An Analysis of Cost Premiums and Losses Associated with USAF Military Construction (MILCON)
Abstract
Military construction (MILCON) represents 40% of the federal government's $30 billion construction budget. The federal budget is fixed; therefore, any cost overages likely affect project scope or requirements. This study investigated if MILCON procurement costs more than private industry construction and if so, what causes the cost premiums. A combination of in-depth literature review, expert interviews, a unique case study, expert surveys, and geospatial statistical analysis answered the research question. The case study evaluated two nearly identical projects to determine how internal factors affect MILCON cost premiums. This study confirmed the existence of MILCON cost premiums. Additionally, 11 major cost premium themes emerged: overly restrictive statements of requirements, failing to balance risk, stifling or not applying innovation, unique MILCON requirements, parameterization of the execution process, selection of construction specifications, schedule and submittal policies, perception of MILCON construction agents, anti-terrorism/force protection requirements, Federal Acquisition Regulations, and socioeconomic laws and policies. Additionally, in spite of contract requirement similarities, the studied projects differed by over a year of construction time and $7 million. Research frequently cites federal laws and policies as the primary cost premium driver; however, this research demonstrated internal construction policies, which the military can control, also cause increased cost premiums.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 01, 2013
- Accession Number
- ADA582650
Entities
People
- Daniel L. Blomberg
Organizations
- Air Force Institute of Technology