Rough Order of Magnitude(ROM)
A preliminary cost estimate used for planning and budgeting before detailed requirements are known, typically expressed as a range.
Overview
A Rough Order of Magnitude (ROM) estimate is an early-stage cost approximation used when requirements are incomplete or evolving. ROMs are typically expressed as a range (e.g., $1M–$2M) and have wide variance — often ±50% or more. They support budgeting, feasibility analysis, and go/no-go decisions before the government commits to a formal procurement.
Why It Matters in GovCon
ROMs appear in market research, RFIs, and pre-solicitation phases. Contractors may be asked to provide ROM estimates to help the government scope acquisitions and secure funding. ROMs are non-binding and should be clearly qualified. Understanding when a ROM is appropriate — versus when a firm estimate is needed — avoids overcommitting or under-scoping.
Key Details
- Accuracy: ROMs are intentionally imprecise; ±25% to ±50% variance is typical.
- Purpose: Budget planning, appropriation requests, and procurement strategy.
- Non-Binding: ROM responses do not commit the contractor to pricing.
- Evolution: As requirements mature, ROMs give way to detailed estimates and IGCEs.
- Proposal Context: Some solicitations request ROM pricing for options or out-of-scope work.
Related Terms
- Independent Government Cost Estimate (IGCE)
- Market Research
- Request for Information (RFI)
- Cost Plus Fixed Fee (CPFF)
More Finance Terms
A guarantee submitted with a bid that ensures the bidder will enter into a contract if selected and provide required performance and payment bonds.
The government's internal estimate of what a procurement should cost, used to evaluate the reasonableness of contractor proposals.
The projected cost to finish remaining work on a contract or project based on current status.
Overhead costs that support the overall organization rather than direct contract performance.
Costs that cannot be traced to a single contract but are allocated across projects via indirect rates.
The total cost of owning, operating, maintaining, and disposing of a system or product over its entire useful life.
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