Rough Order of Magnitude (ROM)

A Rough Order of Magnitude (ROM) is a preliminary cost estimate for a project or acquisition that conveys approximate magnitude rather than precise cost, typically carrying an accuracy range of -25% to +75% or even -50% to +100%, and is used when detailed requirements are not yet available.

What is a Rough Order of Magnitude?

Government program offices and contractors frequently exchange ROM estimates during the pre-acquisition phase, when the government is assessing feasibility, developing business cases, or deciding whether to proceed with a new capability. The ROM is not a price commitment, it is a planning tool that communicates approximate cost magnitude to inform go/no-go decisions and budget planning.

Common contexts for ROM estimates include: market research by contracting officers who need rough cost data before issuing an RFP, program office feasibility studies that require cost-of-alternatives analysis, government-to-government discussions about potential programs before any procurement action is initiated, and contractor unsolicited proposals that include a preliminary cost estimate.

The accuracy of a ROM is inherently limited because it is developed without detailed requirements, a defined scope of work, or a complete understanding of technical risk. ROM estimates typically use historical cost data from similar programs, cost models, expert judgment, or analogy-based estimating. The wide accuracy range (-50% to +100%) communicates to the recipient that the estimate should not be relied upon for contract award pricing or program budget commitments.

When requirements mature and a Request for Proposals is issued, the ROM is replaced by a detailed, certified cost or pricing data proposal that narrows the cost range significantly.

Why ROM estimates matter for government contractors

A contractor that provides accurate ROM estimates builds credibility as a reliable cost estimator with government program offices. Conversely, artificially low ROM estimates, provided to influence a government go decision, damage relationships when the actual proposal price is substantially higher. Honest ROM communication is both an ethical obligation and a long-term business development strategy.

Example

A government program office contacts an incumbent contractor about a potential follow-on study program. The program office asks for a ROM to inform its budget request for the next fiscal year. The contractor uses parametric cost models and historical hours data from a similar completed study to develop a ROM of $8M-$16M for a 24-month effort. The program office includes a $12M budget request as the midpoint estimate. When the formal RFP is issued a year later, the contractor's detailed proposal comes in at $10.5M, within the ROM range.

Frequently Asked Questions

What is the accuracy range of a ROM estimate?

Industry standards vary, but ROM estimates are typically characterized as having an accuracy of -25% to +75% for preliminary planning estimates or -50% to +100% for very early conceptual estimates. The Association for the Advancement of Cost Engineering (AACE) defines Class 5 estimates (the least mature category) with an accuracy range of -50% to +100%.

How does a ROM differ from a budget estimate or a definitive estimate?

A ROM is the earliest and least accurate estimate type. A budget estimate (AACE Class 4 or 3) has somewhat more refined scope and carries -15% to +50% accuracy. A definitive estimate (AACE Class 1 or 2) is based on complete engineering and design and carries -5% to +15% accuracy. The ROM is used for feasibility; the definitive estimate supports contract pricing.

Are ROM estimates provided to the government subject to TINA?

Generally no. The Truth in Negotiations Act (TINA) requires certified cost or pricing data for negotiated contracts above the threshold, but TINA applies to actual proposals, not preliminary ROM estimates provided during market research or pre-acquisition engagement. However, contractors should be aware that material misrepresentations in ROM estimates could raise questions about good faith dealing.

Can a contractor charge the government for providing ROM estimates?

ROM estimates provided in response to informal government inquiries are typically not billable, they are considered B&P or marketing costs. However, formal market research contracts, Requirements Development Studies, or Analysis of Alternatives contracts may directly fund ROM estimating activities as deliverables.