Cost Estimating

Program Office Estimate (POE)

 

A Program Office Estimate (POE) (also known as a Life-Cycle Cost Estimate) is a detailed estimate of acquisition and Total Ownership Costs (TOC) normally required for high-level decisions. (see DoD Component Cost Estimate) The estimate is performed early in the program and serves as the baseline for all subsequent tracking and auditing purposes. It supports:

  • Affordability Assessments
  • Establishment of program cost goals for Acquisition Program Baselines (APB)
  • Independent Cost Estimates
  • Estimates of budgetary resources
  • Preparation of annual budget justifications
  • Cost and price analyses associated with contract negotiations or source selection evaluations
  • Monitoring of progress in achieving program cost goals
  • Engineering trade-off analyses over the life cycle

 

DoD Instruction 5000.02 “Operation of the Defense Acquisition System”  requires that the Program Office prepare a POE in support of program initiation. The POE is to be updated for each subsequent milestone and decision review. These cost estimates must be provided to the Director, Cost Assessment and Program Evaluation (DCAPE). For Acquisition Category (ACAT) ID programs with significant cost risk or high visibility, the Component Acquisition Executive (CAE) may request a Component Cost Analysis (CCA) estimate be prepared in addition to the POE and the Cost Assessment and Program Evaluation (CAPE) Independent Cost Estimate (ICE). [1]

 

Visit Life-Cycle Cost Estimate (LCCE) for more details.

 

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Updated: 6/18/2018

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