Toolsets / FAA Pricing Handbook
Updated 03/1999
Table of Contents
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INTRODUCTION TO PRICING
Overview--The Pricing Process
Fair and Reasonable Price
Cost and Price Analysis
Summary
PART I: THE PRICING DISCIPLINE
1. PLANNING EFFECTIVELY
1.1 Overview
1.2 Scheduling the Analysis
1.3 Determination of the Degree of Information Required
1.4 Tools Required For Analysis
1.5 Planning For Technical/Audit Assistance
1.6 Summary
2. COMPREHENSIVE PROPOSAL REVIEW
2.1 Overview
2.2 Initial Review and Review for Completeness
2.3 Validate and Verify Cost Data
2.4 Review and Incorporate Q&Q, and Audits
2.5 Documenting Findings
2.6 Summary
3. AUTOMATED COST MODELS
3.1 Overview of Modeling
3.2 Using the Appropriate Application
3.3 Planning the Model: Organization of Data and Exhibits
3.4 Building a Cost Model
3.5 Application Functions and Analytical Tools
3.6 Data Entry Techniques
3.7 Transforming Cost Models to Hard Copy
3.8 Summary
4. FINANCIAL CAPABILITY ANALYSIS
4.1 Introduction
4.2 Types of Financial Statements
4.3 Financial Statement Review Using Ratio Analysis
4.4 Information for Analysis
4.5 Summary
Appendix 4A: Sample Balance Sheet
Appendix 4B: Sample Income Statement
Appendix4C: Consolidated Statements of Changes in Financial Position
Appendix 4D: Formulas for Ratio Analysis
Appendix 4E: Limited Ratio Analysis
Appendix 4F: Preaward Survey of Prospective Contractor Financial Capability
PART II: PRICE ANALYSIS
5. PRICE ANALYSIS
5.1 Price Analysis Overview
5.2 Price Analysis Techniques
5.3 Evaluating Commercially Available Items
5.4 Summary
6. GATHERING AND EVALUATING DATA FOR PRICE ANALYSIS
6.1 Price Data Overview
6.2 Sources of Data
6.3 Considerations Regarding Data
6.4 Evaluating Data
6.5 Summary
Appendix 6A: Industry Associations
PART III: COST ANALYSIS
7. DIRECT LABOR
7.1 Overview of Direct Labor
7.2 Direct Labor Hours
7.3 Direct Labor Rates
7.4 Basic Elements of Direct Labor Submission and Analysis
7.5 Cost Realism as Related to Direct Labor
7.6 Summary
8. MATERIAL
8.1 Overview of Material
8.2 Material Submission Requirements
8.3 Standard Methods of Estimating/Analyzing Direct Material Costs
8.4 Inventory Pricing Methods
8.5 Cost Realism as Related to Material
8.6 Summary
9. OTHER DIRECT COSTS
9.1 Overview of ODCs
9.2 Travel
9.3 Pre-Production Costs
9.4 Relocation Costs
9.5 Royalties
9.6 Packaging & Transportation Costs
9.7 Cost Realism as Related to ODCs
9.8 Summary
10. INDIRECT COSTS
10.1 Overview of Indirect Costs
10.2 Composition of Indirect Rates
10.3 Types of Overhead
10.4 G&A Expense
10.5 Analysis of Indirect Rates
10.6 Cost Realism as Related to Indirect Costs
10.7 Summary
11. FACILITIES CAPITOL COST OF MONEY
11.1 Overview of Facilities Capital Cost of Money
11.2 Calculating Facilities Capital Cost of Money Factors/Rates
11.3 Summary
12. PROFIT/FEE
12.1 Overview of Profit/Fee
12.2 Considerations for Profit/fee Analysis
12.3 Use of a Structured Approach for Profit Analysis
12.4 Summary
PART IV: SPECIAL SUBJECTS
13. COST PRINCIPLES
13.1 Introduction
13.2 Cost Principles Versus Cost Accounting Standards
13.3 Applicability to FAA Contracting
13.4 Elements of Allowability
13.5 Enforcement
13.6 Advance Agreements
13.7 Highlights of the Cost Principles
13.8 Summary
Appendix 13A: Cost Principles
14. COST ACCOUNTING STANDARDS
14.1 Introduction
14.2 Background & History
14.3 Summary of The Cost Accounting Standards
14.4 Cost Accounting Standards Versus Cost Principles
14.5 Applicability
14.6 Types of Coverage
14.7 Disclosure Statements
14.8 Cost Accounting Standards Administration
14.9 Cost Accounting Standards Implementation
14.10 Summary
Appendix 14A: Cost Accounting Standards
15. QUANTITATIVE ANALYSIS TECHNIQUES
15.1 Overview
15.2 Basic Statistics describing Central Tendency
15.3 Sampling
15.4 Regression Analysis
15.5 Learning (Improvement) Curves
15.6 Summary
16. EQUITABLE ADJUSTMENTS
16.1 Overview of Equitable Adjustments
16.2 Contract Disputes under the FAA Contract Disputes Clause
16.3 Quantifying an Equitable Adjustment
16.4 Allowance of Costs in Equitable Adjustments
16.5 Indirect Costs in Equitable Adjustments
16.6 Methods of Evaluating Equitable Adjustments
16.7 Summary
17. TERMINATION
17.1 Overview
17.2 General Principles
17.3 Termination Costs
17.4 Summary
18. THE LEARNING CURVE
18.1 Introduction
18.2 Fundamental Concepts
18.3 Unit and Cumulative Average Theory
18.3.1 Typical Learning Curve Computation Issues
18.3.2 Choice of Cumulative Average Versus Unit Curve Formulation
18.4 Special Learning Curve Applications
18.4.1 General Considerations in Dealing With Disruptions to the Log linear Learning Curve
18.4.2 General Tips on Complex Learning Curve Problems
18.4.3 Production Rate Changes
18.5 Evaluation Criteria for the Learning Curve
18.5.1 Estimating Scenarios Suited to Use of the Learning Curve
18.5.2 Causes of Cost Reduction Due to Learning
18.5.3 Quantity Discounts
18.5.4 Choice of Learning Curve Parameters
18.5.5 Labor Dollars Versus Labor Hours
18.5.6 The Impact of Technology and Automation
18.5.7 Reliability of Data Underlying Learning Curve
18.6 Summary
19. SOFTWARE PRICING
19.1 Introduction
19.2 Software and the Life Cycle
19.3 Software Cost Estimating Process
19.4 Estimating Software Size
19.5 Software Cost Estimating Methodologies
19.6 Life cycle Costs
19.7 Software Pricing Process
19.8 Model Selection
19.9 Intelligent Use of Models
19.10 Software Project Tracking And Measurement
19.11 Summary
Appendix 19A. Acronyms 19A
Appendix 19B. Software Cost Estimation Terminology 19B
Appendix 19C. Sample Software Work Breakdown Structure 19C
Appendix 19D. Popular Parametric Software Cost Models 19D
Appendix 19E. Commercial Off-The-Shelf (COTS) Software 19E
Appendix 19F. Bibliography 19F
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