d Civil Engineer Group, Weldin Construction, and CDMSmith for their support, insights, and contributions to this work.
Disclaimer
The views expressed in this article are those of the writers and do not reflect the official policy of position of the U.S. Air Force, Department of Defense, the U.S. Government, or the Air Force Institute of Technology.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 140 • Issue 3 • March 2014
Copyright
© 2013 American Society of Civil Engineers.
History
Received: Mar 25, 2013
Accepted: Oct 24, 2013
Published online: Dec 11, 2013
Published in print: Mar 1, 2014
Discussion open until: May 11, 2014
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