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Creating Data Driven Basis of Estimates

What is a data driven basis of estimate? It is a cost estimate that is based on verifiable data. Ideally, it is historical or other data that is traceable to the source business system such as accounting, timekeeping, material management, purchasing, or manufacturing. Along with verifiable data, the rationale used to arrive at the estimate must be clearly documented and easily available. The proposal team and customer must be able to follow the thought process, methodology, assumptions, and calculations used to arrive at the cost estimate.

Data driven basis of estimates makes it easier for the project team after contract award to develop their performance measurement baseline. A previous blog, DCMA’s Earned Value Analysis System (EVAS): What’s the Impact to Contractors, highlighted why it is important to pay attention to the quality of your schedule and cost data and the value of data-backed documentation. This holds true for basis of estimates. Data-backed documentation means you can produce higher quality cost estimates management has confidence in to meet target profit margins.

Make it Easy for the Customer to Select Your Proposal

A high-quality proposal always stands out from the crowd. Producing a data driven basis of estimate provides fact-based information that makes it easier for the customer to evaluate the proposal. Clear, concise basis of estimate documentation helps the evaluator to confirm you understood the statement of work requirements and produced a credible estimate to complete the scope of work. Any time you can provide fact-based information you have an advantage over a competitor using a high percentage of expert judgement to create their cost estimate. Anything without objective evidence means more risk to the customer.

The Right Proposal Software Can Help

The right proposal software tool in place to support the proposal process can make a difference in the quality of the cost estimates. BOEMax was designed so proposal teams can easily produce data driven basis of estimates complete with built-in rich text rationale documentation. With BOEMax proposal software, your proposal teams can:

    • Create and maintain a central proposal database with historical estimate data, actual costs, and assembly bills of material. Continually update the data library with current actual costs and project performance data to improve the quality of the source data. Proposal teams can use the search function to quickly locate relevant source data as the basis to substantiate their cost estimate. They can document what source data they used as well as how they arrived at their cost estimate. For example, perhaps they needed to factor the source data to reflect a level of difficulty or a difference in an operating environment. In the BOEMax proposal software, this is all captured with the proposal’s cost estimate data so it can be traced back to the historical source data.

      This solves a common problem for proposal teams – they need easy access to useful source data. When historical data is not available, it is difficult and time consuming for the team to gather what they need to develop sound cost estimates. When bid estimates are off the mark and actual costs to do the work are higher than anticipated, it impacts the company’s profit margins.  

    • Create and maintain a set of process library templates. These templates capture the list of tasks, labor resource requirements, and materials required to produce a component such as an assembly or subassembly. These are usually based on standards or historical performance for completing comparable tasks. These templates can be combined with the library of historical bills of material.

      This helps to establish a consistent basis the proposal teams can use to create their cost estimates. They have a common set of source data that has been validated and used for similar proposals they can build upon, another time saver for the team. With the BOEMax proposal software, they have additional data-backed documentation to substantiate their basis of estimate.

    • Include the basis of estimate rationale with the cost data in the same database. With built-in rich text capability, the entire proposal team can easily access the data and rationale documentation in one place. They can trace back to the source data as well as verify the approach and methodology used, calculations performed, risk assumptions, and other details. The data-backed documentation is immediately available to everyone including the customer or a government auditor.

      This solves another problem – the lack of basis of estimate documentation. To help proposal teams create clear, concise documentation, create basis of estimate templates. Provide a framework or examples of how you want them to document the process they went through to arrive at their cost estimate. You can create basis of estimate forms in the BOEMax proposal software that automatically include the time phased cost estimate data the proposal teams put together. This is part of the built-in workflow process useful for managing the proposal content development process from start to finish.

    • Demonstrate traceability between the schedule and the time phased cost estimate. Bi-directional integration with schedule tools means proposal teams can demonstrate the resources are time phased to match the planned sequence of activities and effort required to complete the work. That also means schedulers can be included in the proposal process which provides another opportunity to improve the schedule, skill mix, staffing profile, and cost estimate.

      This eliminates another common problem where the resource loaded schedule activities and time phased cost estimate don’t align. The proposal teams don’t waste time verifying the schedule and cost data correlate or “adjust” the data so they appear to align at a summary level.

    • Produce standard basis of estimate reports or cost summary reports compliant with government contracting standards. With a central database, the data are fully traceable from the top down or bottom up. Proposal teams can easily demonstrate to the customer or auditor how they arrived at their cost estimate numbers. As needed, they can trace back to the source historical data along with the documented rationale.

      Reporting and producing data views helps the proposal team verify the quality of cost estimate. Built-in reporting tools and the ability to produce ad-hoc pivot tables means proposal teams can compare versions, sort and select data for further analysis, or produce role specific views during the proposal development process.

Why Wait?

Call or schedule a demo today to see how the BOEMax proposal software historical data library, built-in rich text documentation, and bi-directional schedule data integration features makes it easy to produce data driven basis of estimates.

Topics: basis of estimate, project lifecycle, data traceability, data integration, proposal cost estimate, BOEMax

Author: Tom Shanahan