CEMP-E/CECW-E
EI 01D010
1 September 1997
as performance, efficiency, or methodology and
14-7. Impact Costs
cannot be stated factually prior to actual
accomplishment. These must be negotiated and
a. When a modification is initiated, the
based upon experienced judgments. In actual
settlement of that modification includes not only the
practice, most factual costs are based to varying
cost and time change of the work directly affected
degrees upon judgment.
but also the cost and time impact on the unchanged
work. The impact portion of a modification is very
e. The estimate of impact should be prepared
important to be estimated accurately. The scope of
for each activity affecting the change. In some cases,
impact may be broad and susceptible to a large
the impact items are typically so interrelated that it is
variety of situations. The following discussion will
often best to develop a detailed plan for
provide guidance and understanding of impact cost
accomplishing the remaining work. Each item in
considerations.
this plan would be estimated at the productivity and
rate in effect at the time the work is to be
b. Generally, the greatest portion of impact
accomplished. The same items of work under the
costs results from acceleration and/or delays due to
original plan would also be estimated at the
changes. When delays due to a change can be
productivity and rate in effect at the originally
minimized, impact costs are reduced. Impact costs
scheduled time. The comparison of the these two
are normally determined on a case-by-case basis for
estimates yields the cost of impact. Impact costs
each particular situation. The determinations have
determined to be valid must be estimated by the most
been based on interpretation of the Contract Clauses
accurate method available and included in the
and on Board of Contract Appeals and court
modification.
decisions.
f. The following impact factors or conditions
c. Impact costs are generally presented by the
play a recurring role in determining impact costs.
contractor as part of the proposal. The existing
Each modification must be evaluated separately and
construction schedule furnished by the contractor
impact costs considered specially for the implications
must be analyzed to determine the actual
of the particular change.
construction and the extent of the impact at the time
of the change. The modification work must be
(1) Impact costs considered factual include
superimposed upon the original schedule in such a
escalation of material and labor wage rates, and
position to determine and minimize the delay. The
change in equipment rates.
revised plan must then be thoroughly reviewed
relative to the existing job plan. This comparative
(2) Impact costs considered judgmental
review should indicate those areas which have been
include change of efficiency resulting from
affected by the modification.
rescheduling; loss of labor efficiency resulting from
longer work hours; loss of efficiency caused by
d. Once the extent of impact has been
disruption of the orderly existing processes and
determined, each cost claimed must be classified as
procedures; inefficiency from tearing out completed
either factual or judgmental. The factual costs are
work and the associated lowering of morale; loss of
those which are fixed and established and can be
efficiency during rescheduling of manpower;
determined directly from records. These include
inefficiency incurred from re-submittal of shop
rental agreements, wage rate agreements, and
drawings, and sample materials; additional costs
purchase orders. Once the item has been determined
resulting from inability to transfer manpower
valid as a factual impact, the item cost may be
expertise to other work; and change in management
directly calculated. The amount of cost change is
for the revised work.
stated on the certified document or can be
determined from the scheduled time change of the
(3) Impact costs considered factual but
construction progress plan. Judgmental costs are
should be based on judgmental decisions including
those which are dependent on variable factors such
increase from extending the storage period for
14-3
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