<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=953018&amp;fmt=gif">

ABCs of BOEs: A Crash Course in Estimating Methodology for Government Contracts

A Basis of Estimate (BOE) is more than an estimate—it’s a multi-page document where estimators, project managers, engineers, technicians, and cost analysts come together to explain and justify a work estimate. 

The BOE is one of the most important sections in a government contract proposal because it gives reviewers the ability to evaluate the reasonableness of costs and hours prior to awarding the contract. 

If you aspire to be a strong government contract proposal writer, you need to know at least a high-level overview of these four estimating methodologies: 

  • Analogy
  • Bottoms-Up
  • Level of Effort
  • Engineering Estimates

So let’s jump right in.

How to use the analogy (similar-to) methodology

Find the cost and effort from a similar contract, adjust for differences, and estimate the cost for the proposed new work. If you choose this methodology, you need to…

  • Choose a historical contract with comparable labor requirements and a similar completion timeline
  • Demonstrate how the historical contract relates to new solicited one
  • Compare the historical contract's actuals to your team's estimates

How to use the bottoms-up methodology

Use a combination of Industry Standards and Subject Matter Experts (SMEs) to estimate the cost and effort for the solicited work. If you choose this methodology, you need to…

  • Examine a conglomerate of historical productivity data
  • Look for instances where there is no data available
  • Use Subject Matter Experts to fill in the data gaps

How to use the level of effort (LOE) methodology

Solicit upper management and supervisory personnel to estimate the cost, hours, and timeline for the new contract. If you choose this methodology, you need to…

  • Use only if you can't use the previous two estimating methodologies
  • Explain the importance of accurate estimates to your higher-ups
  • Know this methodology won't produce precise estimates

How to use the engineering estimates methodology

Go straight to the source for estimates. If you choose this methodology, you need to…

  • Use this as a last resort
  • Ask for step-by-step explanations of activities, broken down into task
  • Know creditability is very difficult to establish

Congratulations, graduate

That’s it! Now that you know four basic estimating methodologies for developing a BOE, bookmark this blog post for future reference. 

Or consider using an all-in-one-estimating, pricing, and proposal management software like BOEMax. It comes equipped with a BOE library so you can leverage existing estimates at a project, work breakdown structure (WBS), or task level and pull from your previous estimates to create even more accurate proposals.

Topics: basis of estimate, proposal cost estimate

Author: Tom Shanahan