LABOR COST: Davis Bacon prevailing wage rates and RS Means rates will be compared for Johnson City. Also, Non-union rate will be considered for this project location.

EQUIPMENT COST: For USACE project we will do the estimate in MACECS MII which will require us to use Region V equipment cost for this project location.

MATERIAL COST: Current quarter Material cost is calculated by escalating the MACECS MII cost database to current date. Also, local vendor and supplier quotes are obtained for major cost items (80-20 rule) such as concrete, steel, lumber or any specialty item which assures that any local cost impact is considered in the estimate.

AREA COST FACTOR: RS Means City Cost Index (CCI) will be used to calculate the material price for project location. For this project current quarter (2022-Q3) RS Means CCI for Johnson City is 114.8% for Material and 60.0% for Installation. Which shows that the Johnson City material cost is 14.8% higher than the national average and Labor cost is 40% lower than the national average.

PRODUCTIVITY IMPACT: Due the secure location of the project site, we consider labor productivity loss. This is loss of work time due to site access, base entrance, or security clearance. This loss is considered between 30 mins to 60 mins of time out of the 8 hrs. work shift.

MARKET STUDY: Estimating in the current construction market, which is highly volatile, labor shortages, inflation, supply chain issues make it necessary to be aware of local market conditions. We will be connecting with the local sub-contractors and suppliers to have better understating of the market and make sound consideration for the project upon the market review.

REMOTENESS FACTOR: Projects with remote locations come with an added costs of construction. With respect to this project, we do see it as somewhat remote given the size of the plant and relative sizes and distances of Kingsport, Johnson City, and Knoxville. This may impact the number of bidders, transportation costs, and added general conditions costs with respect to items such as staffing relocations. These factors can only begin to be quantified as actual cost increases as the project gains definition.

ENVIRONMENTAL FACTOR: Project locations with a history of environmental issues come with an added costs of construction. With respect to this project, we do not see a history of any significant environmental issues, although ammunition plants in general do have a history of these challenges. This may or may not impact the costs of design and general requirements due to the need for more environmental studies, reports, and remediations than the average project. This factor can only begin to be quantified as actual cost increase as the project gains definition, due to the complexity of EPA requirements.

ANNUAL ESCALATION: Depending on the project schedule and construction start date we will calculate the annual escalation with an understanding of overall market conditions on national and local/project location level. We use ENR Building Cost Index as reference point for our annual escalation percentage and need compare with other indices such as USACE, NAVFAC, DCD, etc.

MISCELLANEOUS: Job office overhead will be estimated in detail as per this project requirements. Additionally temporary space or swing area for the current offices and staff will be taken into consideration as required by the project scope. Project Markups will be factored based on local competition and conditions. We make sure to account that in our estimate with the help of our detailed market analysis. Our Internal Quality Control plan to review estimate helps us provide more clean and accurate construction cost for the project. This has allowed the A/E teams to better design to the project scope and has given the owner more confidence in their project budgeting.