GAO Cost Estimating and Assessment Guide

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GAO Cost Estimating and Assessment Guide

The U.S. Government Accountability Office is responsible for, among other things, assisting the
Congress in its oversight of the federal government, including agencies’ stewardship of public funds. To use public funds effectively, the government must meet the demands of today’s changing world by employing effective management practices and processes, including the measurement of government program performance. In addition, legislators, government officials, and the public want to know whether
government programs are achieving their goals and what their costs are. To make those evaluations, reliable cost information is required and federal standards have been issued for the cost accounting that is needed to prepare that information.1 We developed the Cost Guide in order to establish a consistent methodology that is based on best practices and that can be used across the federal government for developing, managing, and evaluating capital program cost estimates.


For the purposes of this guide, a cost estimate is the summation of individual cost elements, using established methods and valid data, to estimate the future costs of a program, based on what is known today.2 The management of a cost estimate involves continually updating the estimate with actual data as they become available, revising the estimate to reflect changes, and analyzing differences between estimated and actual costs—for example, using data from a reliable earned value management (EVM)
system.3 The ability to generate reliable cost estimates is a critical function, necessary to support the Office of
Management and Budget’s (OMB) capital programming process.4 Without this ability, agencies are at risk of experiencing cost overruns, missed deadlines, and performance shortfalls—all recurring problems that our program assessments too often reveal. Furthermore, cost increases  often mean that the government

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