Cost Analysis and Negotiation Techniques

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