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Cost Elements included in Large Scientific Project Construction Cost Estimates

Daniel Lehman, director of the Office of Project Assessment in the U.S. Department of Energy’s Office of Science,  convened a meeting of his counterparts from thirteen countries or international entities to compare cost elements for large-scale scientific construction projects. From the meeting, he was able to assemble this table listing each country’s or international entity’s cost elements.

 

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Country/Organization Specific Notes

Belgium

Table entries are based on experience with the IMEC Public-Private Partnership (new nano-electronics research and development infrastructure) rather than on a general rule for Belgium.

Canada

Inclusion of specific cost elements is variable and dependent on the nature of the project, funding mechanism, and approving agency. Contingency, escalation, and operating costs are less likely to be included, but this is highly variable. D&D costs are estimated at the time of award, but not explicitly awarded.

European Commission

This applies to the Research Infrastructures Action of the Sixth Framework Program (FP6). This includes: “Design Studies”, i.e., feasibility studies and/or technical preparatory work; “Construction of New Infrastructures”; and “Transnational Access” and “Integrating Activities” (combining networking activities, access to transnational users, and joint research activities). Community support for “Design Studies” takes the form of a grant to the agreed budget of the study, up to a maximum of fifty percent of the total budget of the study. For “Design Studies,” contributions to capital investment are excluded.  Community support for “Construction of New Infrastructures” takes the form of a grant to the agreed budget of the construction project, up to a maximum of ten percent of the total budget of the project. Community support for “Transnational Access” and “Integrating Activities” schemes takes the form of a grant to the budget (up to a maximum of one hundred  percent of the user fees for “Transactional Access” and up to a maximum of fifty percent of the costs related to the research and technological development (RTD) activities). Through these project schemes, as well as through cost-shared research activities covered by the Thematic Priorities of the FP, the European Community indirectly contributes to “Operating Costs.”

Finland

Before the final decision to join a large international project, most of the above costs will be inquired by the ad hoc committee, or in some cases only by an ad hoc group of experts, studying the proposal.

Republic of Korea

For a “green field” project, labor costs will be included in the total project budget. For an expansion project by an existing organization, labor costs for existing members will not be added.

United Kingdom

The full labor costs are included in the project costing. In some projects the full labor costs are then transferred to the organization carrying out the project. In other cases, since Research Councils are both the funder for large projects and the funder of operational costs for national institutes and laboratories where such facilities are sometimes built, there is an in-kind contribution to the labor from the operational budget of the national laboratory providing the labor. Where this is done, it is done openly and on the basis of full economic costing of the project.

While there is no national system in allocating contingency, in general the Research Councils allocate contingency within the project. Some large projects currently under construction (e.g., the Diamond synchrotron) were approved without a contingency.

For projects funded by the Office of Science and Technology (OST, now absorbed within the Department of Business, Innovation, and Skills) and at least some Research Councils, a rate of inflation is estimated at the start of the project based on the estimates from Her Majesty’s Treasury of inflation in future years. Generally, the risk that this level of inflation is not in line with actual inflation lies within the project and where appropriate can draw upon the contingency.

United States

The table entries represent the practices of the U.S. Department of Energy.

 

REFERENCED IN: International Fusion Energy Cooperation