Creating Data Driven Basis of Estimates

What is a data driven basis of estimate (BOE)? It is a realistic cost estimate based on relevant and verifiable data. Historical performance or actual cost data traceable to a source business system such as accounting, material management, purchasing, or manufacturing is one example of verifiable data proposal teams could use to locate relevant data for the cost volume of a proposal.

Along with verifiable source data, the rationale used to arrive at the cost estimate must also be clearly documented and easily available. The proposal team, internal management, and customer must be able to follow the thought process, methodology, assumptions, and calculations used to arrive at the cost estimate. Data-backed documentation means you can produce higher-quality cost estimates that management has confidence in to meet target profit margins. A realistic cost estimate reduces the risk of cost growth after contract award.

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 and concise basis of estimate documentation helps the evaluator confirm you understood the statement of work requirements and produced a realistic cost estimate to complete the scope of work.

Any time you can provide fact-based information, especially if it is well organized in cost estimating software, you have an advantage over a competitor using a high percentage of expert judgement to create their cost estimate. A cost estimate without objective evidence translates into greater risk for the customer.

The Right Cost Estimating Software Can Help

Having the right software to support the proposal process can make a difference in the quality of the cost estimates. BOEMax cost estimating software was designed for proposal teams to easily produce data driven basis of estimates complete with built-in rich text rationale documentation.

What can your proposal team accomplish with BOEMax? They can:

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

  • Create and maintain a set of process library templates. These basis of estimate templates capture the list of tasks, labor resource requirements, and materials required to produce a component such as an assembly or sub-assembly. 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 BOEMax cost estimating 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 data back to the source 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 BOEMax 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 such as Oracle Primavera P6 or Microsoft Project means proposal teams can demonstrate the resources are time phased to match the planned sequence of activities and effort required to complete the work. Including the schedulers in the proposal process 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 are in agreement or manually “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. Using the central database in BOEMax, the data are fully traceable from the top down or bottom up. That means proposal teams can easily demonstrate to the customer or auditor how they arrived at their cost estimate numbers for the proposal's cost volume. As needed, they can also trace back to the source historical data along with the documented rationale.
    • Reporting and producing data views helps the proposal team to verify the cost estimate details and determine the best pricing strategy to win the contract. Built-in reporting tools and the ability to produce ad-hoc pivot tables enables proposal teams to compare versions, sort and select data for further analysis, or produce role specific views during the proposal development process.

Why Wait?

Call us or schedule a software demo today to see how BOEMax cost estimating software makes it easy to produce data driven basis of estimates in less time. That means you can respond to more RFPs and win more contracts with realistic cost estimates.

Content updated September 2020.

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

Author: Tom Shanahan