Original Date: 04/29/2002
Revision Date: 01/18/2007
Best Practice : Cost Analysis and Estimating Process
Cost estimating tools and processes developed by the Maintenance and Logistics Command-Atlantic have dramatically improved the accuracy and completeness of government estimates and contracts administered at this location. Continuous updates and refinements of the processes and data enable the Maintenance and Logistics Command-Atlantic to accomplish its mission quicker and more effectively.
The preparation of quality cost estimates is essential to the operation of the Maintenance and Logistics Command- Atlantic (MLCLANT). These cost estimates must adequately cover the scope of planned ship repair, overhaul, and drydocking activities to maintain ship mission readiness within budget. The processes developed and continuously being refined at MLCLANT allow the Naval Engineering Division to accurately prepare government estimates, reflecting fair market value, that are then used to justify contract awards for the required work. Several different estimating processes are used depending on the type of contracting vehicle used to accomplish the work. Internal guides explain to personnel the estimate types and methods to be used for each task assignment (e.g., historical prices; parametric tables; or labor and material breakdown templates).
To begin the estimating process, a work list (WL) and supporting documents are forwarded to the engineering specifications branch where initial or preliminary government estimates are prepared for comparison to budget. Once this comparison is made and budget issues are resolved, the WL defining the full scope of work is finalized. The final estimate is used to validate the acquisition strategy and enables contracting personnel to more effectively evaluate bids for the needed contractual work.
A major tool used in the estimating process is the standard work templates. By comparing the scope of the standard work items to each unique task, pricing can be obtained for the unique task, and historical data can be collected enabling continuous updates and refinement of the templates to reflect the most used work items and market conditions. This continual updating process ultimately ensures the accuracy of the new estimates. In addition, the process helps ensure that contracting personnel have adequate tools for bid evaluation. Feedback loops have been established between contracting and engineering estimating personnel allowing the comparison of abstracts for scope and price and updating the templates with current market prices.
Further refinements are being implemented in the standard work templates that will minimize unused options and keep the templates current. An interactive database of work items showing cutter class, work item, region, season, bidder, bid, pricing unit, and quantity is being created. This database will enable future estimates to account for more variables in contract pricing while further improving the estimating process.
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