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Cost Analysis and Negotiation Techniques

Available Modalities:

  • e-Training
  • Public Classroom
  • On Site
  • Virtual Classroom
Delivery Method PDU Total Technical PMP/PgMp Leadership Strategy PMI RMP PMI SP PMI ACP PfMP PMI PBA
Instructor-Led Training 34 10 0 24 0 0 0 0 0
Delivery Method Instructor-Led Training
PDU Total 34
Technical PMP/PgMp 10
Leadership 0
Strategy 24
PfMP 0
  • CEUs: 3.4
  • CPEs: 40
  • Field of Study: Management Advisory Services

In this course, you’ll learn the cost and pricing knowledge and skills essential for making sound contracting negotiation decisions. Building on the basic skills learned in Level I contracting courses and on-the-job experiences, Cost Analysis and Negotiation Techniques introduces the techniques needed to analyze cost proposals to establish pre-negotiation objectives for the various elements of cost contained in the proposals. Through an integrated case study, participants will demonstrate their ability to calculate a cost objective and a price/cost objective and determine their pre-negotiation position based on their calculations.

This course is recommended for contracting personnel who work in positions requiring unlimited contracting officer warrants or a Level II Defense Acquisition Workforce Improvement Act (DAWIA) certification.

Recommendation: You are encouraged to bring your laptop to use in this course. Also, you will receive a tool to help you apply what you learn in class back on the job.

  • Determine when cost analysis should be used 
  • Identify the use and application of a contract audit 
  • Outline the process for preparing to conduct contract negotiations 
  • Explain the implications of having an acceptable or unacceptable estimating and accounting, purchasing and internal control systems 
  • Determine a pre-negotiation objective for direct material, direct labor and other direct costs 
  • Determine a pre-negotiation objective for indirect costs, facilities cost of money and profit/fee

This course uses digital materials.

  • Cost Analysis Basics
    • What is cost analysis?
    • The role of cost analysis in contract pricing
    • Types of contract proposal analysis
    • Truth in Negotiations Act
    • Benefits of using cost analysis
  • Contract Audits
    • What is an audit?
    • The players in the contract audit process
    • Field pricing assistance
    • Defense Contract Audit Agency (DCAA) support
    • Types of audits and services
    • DCAA audit reports
  • Internal Control Systems
    • Importance of contractor internal controls
    • Cost accounting system
    • Estimating system
    • Purchasing system
    • Approval, disapproval and changes to internal control systems
  • Contract Negotiation Strategies
    • What are negotiations?
    • Factors involved in successful negotiations
    • Possible outcomes of negotiations
    • Attitudes leading to successful negotiations
    • Key negotiation terms
    • Steps in the win/win process
  • The Big Picture View of Contract Analysis
    • The view
    • Resource-constrained vs. schedule-constrained processes
    • Customer process inputs to program/project management
    • Seller process inputs to program/project management
  • Statistics in Contract Pricing
    • Identification of statistical terms
    • Contract situation where statistical analysis is appropriate
    • Measures of central tendency
    • Measuring the dispersion of data sets
    • Establishing confidence intervals
    • Stratified sampling
  • Simplified Regression Analysis
    • Regression analysis defined
    • Different regression analysis methods
    • Coefficient of determination
    • How well the regression equation fits the data
    • Establishing and using a prediction interval
    • When advanced regression analysis is required
  • Analyzing Direct Labor Costs
    • Defining direct labor
    • Direct labor classifications
    • Major types of direct labor
    • Planning for further analysis
    • Estimating methodology
    • Cost Estimating Relationships (CERs)
    • Using industry and company data to estimate future labor rates
  • Learning Curve (Improvement Curve) Analysis

    History of improvement curves

    Basic improvement curve theories

    Selecting the appropriate learning curve

    Steps in using improvement curves

    Impact of the learning curve slope on the cost estimate

    Unit curve theory

    Cumulative average learning curve

  • Analyzing Direct Material Costs
    • Defining materials
    • Directly associated materials
    • Planning for further analysis
    • Estimating methodologies used in developing direct materials estimates
    • Detailed quantity estimates
    • Unit cost estimates
    • Subcontract pricing responsibilities
  • Analyzing Other Direct Costs
    • Importance of proper identification and treatment of direct costs
    • Typical other direct costs
    • General considerations for other direct costs
    • Analysis of specific other direct costs elements
  • Analyzing Indirect Costs
    • Cost pools and cost bases utilized in developing indirect rates
    • Methods used to calculate indirect cost rates
    • Allow ability of costs used in indirect cost rates
    • Presentation of allowable and unallowable costs for indirect costs
  • Analyzing Facilities Capital Cost of Money
    • Factors affecting the facilities capital cost of money
    • Calculating the facilities capital cost of money
    • Cost of money applicable to a specific contract
  • Analyzing Profit and Fee
    • Factors affecting profit or fee analysis
    • Calculating profit/fee using a structure approach