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Chapter 9: Pricing and Estimates - Coggle Diagram
Chapter 9: Pricing and Estimates
Types of global pricing strategies
Type I acquisition
one-of-a-kind program with little or no follow-on
potential
Type II acquisition
the new program with potential for large followon business or representing a desired penetration into new markets
Types of estimates
Order-of-magnitude analysis
Approximate estimate (or top-down estimate)
Definitive estimate, or grassroots buildup estimate
• Learning curves
Overhead rates
Marketing intelligence
Proposal data
Management goals
Actual costs to date and estimates to completion
Past performance and trends
Steps to determine project pace:
Step 9: Negotiate with functional managers for qualified personnel.
Step 8: Review the base case costs with upper-level management.
Step 7: Establish reasonable costs for each WBS element.
Step 13: Document the result in a program plan.
Step 12: Establish pricing cost summary reports.
Step 11: Develop the final detailed and PERT/CPM schedules.
Step 10: Develop the linear responsibility chart
Step 3: Develop the work breakdown structure.
Step 4: Price out the work breakdown structure.
Step 2: Establish a logic network with checkpoints.
Step 5: Review WBS costs with each functional manager.
Step 1: Provide a complete definition of the work requirements
Step 6: Decide on the basic course of action.
Types of pricing reports
A yearly cost distribution table.
A raw material and expenditure forecast.
A monthly equivalent manpower cost summary
A functional cost and hour summary
A total program manpower curve for each department
A monthly labor hour and dollar expenditure forecast.
A detailed cost breakdown for each WBS element.
Total program termination liability per month.
Life cycle Costing
Production cost
Operation and maintenance cost
Construction cost:
Product retirement and phase-out cost (also called disposal cost):
R&D costs