Course Description
In this course, you’ll learn the cost and pricing knowledge and skills essential for making sound contracting negotiation decisions. Building on the basic skills learned in Level I contracting courses and on-the-job experiences, Cost Analysis and Negotiation Techniques introduces the techniques needed to analyze cost proposals to establish pre-negotiation objectives for the various elements of cost contained in the proposals. Through an integrated case study, participants will demonstrate their ability to calculate a cost objective and a price/cost objective and determine their pre-negotiation position based on their calculations.
What Do Participants Learn?
- Determine when cost analysis should be used
- Identify the use and application of a contract audit
- Outline the process for preparing to conduct contract negotiations
- Explain the implications of having an acceptable or unacceptable estimating and accounting, purchasing and internal control systems
- Determine a pre-negotiation objective for direct material, direct labor, and other direct costs
- Determine a pre-negotiation objective for indirect costs, facilities cost of money and profit/fee
Who Should Attend?
- Managers
- Supervisors
- Project Managers
- contracting personnel
- Those who are interested in the field
What Will the Learning Experience Include?
Phase: 1
Introduce
- Comprehensive pre-program activities include:
- Web-based information forms & surveys completed by attendee.
- Direct consultation with the attendee about the expectations.
- During the training, participants engage in data, activities, and conversations that lead to insight and knowledge.
- Participants learn from expert trainers who have both academic and business experiences.
- Highly applicable training content & instructive activities for adding depth to training topics.
- **A half-day site visit for integrating the experience & plan next steps. Opportunities to provide connections, ideas & support.
Phase: 2
Explore & Practice
Phase: 3
Apply
- Apply & sustain the learning experience by using this ongoing support:
- To ensure participant has new skills or behavior progress.
- Optional, fee-based mentoring & coaching with the trainer.
- Training materials & additional documents (e-books, pdf files, presentations and articles)
- Evaluate your training experience by giving us feedbacks and help us to reach our organizational goals.
- Participant's Evaluation
- Trainer's Evaluation
Phase: 4
EVALUATE
Section One: Cost Analysis Basics and Contract Audits
- What is the cost analysis?
- The role of cost analysis in contract pricing
- Types of contract proposal analysis
- Truth in Negotiations Act
- Benefits of using cost analysis
- What is an audit?
- The players in the contract audit process
- Field pricing assistance
- Defense Contract Audit Agency (DCAA) support
- Types of audits and services
- DCAA audit reports
Section Two: Internal Control Systems and Contract Negotiation Strategies
- Importance of contractor internal controls
- Cost accounting system
- Estimating system
- Purchasing system
- Approval, disapproval, and changes to internal control systems
- What are negotiations?
- Factors involved in successful negotiations
- Possible outcomes of negotiations
- Attitudes leading to successful negotiations
- Key negotiation terms
- Steps in the win/win process
Section Three: The Big Picture View of Contract Analysis and Statistics in Contract Pricing
- The view
- Resource-constrained vs. schedule-constrained processes
- Customer process inputs to program/project management
- Seller process inputs to program/project management
- Identification of statistical terms
- Contract situation where statistical analysis is appropriate
- Measures of central tendency
- Measuring the dispersion of data sets
- Establishing confidence intervals
- Stratified sampling
Section Four: Simplified Regression Analysis and Analyzing Direct Labor Costs
- Regression analysis defined
- Different regression analysis methods
- Coefficient of determination
- How well the regression equation fits the data
- Establishing and using a prediction interval
- When advanced regression analysis is required
- Defining direct labor
- Direct labor classifications
- Major types of direct labor
- Planning for further analysis
- Estimating methodology
- Cost Estimating Relationships (CERs)
- Using industry and company data to estimate future labor rates
Section Five: Analyzing Direct Material Costs and Indirect Costs
- Defining materials
- Directly associated materials
- Planning for further analysis
- Estimating methodologies used in developing direct materials estimates
- Detailed quantity estimates
- Unit cost estimates
- Subcontract pricing responsibilities
- importance of proper identification and treatment of direct costs
- Typical other direct costs
- General considerations for other direct costs
- Analysis of specific other direct costs elements
- Cost pools and cost bases utilized in developing indirect rates
- Methods used to calculate indirect cost rates
- Allowability of costs used in indirect cost rates
- Presentation of allowable and unallowable costs for indirect costs