Transcript ProjStream’s BOEMax

www.BOEMax.com
www.EVMax.net
Maximizing the
Competitive Advantage of
Your Estimating System
Brad Arterbury, VP of Business Development
Tom Shanahan, President and CEO
About ProjStream
• Headquartered in Orlando, FL
• Enterprise Software Company
Our Vision
Creating value throughout the entire life cycle of a project,
from the pre-award phase, the transition from pre-award to
award, and delivery
Our Mission
To make our clients successful in winning and delivering
projects
ProjStream | www.ProjStream.com | 800.914.1710
Review - Part 1 Agenda
• Why is it important to have a solid estimating system?
• Discussion of FAR 15-2 and DFARS 252-242-7005
Compliance
• What is a Basis of Estimate?
• What are the Components of a good BOE?
• What is Cost Proposal Traceability and why is it
important?
ProjStream | www.ProjStream.com | 800.914.1710
Estimating Systems – Why are
they important?
• Evaluating, re-engineering and maximizing
process efficiency should be a high priority to
government contractors
• Estimating function optimization has a DIRECT
causal beneficial relationship to the organization’s
end strategic goals:
1) To win and execute new business
2) To maximize cost recovery
3) To enhance profitability
ProjStream | www.ProjStream.com | 800.914.1710
What is included in an Estimating
System?
• Organizational Structure
• Established lines of authority, duties and
responsibilities
• Internal controls and managerial reviews
• Flow of work, coordination and communication
• Budgeting, planning, estimating methods,
techniques, accumulation of historical costs and
other analyses used to generate estimates
ProjStream | www.ProjStream.com | 800.914.1710
Estimating System Criteria
1. Establish clear responsibility for preparation, review, and approval
of cost estimates and budgets.
2. Provide a written description of the organization and duties of the
personnel responsible for preparing, reviewing and approving cost
estimates and budgets.
3. Ensure that relevant personnel have sufficient training, experience
and guidance to perform estimating and budgeting tasks in
accordance with the Contractor’s established procedures.
4. Identify and document the sources of data and the estimating
methods and rationale used in developing cost estimates and
budgets.
5. Provide for the adequate supervision throughout the estimating and
budgeting process.
ProjStream | www.ProjStream.com | 800.914.1710
Estimating System Criteria
6. Provide for consistent application of estimating and budgeting
techniques.
7. Provide for detection and timely correction of errors.
8. Protect against cost duplication and omissions.
9. Provide for the use of historical experience, including
historical vendor pricing information, where appropriate.
10. Require use of appropriate analytical methods.
11. Integrate information available from other management systems.
12. Require management review, including verification of
compliance with the company’s estimating and budgeting
policies, procedures, and practices.
ProjStream | www.ProjStream.com | 800.914.1710
Estimating System Criteria
13. Provide for internal review of, and accountability for, the
acceptability of the estimating system, including the budgetary data
supporting indirect cost estimates and comparisons of projected
results to actual results, and analysis of any differences.
14. Provide procedures to update cost estimates and notify the
Contracting Officer in a timely manner throughout the negotiation
process.
15. Provide procedures and ensure subcontract prices are
reasonable based on documented review and analysis
provided with the prime proposal, when practicable
ProjStream | www.ProjStream.com | 800.914.1710
Estimating System Criteria
16. Provide estimating and budgeting practices that consistently
generate sound proposals that are compliant with the
provisions of the solicitation and are adequate to serve as a
basis to reach a fair and reasonable price.
17. Have an adequate system description, including policies,
procedures, and estimating and budgeting practices, that comply
with Federal Acquisition Regulation and Defense Federal
Acquisition Regulation Supplement.
ProjStream | www.ProjStream.com | 800.914.1710
What is a Basis of Estimate (BOE)
• Provides the elements and rationale of every
component of the work that is the basis of the final
price
• Provides the logic, estimating methodology, data
and calculations used to estimate the resources
required to perform the work
• Provides credibility in the numbers and assists the
government in determining if the estimates, and
therefore the price is reasonable
ProjStream | www.ProjStream.com | 800.914.1710
Basis of Estimate (BOE)
Brings together:
• Work Breakdown
Structure (WBS)
• Schedules
• with labor category
estimates, material, travel
• Includes prime and subK
LCAT’s
• ODC estimates
• includes quantities and
unit pricing
ProjStream | www.ProjStream.com | 800.914.1710
Proposal
Stage / PreAward
Execution
Stage /
Post-Award
Delivery Stage /
Close-out
Attributes of a BOE
• Meets Customer Constraints
• Demonstrates Understanding of Requirements
• Estimates and Assumptions are well documented
• Conveys that estimates are credible, defendable and
realistic
• Aligns with WBS, SOW and other project structures such
as CLIN
ProjStream | www.ProjStream.com | 800.914.1710
What is a Basis of Estimate Used For?
To evaluate the Cost Reasonableness and Realism
of your estimate.
• Realism – Compatibility of estimate with scope
(as defined in the estimate Task Statement or
Statement of Work)
• Reasonableness – Justification for estimate
development methodology, and completeness
and accuracy of the mathematics applied
ProjStream | www.ProjStream.com | 800.914.1710
What are the components of a good
BOE?
1)
2)
3)
4)
5)
6)
Proposal and BOE Header Information
Task Description
Assumptions and Risk Development/Mitigation
Estimating Methodology
Rationale or Justification
Cost Estimate Distribution
ProjStream | www.ProjStream.com | 800.914.1710
Estimating Methodology
There are two main categories of estimating methodologies:
1. Historical – Always reference historical data if it exists
2. Judgment – Level of Effort, Engineering Estimates, etc.
Supplier quotes are more supportable than LOE or Subject Matter
Expert Judgment – Supplier Analysis attached to the BOE’s is
important as part of the subcontract price analysis
ProjStream | www.ProjStream.com | 800.914.1710
Estimating Methodology
Reliability Estimate Methodology
High
Actual Program Cost History
Estimate
Classification
Historical
Analogous Estimates
Parametric or CER's (Cost Estimating
Relationships)
Low
Standards
Historical
Unit or Multiplier Methods
Historical & Judgment
Level of Effort
Judgment
Expert Judgment
Historical resource based estimates are easier to support than
judgmental type estimates
ProjStream | www.ProjStream.com | 800.914.1710
Rationale or Justification
• Back Up the Estimating Methodology
• Explain why you chose the particular methodology
• Explain how the estimate in question relates to work that
was previously done.
Provide a convincing argument to support the estimate here:
Convince your customer that you understand the requirement and
can perform the work as estimated
ProjStream | www.ProjStream.com | 800.914.1710
Cost or Estimate Distribution
• Time phase spread the estimate
• Ensure dates of the estimated activity support the RFP
contractual requirements
• The time-phased estimates and cost schedules that result
in an RFP submittal should at least be the beginning of
the planning function for an IMS
Incorrect time phasing of estimated work can lead to incorrect costs
due to escalated rates
ProjStream | www.ProjStream.com | 800.914.1710
The Power of BOEMax™
Planning
Estimating
Add Data Driven Estimates
with BOE documentation,
Interface with IMS Schedule
Build WBS, Map Statement of
Work (SOW), create Work
Flow, BOE Templates
Process Flow
Create Versioning, Global
Updates, Project Version
Reports, Restore Bid Version
Scenario Analysis
ProjStream | www.ProjStream.com | 800.914.1710
BOE Report, Cost Summary
Report, Ad Hoc Pivot Reports,
Rate Reports
Reporting
Question & Answer
Tom Shanahan &
David Eck