by Joe Bauer
| December 28, 2016
We have all likely heard of “should cost” estimates. Boiled down: If everything goes as planned, how much should program cost? Are there efficiencies or best practices we can employ to get the job done faster and cheaper? We may use analogies, parametrics, bottom up estimates, or extrapolation of actual costs to make a determination.
How many of us have heard of “should price”? “Should price” is the determination of reasonableness of price for commercial items. When contracting personnel receive quotes for off-the-shelf items, they need tools at their disposal to determine if the item is fairly priced. On the surface, it sounds like something cost estimators would be responsible for. However, government contracting officers face this type of challenge in their daily work. Contracting officers require similar skill sets and analytical prowess as the estimators.
Fair price determination has gained momentum recently. Mr. Shay Assad (OSD Director of Defense Pricing) released a memorandum on the topic in February, 2015. See http://www.acq.osd.mil/dpap/policy/policyvault/USA007164-14-DPAP.pdf. The memorandum calls for pricing specialists to utilize the full gamut of tools and techniques at their disposal, to include parametric modeling. Some people may avoid parametrics as being too complicated, time consuming, and burdensome. This need not be the case.
Enter TruePlanning®! With limited information or highly detailed information such as technical specifications and performance parameters, TruePlanning® allows the user to quickly generate high-fidelity ROM or detailed level estimates. With approximately 10,000 hardware data points behind the algorithms, the pricing specialist can feel confident about the speed, accuracy, and ease of use of the TruePlanning® estimating framework. In TruePlanning® 16.0, there are over 100 pre-built product breakdown structures for a wide range of projects…from missiles to tanks to robots! Extensive on board help menus, calculators, “wizards” and other tools make a daunting task relatively pain free.
“Am I paying a fair and reasonable price?” That is a quote from Mr. Assad’s memorandum. It is a valid question, one that seeks to protect tax payer dollars while getting the required equipment to the warfighter as quickly as possible. Barring the availability of certified cost data, parametric estimating may very well provide that answer with much less time and effort than any other estimating methodology.