Archives: Acq Notes

AcqNote Description Area

Cost Estimating

Cost Analysis Reviews

Cost Analysis Reviews are conducted by the OSD Office of Cost Assessment to provide oversight of programs to ensure that they are able to deliver on cost, schedule, and performance parameters. All cost estimates and cost analyses and associated studies conducted by the DoD Components for Major Defense Acquisition Program (MDAP) and Major Automated Information …

Cost Estimating

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Cost Estimating

Component Cost Estimate

The generic term “DoD Component Cost Estimate” is used to provide considerable latitude to each military service or defense agency as to the actual responsibility for this cost estimate. In some cases, a military service assigns the responsibility to the Program Management Office (PMO), which then provides a Program Office Life-Cycle Cost Estimate (PLCCE). In …

Cost Estimating

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Cost Estimating

Average Procurement Unit Cost (APUC)

Average Procurement Unit Cost (APUC) is calculated by dividing total procurement cost by the number of articles to be procured. Total procurement cost includes flyaway, rollaway, sail away from the cost (that is, recurring and nonrecurring costs associated with the production of the item such as hardware/software, Systems Engineering (SE), engineering changes, and warranties) plus …

Cost Estimating

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Cost Estimating

Affordability

Affordability is the results obtained from the analysis of the Life-Cycle Cost (LCC) of a proposed acquisition, in which the purchase is in accord with the resources and long-term requirements of the acquirer. The Defense Acquisition Guidebook (DAG) defines affordability as the degree to which the LCC of an acquisition program is in consonance with …

Cost Estimating

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Cost Estimating

Actual Cost Estimating

Actual Cost Estimating is a technique where actual cost experience or trends (from prototypes, engineering development models, and/or early production items) are used to project estimates of future costs for the same system. These projections may be made at various levels of detail, depending on the availability of data. Cost estimates that support Full-Rate Production …

Cost Estimating

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Cost Estimating

Step 12 Update the Estimate to Reflect Actual Costs and Changes

Programs should be monitored continuously for their cost effectiveness by comparing planned and actual performance against the approved program baseline. In addition, the cost estimate should be updated with actual costs so that it is always relevant and current. The continual updating of the cost estimate as the program matures not only results in a …

Cost Estimating

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Cost Estimating

Step 11 Present Estimate to Management for Approval

A cost estimate is not considered valid until management has approved it. Since many cost estimates are developed to support a budget request or make a decision between competing alternatives, it is vital that management is briefed on how the estimate was developed, including risks associated with the underlying data and methods. Therefore, the cost …

Cost Estimating

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